Driving UK growth in 2025: Big steps to stimulate business productivity

In 2025 the UK economy is expected to grow modestly with GDP predicted to rise by 1.5%. While this marks an improvement from recent years, the UK continues to lag other major global economies such as the US and Germany. External factors and macroeconomic conditions have affected productivity and investment, contributing to this slowdown in growth. 

To address these issues, the UK government is looking to kickstart growth by creating a pro-business environment which delivers economic stability and encourages better collaboration between government, business and trade. But to stimulate growth, there need to be financial incentives and investment opportunities in place for organisations to use as support.

Financial incentives to support business investment

For companies and their finance functions, there is an opportunity to take advantage of the government’s pro-business approach (and the financial incentives that should be offered as a result) to adopt new solutions that drive innovation and deliver better results for the organisation.

The government has already laid the groundwork for boosting business investment through a range of measures such as the Enterprise Investment Scheme, now extended until 2035, which encourages investment in start-ups and high-growth companies by providing tax relief for investors while ensuring access to capital for SMEs. Given the increase in National Insurance Contributions for employers, which will impact all businesses but especially small to medium-sized ones, schemes such as this are crucial. They help ensure the UK is seen as a competitive landscape for enterprise investment, which will continue to positively impact job and wage growth across the country.

Elsewhere, businesses can continue to claim tax relief on qualifying research and development activities. The government estimates that the UK’s market for ensuring the trustworthiness of AI systems will grow six-fold over the next decade, unlocking more than £6.5 billion. AI is expected to play a central role in reforming the country’s public services and boosting the business economy.

But delivering economic growth requires investment, which is where research and development tax relief for businesses is a vital incentive. Enabling companies to claim relief on qualifying R&D activities will play a long-term impact in reducing the costs of innovation, again ensuring the UK is positioning itself as a competitive player in the tech space.

An additional incentive that finance departments can use to their advantage is maintaining the corporate tax rate capped at 25%. Providing businesses with stability and predictability in a challenging economic environment will help finance teams plan, budget, and make investment decisions with more confidence. This can also help with collaboration across the company by providing a clearer line of sight into how the business is performing. As a result, more projects may be approved, shifting the perception of the finance team from “no people” to “yes people.”

The role of automation and technology

To make the most of these incentives, businesses must focus on integrating automation and technology into their operations. Automation is crucial for cutting costs, boosting productivity, and improving accuracy by removing manual errors. For finance teams, this is not just an opportunity – it’s essential.

For example, many finance teams are still heavily reliant on time consuming processes. In fact, 38% of payroll professionals still manually input all their data. Adopting digital tools to automate these tasks would allow teams to increase efficiency, focusing on more important tasks.

AI is another game-changer for finance. By automating repetitive tasks such as invoice processing and reconciliations, AI frees up employees’ time to focus on high-value work, like forecasting, planning, and strategy. With initiatives such as Making Tax Digital driving the adoption of digital processes, finance teams must modernise their systems to stay compliant, competitive, and ultimately high performing.

Beyond improving productivity, technology adoption can drive broader business transformation. For example, data-driven insights from automation tools help businesses spot trends, improve processes, and encourage innovation. However, to make the most of these benefits, businesses need to focus on training staff and promoting a culture of ongoing improvement.

2025 – a growth year for the UK?

The financial incentives announced by the UK government have the potential to create a more competitive, resilient, and innovative business landscape. However, their success will depend on collaboration between the private and public sectors, as well as businesses being open to change.

For finance leaders, this is a pivotal moment. By using government incentives and adopting automation and digital tools, they can reduce costs, improve efficiencies, and set their businesses up for long-term growth. Those who act now to modernise their finance functions will be in the best position to succeed and become truly high performing in a fast-changing economy.