Business finance provider iwoca’s latest SME Expert Index shows that 38% of finance brokers in the UK believe that cutting taxes is crucial for boosting small and medium-sized enterprise (SME) growth this year.
This sentiment is double that of the next preferred reform, which is the restructuring of business rates (19%).
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The focus on tax reduction highlights its perceived importance in fostering SME expansion.
iwoca’s survey reveals that 70% of finance brokers feel that conditions for SMEs have deteriorated since the Labour Government assumed office. This has led to increased anxiety among small business owners.
Rising operational costs for SMEs remain the primary concern for more than half or 53% of finance brokers, marking an 11-point increase from the previous quarter.
Inflation remains a key concern, with 67% of finance brokers predicting that it will exceed the Bank of England’s 2% target by year-end. Of these, 32% expect inflation to surpass 2.6%.
Despite these challenges, economic optimism has improved, with nearly half of SME finance brokers (46%) expressing optimism about the future of SMEs in 2025, up from 36% in the previous quarter.
Concerns about a potential recession persist, with 51% of finance brokers worried about this possibility, a slight increase from the last quarter.
iwoca UK chief commercial officer Colin Goldstein said: “SMEs are facing rising costs and tougher borrowing conditions, yet they remain vital to the UK economy. With high street banks pulling back, businesses are turning to alternative lenders like iwoca to access the funding they need. We’re making it faster and easier for SMEs to secure finance—helping them navigate uncertainty and drive growth in 2025.”
In December 2024, iwoca reported that economic uncertainty is rising among the UK’s 5.6 million SMEs following the Autumn Budget.
The percentage of brokers observing pessimism among their SME clients about the future has more than doubled, increasing from 15% in the prior quarter to 34%.
