More than half of Britain’s medium-sized companies are preparing to invest substantial sums to expand their operations over the next five years, according to a recent report by BDO, the accountancy and business advisory firm.

The survey, which polled 500 companies with annual revenues ranging from £10 million to £300 million, revealed that 51% of respondents are gearing up to invest more than £3 million each in growth initiatives. This surge in planned investment highlights a growing optimism among these businesses about their future prospects.

Nearly two-fifths of the surveyed companies intend to channel the majority of their investments within the UK, indicating strong domestic growth ambitions. Additionally, 24% of the businesses are focusing on securing new investment capital this year, seeking funding from private equity firms, venture capital investors, and bank lending.

Despite the economic challenges of recent years, a quarter of the businesses expressed a positive outlook for the future, while 18% were more pessimistic.

This wave of optimism comes as a boost to the new Labour government and Chancellor Rachel Reeves, who has prioritised economic growth in her policy agenda. The past two years have seen households and businesses grapple with soaring inflation and rising interest rates, with inflation peaking at a 41-year high of 11.1% in October 2022. However, it has since fallen to the Bank of England’s target of 2%, raising hopes for a potential cut in the base interest rate, which currently stands at a 16-year high of 5.25%.

“With a new government in place and inflation hitting the Bank of England’s 2% target in May, it looks like businesses may have some reason to be optimistic after years of challenging economic conditions and uncertainty,” said Richard Austin, a partner at BDO. He added that the intention of mid-sized businesses to invest is “good news for the new government,” emphasizing the need for policymakers to create an environment conducive to business growth.

The survey also highlighted a significant area where medium-sized firms seek government support: hiring. Nearly half (47%) of the respondents urged ministers to take steps to improve recruitment capabilities, including revamping the apprenticeship levy to better support their hiring needs.

This growing trend of investment and optimism among mid-sized businesses suggests a potential rebound in the UK’s economic landscape, driven by proactive measures from both the business sector and government.

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Mid-sized firms set their sights on growth, planning £3m investment over five years