UK Economy review May 2025: Updates on UK-EU Agreements, Defense SME support, and rising financial distress.

UK-EU Agreement

New trade deal signed with the EU includes easier food export rules, youth exchange (Erasmus+), and reduced border checks. Some concerns raised by fishing industry.

Support for Defense SMEs

New government package to boost defense innovation. Faster equipment procurement (6 years → 2 years). £400 million innovation fund launching by July 2025. New defense tech marketplace pilot underway.

Financial Distress Rising

Over 45,000 UK businesses in “critical financial distress” (Q1 2025) according to Begbies Traynor. Worst-hit sectors: hospitality, retail, travel. Rising costs from tax, NI, and minimum wage increases are key factors.

SME Optimism & Investment

92% of SMEs feel positive about growth this year (KPMG survey). Focus on investing in Tech and automation, Expansion into EU and North America, and R&D for innovation.

Key Takeaways: Trade Opportunities may open up markets. Consumer Spending could boost tourism. Staying informed about these developments will be crucial for strategic planning.