Friday 17 October, 2025
NatWest’s Mid-Market Growth Tracker marks more than four-and-a-half years of expanding output levels
The UK mid-market has demonstrated resilience as solid growth has been maintained in the third quarter of 2025, according to the latest data from NatWest’s Mid-Market Growth Tracker. This marks more than four-and-a-half years of expanding output levels.
Key findings from the report show that business activity growth was led by mid-market service providers in September, with elevated growth expectations reported at mid-market firms, helped by easing input cost inflation. However, small and medium-sized enterprises (SMEs) experienced another decline in business activity, although new orders fell to the smallest extent seen so far in 2025.
The Tracker, which surveyed mid-market businesses operating in the manufacturing and services sectors, fell from August’s 13-month high of 56.4 to 51.6 in September. While some mid-market firms mentioned that a tentative pick-up in market conditions and new customer wins had supported growth, others noted subdued business investment and soft consumer demand as limiting factors.
Mid-market growth continued to be centred on the services economy (index: 52.6), although the expansion here was the weakest in four months and only modest overall. Manufacturing output, on the other hand, fell at a solid pace, the quickest seen in ten months (index: 46.4).
Sebastian Burnside, NatWest’s Chief Economist, said, “UK business confidence has been on a rollercoaster ride over the last three months, but mid-market firms rounded out the quarter in a solid position. With so much changing on both domestic and international fronts, it’s no surprise to see activity vary substantially from month to month. But it’s encouraging to see businesses reporting signs of cost pressures starting to ease, hopefully setting the scene for stronger growth into 2026.”
Andy Gray, Managing Director of Commercial Mid-Market at NatWest, added, “The resilience and adaptability of the UK’s mid-market firms is clearly demonstrated, as they continue to drive growth even as broader market conditions remain mixed. While challenges persist, particularly for SMEs, it’s encouraging to see that mid-market businesses are showing elevated growth expectations and responding positively to easing cost pressures. At NatWest, we remain committed to supporting businesses as they navigate the evolving economic landscape and seize new opportunities for expansion.”
Despite the overall positive outlook for mid-market companies, the report also highlighted some challenges. Total new business placed at small and medium-size firms decreased for the tenth successive month in September, although it was the least marked decrease since December 2024. Across the mid-market, the overall volume of new work fell in September, marking the second reduction in three months.
Employment numbers at SMEs decreased for the twelfth consecutive month in September, although the degree of job losses remained less marked than across the UK private sector as a whole. At the mid-market level, the level of employment was solid, marking the sixth reduction in successive months.
Cost burdens faced by mid-market businesses continued to rise sharply at the end of the third quarter. However, the overall rate of cost inflation fell to its lowest since November 2024 and was below the post-pandemic average. At SMEs, overall cost inflation was the second-lowest since December 2024, with construction, manufacturing, and service providers all recording slower rates of cost inflation than in the first half of the year.
Despite some challenges, overall confidence levels remain positive for both mid-market and SMEs. SMEs remained confident about their own business prospects for the year ahead, although optimism levels slipped from August’s 10-month high. Similarly, mid-market companies were generally upbeat in September, with the Future Activity Index recovering back above its long-run average.
In conclusion, the NatWest Mid-Market Growth Tracker demonstrates the resilience of the UK mid-market, which has maintained solid growth in the third quarter of 2025. While challenges persist, businesses are showing elevated expectations and responding positively to easing cost pressures. NatWest remains committed to supporting businesses as they navigate the changing economic landscape and capitalize on new opportunities for expansion.
Derick is an experienced reporter having held multiple senior roles for large publishers across Europe. Specialist subjects include small business and financial emerging markets.