London, 12 March 2026 – In a key release for the UK business sector, UK Finance has published its Business Finance Review covering lending to small and medium-sized enterprises (SMEs) in 2025, offering critical insights into corporate borrowing amid a challenging economic landscape.

SME Borrowing Trends on the Rise

Bank of England data indicates heightened borrowing activity among SMEs over the past year, corroborated by lending patterns from major high street banks as captured in UK Finance's datasets. This uptick aligns with a modest improvement in business confidence since the start of 2026, providing a tentative boost to corporate finances.

Investment Caution Persists

Despite these positive signals, the Office for National Statistics (ONS) Business Conditions survey underscores ongoing reticence among firms to expand investment, with net balances for planned increases barely holding positive. Surveys such as the Ipsos SME Finance Monitor highlight economic and political uncertainty, alongside elevated cost pressures, as primary deterrents to aggressive capital spending.

Global Trade Risks Loom Large

The report flags renewed trade policy uncertainties stemming from the US Supreme Court's judgement on President Trump’s tariffs as a significant overhang, potentially dampening business momentum. This comes against a backdrop of flat services output in Q4 2025 – the weakest quarterly performance in two years – and manufacturing recovery partly attributed to prior cyber disruptions at Jaguar Land Rover.

Broader Economic Context

UK Finance's Monthly Economic Review for March complements the SME data, noting expectations for modest productivity gains through capital deepening and AI investment, though uptake remains uncertain. Meanwhile, mortgage arrears continued their steady decline in Q4 2025, per February data releases, signaling resilience in household finances.

This review arrives as policymakers grapple with disinflation drivers, including the autumn Budget's energy bills package and softening administered prices, per related forecasts. For SMEs, the findings underscore a delicate balance: access to finance is improving, but external shocks could hinder sustained recovery.