Rising costs push SMEs into survival mode

Small and medium-sized enterprises (SMEs) across the UK are warning that rising costs and weak government support are pushing them into “survival mode”, according to new research from independent funder Bibby Financial Services (BFS).

The Q3 2025 SME Confidence Tracker, which surveyed 1,000 small businesses, found that more than half (52%) believe existing government initiatives including the Fair Payment Code, Late Payments Review, and the British Business Bank’s Bank Referral Scheme are failing to deliver meaningful protection or growth opportunities.

Despite cautious optimism about their own prospects, high inflation and mounting operational costs continue to weigh heavily on small firms. The survey found that 62% of business leaders cite inflation and high costs as major challenges, pointing to recent increases in National Insurance and the national minimum wage as key factors limiting their ability to invest in staff or expansion.

Jonathan Andrew, chief executive of BFS, said: “The current economic climate is hugely challenging for SMEs that are seeing profit margins and spending power eroded, and overheads increasing.

“On top of continued supply chain pressures both domestically and internationally, these issues pose a significant risk to economic growth, but more importantly, they threaten the survival of thousands of small businesses across the country.”

Ahead of the Autumn Budget, the report outlines a clear set of demands from business owners. Nearly four in ten (37%) SMEs are calling for access to low-interest loans, while more than a third (35%) want cuts to business rates. A smaller proportion (9%) are urging the government to reverse the recent rise in National Insurance Contributions.

International pressures are also weighing on small businesses. Nearly a quarter (23%) of respondents said they want new trade agreements to open overseas markets, while 19% are calling for targeted government support to offset the impact of international tariffs, particularly those imposed by the US.

Andrew said small firms were “crying out for support”, warning that the “high cost of doing business” is reaching a critical point.

“What they need are practical measures that protect them against mounting cost pressures and volatile international trading policies,” he said. “There’s a real opportunity in November for the Chancellor to back Britain’s small businesses with bold measures that cut red tape, roll back the burden of increasing costs and improve the environment for international trade.”

The findings come as Chancellor Rachel Reeves prepares to deliver her first Autumn Budget, with business groups urging her to prioritise support for SMEs that make up the backbone of the UK economy.