More than three-quarters (76%) of business finance experts have noted that government policy has had a “negative impact” on the UK’s 5.5m small and medium-sized enterprises (SMEs), according to iwoca’s Q3 2025 SME Expert Index.
Positive views of government impact remain very limited, with only 3% of respondents describing current policy has positive impact on smaller firms.
The Chancellor’s Autumn Budget announcement, scheduled for 26 November, is expected to add to these concerns.
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Two-thirds (66%) of those surveyed predict the Budget will worsen conditions for SMEs, while just one in ten (10%) expect any improvement for their clients.
Surveyed brokers identified two priority areas for policy change: 39% believe business rates relief as most impactful for SMEs, while 35% favour a reduction in corporation tax.
The proportion of brokers who observed growing pessimism among their SME clients increased from 15% in Q2 2025 to 34% in Q3.
Nearly half (48%) of brokers cite increasing operating costs as their main issue and 25% highlight political uncertainty, up from 5% last quarter.
Inflation is expected to remain above target through next year, according to 85% of SME finance specialists who forecast inflation at or above 3% by end-2025, above the Bank of England’s 2% target.
Concerns about recession are also widespread, even though recent data from the Office for National Statistics showed GDP growth of 0.3% in the third quarter.
iwoca’s SME Lending Thermometer, designed to measure demand across all UK lenders, recorded a reading of 5.15 for Q3 2025, down from 5.63 in Q2, on a scale where one equals extremely low demand and ten indicates extremely high demand.
iwoca UK chief commercial officer Colin Goldstein said: “Every day, we hear from small business owners who are concerned about what the Autumn Budget might mean for their businesses.
“With high costs and so much uncertainty, many feel under real pressure. This Budget is a valuable opportunity for the Government to give small businesses the practical support and long-term vision they need to thrive.”
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