Business Outlook 2025 | Christie Finance

With a change of Government last July, followed by the first Labour budget in 14 years, 2024 proved to be a relatively stable year in the SME and commercial property debt markets. 

However, as well received as the reduction of Bank of England base rate in August and November was, the overall movement in rate proved to be much slower than was hoped for as market predictions for 2024 have anticipated rates being nearer 4.25% by the year end.

At the time of writing, base rate sits at 4.75%, only a 0.5% reduction from the 16-year high of 5.25%. Expectations are that base should fall by 0.75%-1% by Q4 2025, signposting further reductions towards a longer term ‘normalised’ target of circa 3% across 2026/27.

As we look ahead to 2025, operational challenges remain at the forefront for so many businesses. In recent years, staff shortages have been a significant issue for many operators in our sectors, an issue which will worsen as businesses now have to price in large National Insurance increases.  Unless these increase costs can be passed to consumers, this will be painful for many operators to absorb.

Despite relatively high borrowing costs and increasing operational challenges, our target market of SME and small corporate operators have proven to show incredible resilience in recent years. We are confident that most business operators will continue to adapt, invest wisely and survive short-term challenges and enjoy longer term success.    

In 2024, demand for our services was at an all-time high, with growth in applications for finance being experienced across all business sectors.

Across both our term debt and unsecured divisions, the care and medical sectors continue to be our busiest/strongest sectors.

Since the launch of our specialist Real Estate division, we’re now able to provide alternative funding solutions for SME’s. This could be through leveraging debt against property assets or facilitating immediate debt needs via specialist bridging lenders.

• Traditional (high street) lenders although still relatively cautious, will improve lending appetite towards some underserved sectors
• Challenger banks, new entrants and private funds will continue to focus on niche areas of SME lending across term debt and unsecured business lending
• If the Bank of England base rate falls, refinancing of debt facilities will be more attractive and attainable
• Although financial incentives are modest, ESG policies will become more relevant for businesses seeking to borrow from mainstream lenders