Almost nine in every 10 (88%) private business owners in London and the South East are confident of delivering growth in 2025, according to KPMG UK’s first-ever Private Enterprise Barometer.
The new poll gauged optimism among 1,500 private business owners, including more than 250 in the capital and the South East, across a range of sectors, including professional services, finance, technology, industrial manufacturing and retail.
More than a third of London and South East firms (36%) identified an improving outlook for the UK economy as the main reason for this confidence.
Looking ahead, over two thirds (68%) plan on diversifying through new products or services in the next five years. Similar numbers (56%) plan to target international expansion in the same time period.
Firms in London were the second most likely of all UK regions to have plans to invest in AI in the future, joint with Scotland (77%) and trailing only the West Midlands (83%).
More than half (58%) of South East firms reported increased demand for their products and services, underpinning the region’s optimism.
Securing and developing the necessary skills for businesses to capitalise on the opportunities of new technologies continues to represent a challenge, though, and firms in the South East were less confident than their peers in being able to recruit people with the right qualifications and experience for their business (48% compared to the national average of 55%). However, more than half (59%) of London firms are confident that they can.
With just a fifth (13%) of firms across London and the South East having difficulty accessing funding, it’s notable that private equity was seen as the most popular external source of funding (cited by 40% of respondents) to support long-term diversification – substantially ahead of bank debt (20%).
Anna Purchas, London office senior partner at KPMG UK, said: “The last few years have not been easy for firms in London or across the South East, but this level of confidence shows the scale of their growth ambitions going into 2025.
“We know that taking advantage of new technology like AI will be vital to achieving those goals – from improving productivity to boosting customer experience – so it’s encouraging to see private businesses are planning to put their weight behind innovation. And, importantly, nurturing talent remains a priority as they do so.
“This balanced approach is what will drive lasting success and deliver sustained growth across the wider UK economy.”
National outlook
92% of Britain’s private business owners are confident of growth in 2025. Those businesses with lower degrees of confidence highlighted challenges such as increased competition and access to funding as limiting factors.
When it comes to areas of planned investment over the next 12 months, technology was ranked as the highest priority (63%), followed by skills and workforce (49%). Of those looking at future tech investment, almost three quarters (73%) plan to invest in AI to improve the customer experience.
Euan West, head of KPMG Private Enterprise in the UK and EMA, said: “2024 has been a turbulent year, so it’s pleasing to see that private businesses are showing resilience and casting a very positive outlook for growth and investment in 2025 and beyond.
“Going into 2025 buoyed by this optimism will help these firms drive results in what will likely be another tough year.
“Investment in areas like technology and talent will be essential for firms to realise their growth ambitions and make a significant impact on the UK’s economic health.”
