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A significant number of small and medium-sized enterprises (SMEs) in the UK are delaying investment despite holding large cash reserves, according to new research from Azets.
The Spring 2025 Azets Barometer survey found economic uncertainty, geopolitical instability and trade tariffs are among the top concerns for SMEs over the next year. Higher labour costs were identified as their biggest challenge, followed by volatile tax policy and a lack of long-term financial predictability.
Peter Gallanagh, UK chief executive of Azets, said: “SMEs are asking for clarity from the government around tax policy and long-term economic plans. Without it, confidence to invest simply won’t return. Right now, SMEs are treating cash as insurance, not fuel for growth.”
SMEs account for 99.8% of all UK businesses, employ around 16.6 million people – 60% of the workforce – and generate 52% of private sector turnover, worth about £2.8tn.
In light of this, Gallanagh urged the government to set out a long-term economic roadmap and introduce targeted incentives to encourage spending, including in research and development and artificial intelligence.
The survey found only 6% of SMEs describe their AI use as “advanced”, while 23% have not adopted it at all. A further 25% are still in the research stage, and 31% have only partially adopted the technology.
Gallanagh added: “AI is the game changer but only if we support SMEs to adopt it. Backing them isn’t a gamble – it’s a guaranteed route to economic growth.”
