SME optimism grows but high energy and tax costs threaten 2026 growth prospects

Almost half of UK SMEs are optimistic about the year ahead, but cost pressures remain the biggest obstacle to growth, according to new research by Simply Asset Finance released ahead of the Autumn Budget.

The study shows that SME confidence is on the rise: 49% of decision makers feel positive about the next 12 months, compared to 43% a year ago. Notably, 19% say they are “really excited” about their growth prospects – more than double the 8% recorded in 2024.

However, despite the growing optimism, the challenges facing SMEs are largely unchanged from last year’s budget. Businesses continue to suffer from high energy prices, inflationary pressures and higher taxes, leading to renewed calls for the government to take measures to boost productivity.

High energy costs remain the biggest problem facing SMEs, with 40% calling for the Chancellor to provide targeted support – rising sharply to 54% among medium-sized businesses. The UK remains one of the most expensive developed economies in terms of business energy costs, leaving companies warning they are operating at a structural disadvantage.

A further 34% of SMEs want tax incentives to be strengthened to stimulate investment and innovation, while calls to reduce corporate taxes have almost doubled year-on-year to 36%, up from 19% in 2024.

Government-backed loans also continue to feature prominently on SME wish lists, with 26% of businesses looking for better access to affordable finance as they plan to expand.

Confidence that the government will deliver a pro-business autumn budget remains low, at 36%. Many companies say they face the same obstacles that hindered them last year, with 46% citing a stagnant economy, 39% citing continued high inflation, and 30% citing high interest rates.

With 68% of SMEs saying the autumn budget will have a “major” or “substantial” impact on their growth plans, pressures are mounting ahead of the November 26 announcement.

Mike Randall, CEO of Simply Asset Finance, said: “It is very encouraging that SMEs are showing a clear appetite for investment and growth. But there is ongoing frustration at a lack of support with ever-increasing costs and the same barriers blocking their way forward.

“Energy costs remain the biggest barrier to growth – and businesses are clear that they need support to allow more room to invest. With the UK facing some of the most expensive energy costs in the world, businesses are at a disadvantage and something must give.

“With the Budget just weeks away, the government has a crucial window. The right decisions can unleash growth and boost productivity across the UK; the wrong decisions risk halting momentum at a crucial moment.”