UK debt advisers see muted deal activity

Almost two thirds of UK debt advisers reported flat or declining deal activity in the lower mid-market in the first few months of 2025, new research has found.

A survey of 70 advisers by UK alternative business lender ThinCats found that 38 per cent reported a decline in deal activity in the first few months of 2025, with a further 27 per cent saying the market was flat.

Advisers highlighted macroeconomic uncertainty and deal quality as the primary constraints on activity, with 34 per cent reporting a reduction in their own deal pipelines.

Read more: FCA: Private markets will boost UK growth

However, concerns around interest rates fell, and advisers reported that funding availability remains stable.

And almost half (48 per cent) reported increasing demand for funding from owner-managed businesses.

Most advisers are not confident about the UK’s economic outlook but sentiment is improving.

35 per cent expressed ‘cautious optimism’, a higher proportion compared to ThinCats’ previous survey, while 23 per cent were pessimistic.

Read more: UK spending review: British Business Bank gets £10.3bn funding boost

Just six per cent of UK advisers think that government policy is supportive of SME growth, while 52 per cent believe that current policies are unsupportive.

Respondents highlighted measures such as National Insurance tax increases and employment reforms as key barriers to growth.

“It has been a challenging few months in the lending market,” said Ravi Anand, managing director of ThinCats.

“But to see the majority of advisers report that they believe the current government’s approach to be actively damaging to UK SMEs is troubling to see. Following the Autumn Statement, many businesses have basically paused on any growth or acquisitions. “Wider geopolitical issues are raising concerns about government debt and expectations of rate decreases by the Bank of England. Despite these challenges, the good news is that businesses in the mid-market are resilient and advisers are picking up on positive sentiment. Hopefully, we will see more activity into the rest of 2025.”

Read more: UK government to force pension schemes to invest in private markets