What the 2025 UK Economy Means for Business Owners & Property Investors

sjohnston90
Aug 18
2 min read

Running a business or managing a property portfolio is never easy—but in today’s economy, it can feel like the rules are changing by the month. Interest rate shifts, stubborn inflation, and cautious lending policies all impact your ability to secure finance.

Here’s what the numbers are telling us, and what they mean for you.

Bank of England: Interest Rates & Inflation

On 7 August 2025, the Bank of England reduced the Base Rate to 4.00%, down from 4.25%.
Inflation remains sticky: CPI rose to 3.6% in June 2025, with forecasts peaking at 3.8% in July.
Economists expect little movement on rates for the rest of 2025.

💡 What this means for you: Borrowing is slightly cheaper, but affordability tests remain strict. Lenders want to see robust cash flow and a clear repayment strategy.

Small Business Confidence Remains Fragile

The Federation of Small Businesses (FSB) reports confidence at -40.7 (Q1 2025), up from -64.5 but still negative.
27% of small business owners expect to shrink, sell, or close within 12 months.
The British Business Bank highlights that SME use of external finance fell from 50% in 2023 to 43% in 2024.
The government estimates that late payments cost small firms on average £21,000 each—slowing growth and investment.

💡 What this means for you: Traditional bank lending is still tight, but specialist and alternative lenders are stepping in with solutions for directors, landlords, and growing SMEs.

Government Measures & Support

Crackdown on late payments: part of the “Small Business Plan” expected to unlock £320 billion in growth by 2030.
HMRC has reduced late-payment interest to 8% (base rate +4%) and repayment rates to 3% (base rate –1%).

💡 What this means for you: Support is available, but preparation is everything. Have your accounts, forecasts, and business plan ready to access funding.

Key Takeaways for 2025

Who	What’s Happening	Action You Should Take
Business Owners	Confidence low, cash flow challenges	Explore alternative finance; chase invoices early
Property Investors	Mortgage rates easing, still above pre-2022 levels	Consider short-term finance with refinance strategy
All Borrowers	Lenders cautious on affordability	Be documentation-ready and present strong financials

Final Word

The UK economy is in a cautious transition. Not a crisis, but not yet comfortable. Those who succeed will:

Prepare early.
Present strong numbers.
Use the full market, not just their bank.

Disclaimer: Finance with Stuart is a personal brand of Stuart Johnston, founder of Kingston Finance Ltd (FRN: 982690). We are a credit broker, not a lender. Your home or property may be at risk if you do not keep up repayments on a loan secured against it.