Increased business lending paints a positive picture of UK growth

There’s no denying the UK economy has seen its fair share of challenges in recent years. Neither the pandemic nor the subsequent period of soaring prices and economic tumult was kind to businesses or consumers, and a general state of economic apprehension appeared commonplace.

But a remarkable quality of British industry is its ability to demonstrate resilience in the face of such economic woes; and after a challenging past few years, we have begun to see positive signs that the UK economy could be turning a corner.

After a significant period of macroeconomic instability, there are positive signs that conditions are improving for UK businesses. This is reflected in better than anticipated retail sales data published by the ONS showing 1.7% growth in January 2025,¹ alongside improvements in the labour market; with January seeing the first increase in payrolled employees since August 2024. These positive developments have certainly been a pleasant surprise for many market-watchers, and suggest that businesses may now have a somewhat surer footing on which to begin flexing their growth ambitions.

It would appear that despite recent economic challenges, shafts of sunlight appear to be breaking through any sense of economic gloom. The last quarter of 2024 revealed the first signs of positive economic growth amid a backdrop of strengthening wages and resilience in the production and service sectors.²

There are also encouraging signs that falling interest rates and reduced borrowing costs are feeding into the borrowing appetite of businesses, with the Bank of England (BoE) reporting corporate lending volumes growing by around 2% in 2024³ and EY anticipating bank lending to businesses to grow by 4.5% net in 2025, rising to 6% by 2027.⁴ The SME sector also experienced four consecutive months of growth up to January 2025, the first such period of consecutive growth since March 2021.⁵

This would represent the strongest growth we have seen since 2020, suggesting a significant change of tone for the UK’s economic prospects; with increased momentum in the markets supporting increased lending.

2025 has so far continued this upwards trend. BoE figures showed that non-financial businesses borrowed £2.4 billion of loans in January 2025; with the annual growth rate of borrowing for large businesses increasing to 4% in January this year, compared to 3.9% in December 2024.⁶

This mood shift is also felt by many business leaders, with reports of rising CEO confidence following the US election as businesses pursue transformation processes to ensure competitiveness in a changing global economy.⁷ It’s notable that the UK has also begun topping the charts of global investment destinations, with PwC’s annual UK CEO Survey ranking Britain as the second most attractive country for investment behind America; beating Germany, China and India in the top-five rankings.⁸

High-profile business challenges tend to shape media narratives; but sometimes a broader perspective tells a different story. As part of our daily work supporting business borrowing, HSBC UK is in the privileged position of being able to take a more granular look at the state of business activity within the UK. The picture we see emerging is a cautiously positive one.

Our lending team regularly works with companies large and small to facilitate a diverse range of borrowing needs. Whether supporting early-stage companies with their first lending facilities, connecting more mature businesses to credit facilities, or helping larger corporates enter syndicate deals, we have observed the reported uptick in business lending first-hand. We also have experience of how the borrowing activity of larger corporates drives lending for smaller businesses and mid-market enterprises (MMEs); reflected in an increase in new deal volumes coming across our desks, a promising growing trend for 2025.

HSBC UK recently provided a manufacturer with a £35 million revolving credit facility (RCF) and £12 million term loan facility, and contributed to an £80 million syndicate deal providing a debt facility for a surgical products company supporting its position as a leader in its industry. Our role as a trusted, expert partner, with market-leading corporate financing expertise is crucial to helping businesses like these expand internationally with the help of bespoke financing solutions and in-depth market insights.

HSBC UK prides itself on a depth of market insight that is hard to match: with analysis by Dealogic showing the bank supporting the highest number of multi-banked lending transactions compared to other lenders since 2014. We combine industry expert advice provided by our banking specialists, helping deliver personalised service and expert insights; connecting our clients to our extensive global network of specialists serving over 50 markets.⁹ This complements the UK focus of our corporate financing team, which also has a regional presence in areas such as Manchester, Birmingham, Bristol and London.

Our product-agnostic lending team serves as a trusted partner for the businesses we lend to, prioritising the delivery of solutions that are calibrated to the needs of our clients rather than an over-reliance on product-led outcomes. This bespoke approach to business lending helps us play an active role in providing comprehensive loan and capital market solutions for UK companies from start-ups to FTSE 100 companies.