South East mid-sized businesses are reporting stronger-than-expected performance in 2025, fuelled by expansion into new markets and resilient customer demand, according to the latest Economic Engine research from accounting and business advisory firm BDO.
The survey of over 500 mid-sized business leaders shows three quarters (76%) have already beaten growth targets set at the start of the year, with one in five (21%) saying they have significantly exceeded expectations.
Expansion into new markets (50%) was a key driver of outperformance, supported by resilient customer demand (50%). This positive trading picture is translating into continued capital commitment. Nearly three quarters (71%) are holding investment steady, with more than a quarter (29%) stepping it up.
These figures suggest regional companies are backing their own pipelines and balance sheets, even as wider economic sentiment remains subdued.
Despite their strong performance, confidence in the UK as a place to grow remains limited for some South East businesses.
Nearly half (47%) of mid-sized companies surveyed describe the UK as a “strong environment” for long-term business growth, while 53% say conditions have become more challenging. One in 10 (12%) are already shifting operations or investment overseas.
That caution reflects persistent structural pressures. On workforce issues, nearly a third (32%) cite plugging skills gaps as their biggest challenge.
Rising wage expectations are another significant pressure (26%), reflecting the ongoing effects of inflation and higher National Insurance contributions. Operationally, managing supply chain disruption is one of the most pressing barriers to growth (38%).
At the same time, while AI is seen as a driver of productivity, nearly a quarter of South East companies (24%) cite adopting new technologies as a challenge, highlighting the uneven pace of digital transformation across the mid-market.
To fuel their growth, South East mid-sized businesses are looking to form strategic partnerships, such as joint ventures and supplier collaborations (65%), and expand their physical footprint (47%).
Phil Cliftlands, regional managing partner at BDO in the South East, said: “These findings highlight the strength of the South East’s mid-market – businesses are delivering growth and continuing to invest despite challenging conditions. But they also carry a warning; confidence in the UK as a place to scale is not guaranteed.
“With mid-sized businesses continuing to contribute significantly to the regional economy, creating a wealth of additional jobs to boost the future outlook in the South East, the government will want to use the Autumn Budget to reassure this segment of the market and address persistent barriers around skills, costs and competitiveness.
“Only with the mid-market firmly and confidently anchored in the South East, will we see the growth the regional economy needs.”
