London & South East Private Business Owners Optimistic for 2025
Private business owners, often navigating through economic uncertainty and global challenges, are looking for signs of optimism to assess their future prospects. A recent report by KPMG UK, the first-ever Private Enterprise Barometer, has provided a much-needed ray of hope for privately held firms in London and the South East. According to the findings, a significant 88% of private business owners in the region are optimistic about achieving growth in 2025.
This confidence comes despite the economic turbulence that private business owners have had to navigate over the past few years. The poll, which surveyed 1,500 private business owners across the UK, revealed that over 250 of those respondents were from London and the South East. The study spans a range of industries, including professional services, finance, technology, industrial manufacturing, and retail, providing a comprehensive view of business sentiment across different sectors.
Factors Driving Optimism Among Private Business Owners in London
So, what’s fueling this optimism among private business owners in London and the South East? The survey revealed that 36% of businesses in the region attribute their confidence to an improving outlook for the UK economy. While many private business owners continue to face challenges, such as the ongoing impact of the pandemic, supply chain disruptions, and global geopolitical uncertainty, the general sentiment points to a steady recovery.
Despite economic pressures, private business owners in London and the South East are clearly focused on growth, especially as we move toward 2025. For many, the goal is not just to survive but to thrive by pursuing strategic plans for expansion and innovation.
Private Business Owners Plan Diversification and Global Expansion for Growth
Looking ahead, two-thirds (68%) of businesses in the region plan to diversify by offering new products or services over the next five years. This trend is expected to provide firms with the flexibility to tap into new revenue streams and manage risks in a volatile economy. Additionally, 56% of businesses plan to target international markets for expansion, driven by the globalisation of industries and the opportunities available for UK businesses abroad.
For businesses in London, innovation is at the forefront of their plans for expansion. According to the survey, London firms are the second most likely to invest in artificial intelligence (AI), with 77% of businesses indicating that they plan to incorporate AI into their operations. This puts London alongside Scotland, with the West Midlands leading the charge at 83%. These investments are primarily aimed at improving customer experiences, increasing productivity, and developing new business models.
Private Business Owners Focus on Technology and Talent to Drive Growth
Technology continues to be a critical driver for growth, and this is evident in the survey’s findings for private business owners in the South East. Over half (58%) of private firms reported a rise in demand for their products and services, signaling positive future growth potential. However, securing the right talent remains a significant challenge for many private business owners in the region.
While private business owners in London are relatively confident in their ability to recruit talent (59% expressed confidence), South East private businesses are less optimistic, with only 48% confident in their ability to find employees with the necessary skills and experience. The national average for this confidence level stands at 55%, so private firms in the South East have room for improvement. This highlights the ongoing skills gap in the workforce, particularly when it comes to high-demand fields like technology and AI.
The competition for talent has intensified, and private business owners are increasingly looking for ways to upskill their existing employees. By investing in training and development, companies can help address the talent shortage while ensuring they stay ahead of the curve in adopting new technologies.
Funding and Investment in the Future
Access to funding is always a crucial element for any business that seeks to grow, especially for those looking to diversify and expand into new markets. The KPMG survey found that only 13% of firms in London and the South East reported difficulty accessing funding. Interestingly, private equity was seen as the most popular external funding source for long-term diversification, with 40% of respondents citing it as their preferred option. This is a significant jump from the 20% who rely on bank debt.
This preference for private equity reflects a broader trend in business financing, where companies are turning to alternative funding sources that can offer more flexibility and less risk. As businesses look to implement their growth strategies and make technological investments, the role of private equity is becoming increasingly important.
The Role of Artificial Intelligence and Technology Investments
Among the most exciting aspects of this report is the growing focus on AI and technology among private business owners. Across the UK, 63% of private business owners plan to prioritize technology investments in the next 12 months, with a strong emphasis on AI. Nearly three-quarters (73%) of private business owners planning to invest in AI intend to use it to enhance customer experiences, a crucial area as businesses look to differentiate themselves in a competitive marketplace.
This focus on technology is part of a broader strategy for private business owners to drive innovation, increase productivity, and stay ahead of competitors. AI, machine learning, and automation offer private business owners the tools they need to streamline operations, reduce costs, and improve service delivery. For private business owners in London and the South East, investing in these technologies is an essential part of their growth plans.
National Outlook: Resilience Across the UK
While private business owners in London and the South East are particularly optimistic, the national outlook is also encouraging. A nationwide survey of 92% of private business owners across the UK revealed similar confidence in achieving growth in 2025. However, private business owners with lower levels of confidence highlighted increased competition and access to funding as primary concerns.
As the UK looks toward 2025, private business owners must continue to focus on technology investments and the development of a skilled workforce. Technology will be the key to remaining competitive, and businesses that fail to invest in these areas risk falling behind.
Regional Comparisons: A Broader Picture of Confidence
In comparing the optimism in London and the South East with other regions, we see varying levels of confidence and differing strategies. For example, businesses in Scotland and the West Midlands are also investing heavily in artificial intelligence and technological innovation, but the dynamics in more rural areas, such as the North and the South West, tell a different story. Private business owners outside of the South East often cite challenges in accessing funding and skilled talent as greater obstacles. In particular, businesses in these regions have lower confidence in recruiting employees with the necessary technical skills, a trend that mirrors the challenges faced in the South East but at a larger scale.
Such regional disparities underscore the importance of targeted support for businesses across the UK. While businesses in London and the South East remain focused on international expansion and technology investments, regions with unique challenges may require additional infrastructure and investment to thrive equally in the post-2025 landscape.
Conclusion: Resilient and Ready for 2025
The findings of KPMG’s Private Enterprise Barometer provide a clear message: despite the economic turbulence of recent years, private business owners in London and the South East are poised for growth. With a strong focus on diversification, international expansion, and technological innovation, these private business owners are laying the groundwork for long-term success.
As we approach 2025, the optimism shown by these private business owners serves as a reminder that businesses, even in challenging times, can remain resilient. By focusing on emerging technologies, nurturing talent, and finding alternative funding sources, private business owners in London and the South East are set to drive the UK economy forward in the years to come.
