By canvassing opinions from more than 70 debt advisors, ThinCats gained valuable insights into the activity among UK lower mid-market companies.
Key findings released are as follows:
- Only 6 per cent of UK advisers think that government policy supports SME growth. 52% think current policies are unsupportive.
- Advisers cite macroeconomic uncertainty and deal quality as primary constraints on activity.
However, 35% were confident about the UK’s economic outlook. This is up from the previous survey, which followed the Autumn Statement, when 23% were somewhat pessimistic.
The main drivers of this feeling are “market stability, funding availability, and pent-up demand.”
Respondents pointed to the impact of measures like the National Insurance tax increases and employment reforms, as impeding growth.
However, despite ongoing political and macroeconomic challenges, advisers have a cautiously optimistic outlook for the rest of the year.
While the research shows “38% of advisers reported a decline in deal activity in the first few months of 2025, with a further 27% saying the market was flat, almost half (48%) say there is increasing demand for funding from owner-managed businesses, underscoring the resilience of this vital part of the UK economy.”
Advisers highlighted macroeconomic uncertainty and deal quality as the primary constraints on activity, with “34% reporting a reduction in their own deal pipelines.”
Interestingly, concerns around interest rates have “diminished, and funding availability remains stable.”
Ravi Anand, Managing Director, ThinCats, said:
“It has been a challenging few months in the lending market. But to see the majority of advisers report that they believe the current governments approach to be actively damaging to UK SMEs is troubling to see. Following the Autumn Statement, many businesses have basically paused on any growth or acquisitions.”
He added:
“Wider geopolitical issues are raising concerns about government debt and expectations of rate decreases by the Bank of England. Despite these challenges, the good news is that businesses in the mid-market are resilient and advisers are picking up on positive sentiment. Hopefully, we will see more activity into the rest of 2025.”
