UK businesses have doubled their reliance on borrowing in a year, as mounting cost pressures force companies to seek finance while others ramp up investment in technology, research and expansion.
More than half of business leaders — 56 per cent — said their companies had taken on new borrowing or credit arrangements over the past 12 months, compared with just 28 per cent in 2025, according to research by HSBC UK.
The findings, based on a survey of more than 1,000 business leaders, underline the growing pressure on corporate finances as firms contend with persistent inflation, rising utility bills, higher labour costs and a surge in fuel prices following the conflict in the Middle East.
The survey found that 82 per cent of businesses identified cost reduction as a strategic priority, while 79 per cent were focused on protecting cash flow and liquidity.
James Cundy, head of mid-market corporates at HSBC UK, said some companies had turned to borrowing to manage continuing cost pressures.
Cost management and liquidity remained priorities for management teams, he said, but investment was also emerging as an increasingly important driver of demand for finance.
“We’re seeing many businesses focus investment on productivity improvements through technology and workforce skills, while others are using finance to pursue consolidation opportunities and strengthen their market position,” Mr Cundy said.
Companies pursuing growth were more likely to seek new finance, with mergers and acquisitions among the intended uses of the funds.
Across the wider business population, digital technology, research and development, product launches and expansion into new markets ranked among the leading investment priorities.
The figures point to a divided corporate landscape: borrowing is helping some firms weather mounting expenses, while others are using external finance to position themselves for growth.
Technology investment has remained one of the brighter spots in an otherwise difficult economic environment, particularly as businesses seek productivity gains from artificial intelligence.
Recent UK gross domestic product figures showed that AI-related spending helped drive growth in July. Businesses recording some of the largest turnovers were also identified as operating in AI and cloud computing-related activities.
However, the doubling in borrowing highlights the financial demands facing companies as they attempt to balance immediate survival with longer-term investment — leaving cash flow, financing costs and productivity central to their prospects.
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