Peter Gallanagh, UK CEO at Azets, says business owners are ready to spend pent-up capital but are “paralysed by fear” due to geopolitical uncertainty and a lack of clear economic policy.

The warning follows the results of the latest Azets Barometer Spring 2025 survey, which shows UK SMEs citing economic uncertainty, geopolitical instability and trade tariffs as their top concerns for the next 12 months.

When asked about overall risks to their business, a volatile tax landscape and lack of long-term financial predictability were among the top three worries. Higher labour costs was the number one concern.

Mr Gallanagh said: “SMEs are asking for clarity from the government around tax policy and long-term economic plans. Without it, confidence to invest simply won’t return.

“Right now, SMEs are treating cash as insurance, not fuel for growth. We’re seeing caution override ambition – and that’s holding the UK economy back.”

Despite the challenging outlook, SMEs remain central to the UK economy. They make up 99.8% of all UK businesses, account for 60% of total employment (around 16.6 million jobs), and generate 52% of private sector turnover (around £2.8 trillion).

Mr Gallanagh is calling on the UK government to listen to SMEs and commit to a long-term economic roadmap that gives SMEs the confidence to plan, invest, and grow.

He believes targeted incentives – such as those for R&D and artificial intelligence – would unlock spending and fuel long-term growth.

“We need to fill entrepreneurs and business leaders with confidence that investments in growth areas will not be undermined by sudden policy shifts or unexpected regulatory changes down the line,” he added. “SMEs have the ambition but the policy needs to catch up.”

According to the Azets Barometer Spring 2025 survey, only 6% of UK SMEs describe their AI use as “advanced”. Nearly a quarter (23%) say they’ve not adopted AI at all, with a further 25% still in the research phase, and 31% only partially adopting it.

Mr Gallanagh concluded: “AI is the game changer but only if we support SMEs to adopt it. Incentivising AI adoption isn’t just smart, it is strategic. Supporting SMEs to adopt AI will deliver a UK-wide windfall. It’s a growth opportunity we can’t afford to miss.

“SMEs account for 60% of the UK workforce. Backing them isn’t a gamble – it’s a guaranteed route to economic growth.”