Country Insight Report Summary: June 2025

Despite ongoing tariff uncertainty and stubborn inflation, UK businesses are showing signs of resilience into Q3 of 2025.

Dun & Bradstreet’s latest UK Country Insight Report highlights the current UK macro-economic outlook and key credit trends.

Elevated risk persists but glimmers of recovery emerge 

The UK’s credit environment is currently rated a slight risk, reflecting increased chances of delayed or non-payments. It was downgraded from DB3a earlier in the year to DB3b due to sluggish economic growth and persistent inflation. 

Inflationary pressures are being driven by factors including high energy costs, with the Bank of England (BoE) forecasting inflation to peak at around 3.7% in September.  

Overall, the UK economy is growing slowly, with GDP forecast to rise by just 1.0% in 2025, a small slowdown on the 1.1% growth seen in 2024. 

Although financial conditions remain tight, the UK macro-economic outlook is stable and business confidence is growing.

SMEs face high lending rates and tighter credit terms

Businesses, particularly SMEs, continue to face pressures from high borrowing costs and limited access to affordable credit. Business lending rates have come down marginally from their 2023 peak but remain high compared with historical averages. 

Insolvency risks remain an issue for SMEs. As a result, at-risk businesses will need to actively monitor and manage their exposure to delayed and non-payments, which could further destabilise cash flows. 

UK interest rates are a critical factor too. Dun & Bradstreet’s Global Business Optimism Insights report found that 46% of UK firms view domestic rates as a key consideration in making investment decisions for Q3, the second highest of global economies surveyed.

The BoE has been more cautious in lowering interest rates than the European Central Bank due to stubbornly high inflation and patchy economic growth. However, this may shift as inflation in the Euro area risks undershooting target and the UK economy may need a shot in the arm. 

While recent trade deals with India, the US and the EU provide some relief to specific sectors like agriculture and automobile manufacturing, their overall impact on GDP is expected to be negligible.

Credit sentiment could be turning a corner

Despite tariff uncertainty and ongoing global trade concerns, there are signs of growing confidence among businesses.

The UK was one of only four out of 32 major world economies not to report a decline in business optimism for Q3 2025, according to D&B’s Global Business Financial Confidence Index. This was an improvement on the Q1 and Q2 reports, which highlighted a drop in UK business optimism following the 2024 Autumn Budget. 

In summary

While the UK economy and credit landscape remain complex, there is a clear shift towards increased stability and improved business sentiment. 

A brighter backdrop is emerging. The latest data shows that real wages are rising faster in the UK than in other European economies. If sustained, this uptick could bolster customer creditworthiness.

In addition, risks that defined 2024 are now being offset by more positive indicators. Stronger investment, healthier wage growth and sectoral recovery are improving credit dynamics.

Businesses should continue to maintain robust risk controls but can begin to plan with cautious optimism, exploring opportunities arising from recent trade agreements. 

Interested in accessing in-depth analysis of the UK's risk & opportunities in relation to the global and regional business environment? Visit our D&B Country Insights page to find out more today. 

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