Barclays has published a new report estimating that the UK economy could gain an extra £60 billion per year if small and medium-sized enterprises (SMEs) invested at the same rate as larger companies.

The bank’s research shows that overall business investment reached record levels in 2024, but most of that growth came from large corporations. Smaller firms, while representing the majority of UK employers, have been more cautious. Many are held back by limited confidence, rising costs, and reduced access to finance.

This matters because SMEs drive over 60% of employment and generate more than half of private sector turnover. Even modest changes in how smaller businesses spend and invest can ripple through the wider economy, supporting new jobs, supply chains, and tax revenues.

According to Barclays, unlocking this potential could create benefits far beyond traditional industries — including fast-growing digital and niche sectors that are quietly fuelling modern economic progress.

From Manufacturers to Digital Ventures

According to Barclays’ September 2025 report, “Unlocking SME Investment: Building a Growth Mindset in the UK,” small businesses could add up to £60 billion a year to the economy if they invested at the same rate as larger firms.

Barclays notes that increased SME investment doesn’t only apply to new factories or logistics hubs. Smaller, digital-first companies are just as vital to growth. These include tech startups, creative agencies, and online entertainment businesses — all of which depend on continual investment to stay competitive.

The report highlights that smaller digital firms, particularly those in online entertainment and gaming, need to invest heavily in technology, compliance, and innovation to thrive. This includes areas like secure payment systems, software development, and responsible operations.

Even niche digital operators, from fintech startups and creative agencies, to gaming apps and Poker sites not on Gamstop, fall into this category. These smaller businesses must continuously invest in technology, security, and compliance to remain competitive.

By showcasing sectors like these — outside of traditional manufacturing or finance — Barclays reinforces the point that the £60bn opportunity extends to every corner of the economy. Digital enterprises create skilled jobs, attract international revenue, and contribute to local growth through taxes and spending.

The Three Drivers Barclays Identifies

The report outlines three main factors influencing whether SMEs will increase investment:

Confidence: Business owners hesitate to make long-term commitments without a stable economic outlook. Years of political uncertainty and inflation have made many smaller firms risk-averse.

Need for upgrades: Rising costs and shifting consumer expectations make digital upgrades and sustainability measures essential. Whether it’s new software, equipment, or greener operations, these investments can’t be delayed indefinitely.

Expansion appetite: Growth often requires calculated risk. Entering a new market or developing a new product line involves investment, but also unlocks new revenue streams. Larger companies can absorb these risks more easily — smaller ones often can’t without support.

Barclays argues that bridging this gap could deliver huge economic benefits, giving SMEs the tools and confidence to invest in their own futures.

Closing the Gap Between SMEs and Big Corporates

Large corporations generally have stronger balance sheets and easier access to credit, allowing them to push forward with expansion. Smaller businesses, on the other hand, often rely on bank loans or personal savings — both harder to secure during uncertain times.

This disparity limits how much SMEs can invest in innovation, automation, and expansion. Barclays warns that without intervention, this gap could widen further, holding back productivity and growth across the UK economy.

Its recommendation is clear: reducing the SME investment gap would yield broad benefits — stimulating employment, regional development, and tax revenue.

What Could Unlock the £60bn Boost?

Barclays proposes a few key steps to encourage SME investment:

• National investment goals: Creating a unified strategy that encourages businesses of all sizes to invest with confidence.

• Changing the narrative: Shifting focus away from big corporate projects to highlight the crucial role SMEs play in regional development and job creation.

• Better financial tools: Improving access to seed funds, tax breaks, and specialist lending products designed specifically for small and growing firms.

The report stresses that when smaller businesses are given the right tools and funding pathways, their potential multiplies.

Why Digital-First SMEs Deserve Attention

One of the strongest findings in the Barclays report is that the UK’s digital economy — from creative industries to gaming and entertainment — is an engine of innovation.

These businesses may start small but grow rapidly when properly funded. Their investments often go toward data protection, software development, and customer experience improvements — all essential for trust and long-term business success.

While traditional sectors like manufacturing and renewable energy remain vital, Barclays underlines that digital and entertainment-focused SMEs also bring real value. They generate skilled jobs, export revenue, and technological innovation.

The inclusion of diverse examples — from creative agencies to responsible online platforms and gaming operators — shows how broad SME investment’s potential truly is.

Supporting Regional Growth

SMEs are also vital for regional economic balance. They’re often deeply embedded in local communities, providing employment in areas where large corporations have little presence.

Encouraging investment in these smaller firms can therefore support levelling-up goals, helping local economies become more resilient.

Digital-first ventures are particularly well-placed for this. They can operate from anywhere, helping towns and regions outside London benefit from skilled, well-paid work without the need for physical infrastructure.

Barclays suggests that encouraging such distributed growth would strengthen regional economies and reduce the UK’s over-reliance on major cities.

Employment and Tax Impact

When SMEs invest, the benefits go far beyond their own revenue. They protect and create jobs, boost payroll taxes, and support suppliers and service providers.

In sectors like digital entertainment and technology, that impact multiplies. Software developers, content creators, designers, and compliance professionals all contribute to a healthy economic ecosystem.

Barclays notes that when smaller firms flourish, the tax impact is substantial — from corporate taxes to indirect contributions through employment and local spending.

A Realistic Yet Ambitious Goal

The £60bn estimate is based on SMEs reaching the same investment rate as large corporations — a tall order, but not unrealistic. Even small increases in SME spending could drive measurable gains in productivity, job creation, and innovation.

Barclays calls this goal ambitious but achievable. With greater access to finance and stronger business confidence, it believes the UK could unlock billions in new growth annually.

Looking Forward

The message from Barclays is simple: SMEs are the backbone of the UK economy, and their investment choices will shape its future.

Supporting smaller firms with better funding options, confidence-building policies, and recognition of their importance could generate tens of billions in additional growth each year.

And while big industries will always dominate headlines, it’s often the smaller, more agile businesses — from creative startups to niche digital operators that drive innovation and expand economic opportunity.

These are the enterprises that bring energy, adaptability, and forward-thinking ideas into the UK market. And with the right support, they could be the reason Britain’s economy grows stronger, smarter, and more inclusive.

 

Source: Barclays (September 2025), “Unlocking SME Investment: Building a Growth Mindset in the UK.”