Business attitudes to investing: How to unlock a growth mindset in the UK

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This article is part of our UK unlocked series - expert insights on the economic and business issues most critical to the UK's companies and policy leaders.

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The UK is facing an underinvestment challenge. Over the last 15 years, business investment has not kept pace with the other nations in the G7, and the consequences of that drop-off are significant. It is estimated that underinvestment has cost the economy hundreds of billions in lost opportunities since 2006 and is of concern to businesses and government alike.

In our latest report, we’ve taken a deep dive into this investment shortfall to better understand how businesses approach the decision to invest for growth, and what might be holding them back. To consider this, we used quantitative and qualitative data inputs to answer the headline question: What are the major drivers of business investment in the UK today, and how could public policy be used to amplify these to support increased levels of investment?

The investment picture right now

The business investment picture is a complex one. From our research, we know that there is appetite among UK businesses to invest for growth – but it could be higher.

We also know that it’s not as simple as businesses lacking the finance for investment. From our findings, which are drawn from research conducted in Q3 of 2024, we know that businesses have a low appetite for borrowing to invest. Between Q3 2023 and Q3 2024, only 32% of businesses borrowed to invest, and, to avoid borrowing, over a quarter (27%) of businesses told us that they would sooner dip into their cash reserves than look to borrow to invest.

Potentially more concerning is the finding that two out of five firms are not looking to invest for growth in any way. This strongly suggests that much more could be done to inspire confidence and propel firms into investing. 

Portrait image of David Farrow.

“Many businesses want to invest to grow, but there is a job to do in improving confidence and raising awareness of opportunities available to them to do so.”

David Farrow, Head of UK Corporate and Barclaycard Payments Coverage

What is driving investment?

Our research looked to discover what the key drivers of investment were:

  1. Competitive pressure
  2. Digital adoption and resilience
  3. Skills cultivation

What is putting businesses off investing?

As well as analysing what was motivating businesses to invest, our research also looked to discover what the key barriers to investment were. Four came through strongly:

  1. Economic climate and high interest rates.
  2. Political uncertainty.
  3. Business size: In particular, small businesses who feel like they have less capacity to invest.
  4. A lack of skills availability in the employment market.
Portrait image of Hannah Bernard.

“In the UK, low demand for investment is one of the biggest inhibitors of business growth. It’s not that businesses don’t have the means or opportunity to invest, it’s that they don’t have the appetite to do so or lack confidence that it’s worth the risk.”

Hannah Bernard, Head of Business Banking at Barclays UK

Putting investment decisions in context

Looking at these drivers and barriers together, we believe they can be grouped into three 'types' of investment driver that underpin all business investment decisions:

1

Foundational drivers 

Perceptions of risk in the external operating environment. This stems from how confident businesses feel about the current economic climate; political climate; interest rates and geopolitical risk.

2

Necessary drivers

Immediate pressures businesses feel the need to respond to, to survive or keep pace in the market. Our latest research shows that in the UK, businesses currently see investment in digital adoption and resilience; workforce skills development; and competitive pressure as key ‘necessary’ investment drivers.

3

‘Big bet’ drivers

Actions that will materially grow or evolve their business, such as launching a new product line, or merger and acquisition activity. Often businesses will pursue these opportunities when they are considered ‘too good to miss’.

Our policy recommendations

So, what does this mean for public policy? To increase business investment, the government needs to unlock a growth mindset among UK businesses, maximising their appetite for investment across all three categories. We have five recommendations for how this could be done:

 1. Build a narrative 

Government should actively advance a narrative of confidence, aspiration, and ambition, coupled with a rigorous approach to providing long-term policy certainty to boost business confidence.

 2. Give businesses the tools and education they need

Government should pursue more action-oriented positioning of its own SME business support materials to inspire and mobilise smaller businesses to pursue grow ambitions – no matter how modest.

 3. Proactively signpost opportunities

Local government and mayors should be tasked with delivering more proactive signposting of business opportunities within local communities. This should include the development of bespoke local action plans and the use of real-world case studies to bring to life where and how businesses can invest to realise these opportunities.

 4. Make environmental and sustainability investment feel urgent

From our research, it has become clear that businesses do not currently see environmental and sustainable investment as a necessary investment driver.

If the UK is to achieve its NetZero targets and reap the potential economic benefits of transitioning, then the government should be aiming to make environmental and sustainability investment feel like a ‘necessary’ investment driver for all UK businesses.

 5. Set targets for business confidence and track levels

The government should seek to establish an official measure of business confidence levels in the UK – both at a national and regional level – and hold itself publicly accountable to achieving an agreed target level for the UK economy.

Download the report

Read in more detail about the findings and recommendations in our 'Business attitudes to investing' report.

Download the report

About the author

Barclays’ Group Policy Development team creates public policy thought leadership content on behalf of Barclays. Our work draws on the bank’s expertise, data and insights, and is intended to inform the design and application of public policy solutions in response to pressing economic and societal challenges. 

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