Expectations of SMEs reach highest level since Russian invasion of Ukraine began

The economic prospects of small and medium-sized enterprises (SMEs) have improved slightly from last spring, the most recent SME Barometer shows. The outlook is also more positive than a year ago, driven by low inflation and falling interest rates. The challenging situation of construction companies, in particular, appears to be easing.

The economic expectations of SMEs are slightly more positive than before, and there are more SMEs anticipating an improvement than those expecting the situation to deteriorate. The outlook is based on expectations of general economic recovery, which in turn largely depends on stronger private consumption. However, there are uncertainties involved and companies are monitoring the situation with cautious optimism.

“The economic outlook of SMEs has turned more positive compared with spring. This indicates that a recovery is on the way. Vibrant SMEs are essential for economic growth, employment and investments,” says Minister of Economic Affairs Sakari Puisto.

The SME Barometer is published twice a year by the Federation of Finnish Enterprises, Finnvera and the Ministry of Economic Affairs and Employment.

Willingness to invest remains subdued but hiring is expected to grow 

Willingness of SMEs to invest is rising, but it is still modest. Of all sectors, only within industry there are more companies increasing their investments than those expected to reduce investments.

Compared to the spring barometer, however, SMEs’ plans to recruit employees have strengthened. Among all SMEs, 14 per cent intend to increase the number of staff, while 11 per cent expect the number of staff to fall. However, most SMEs (75 per cent) plan to retain the current number of employees.

Customs policy increases costs and competition

During 2025, the export expectations of SMEs have come under pressure from strained trade relations caused by the US customs policy. Approximately every tenth SME reported that their costs have increased due to the international tariff policy or other trade restrictions. In addition, a similar proportion of SMEs have faced tougher competition as a result of tariffs.

“Uncertainty about the rules of international trade have caused concern for entrepreneurs this year. For companies exporting to the US, the operating environment has been exceptionally opaque and the 15 per cent customs duty imposed by the US creates a significant disadvantage for many SMEs. Companies need predictability and trade that is as free of barriers as possible so that they dare to make investments and expand to international markets,” says Juhana Brotherus, Chief Economist at the Federation of Finnish Enterprises.

SMEs’ growth orientation is at a stable but modest level

The growth orientation of SMEs has decreased for a long time, but the latest data indicate that the situation has stabilised. More than one third of SMEs reported that they are either seeking strong growth or seeking growth when it is possible. In particular, the proportion of companies seeking growth when it is possible has risen slightly from the record low reached last year. As a whole, however, growth orientation remains at a subdued level compared with previous years.
 
“Growth companies are important, because they create new innovations and act as drivers of growth spurring other companies on. A positive sign of the economic recovery is that the prospects of young SMEs remain upbeat. Finland needs more growth orientation and entrepreneurs willing to take bold risks,” says Brotherus.

R&D to offer growth

The success and growth of companies are based on skills, new knowledge and innovations. Every fourth SME said they are engaged in research and development (R&D) activities. R&D was most common in the industrial sector, where 37 per cent of companies reported of such activities. Meanwhile, five per cent of SMEs that are not yet engaged in R&D activities are planning to launch them over the next year. This is a positive sign.

The most common sources of public funding for research and development are local and regional authorities, such as ELY Centres and, at the national level, Business Finland.

“It is promising that SMEs are willing to increase their R&D activities. We absolutely need more productivity and growth in the Finnish economy. The Government is committed to the 4 per cent R&D target by 2030, in accordance with the parliamentary plan. The intention is that one third of this funding will come from the public purse and two thirds from companies,” says Minister of Economic Affairs Puisto. 

Financing environment is challenging but companies can still make important growth investments

The bottom of the business cycle for SMEs appears to have passed, but there are still challenges in the availability of financing. In the autumn Barometer, 43 per cent of the companies requiring financing stated that they had not obtained financing nor applied for it despite the need. The corresponding figure in spring 2021 was 25 per cent. 

“On the other hand, the financial situation of companies is no longer deteriorating and the need for working capital has fallen, in fact. Only 15 per cent of the respondents are facing challenges related to the availability of funding. Instead of increasing their financial buffers against uncertainty, I encourage companies to initiate forward-looking investments. They are the most means to ensure growth and competitiveness. Now is the right time for investments, as demand in Finland’s neighbouring markets is growing, availability of skilled labour is high and interest rates are low,” says Juha Ketola, Executive Vice President at Finnvera.

Increasingly, Finnvera is required to guarantee the bank loans of companies. Up to 64 per cent of SMEs seeking strong growth were required to obtain Finnvera’s guarantee before being granted bank financing.

“Finnvera’s basic task is to complement the financial markets in areas where financing challenges are greatest. The self-sufficiency of SMEs has increased and more and more companies are free of debt. If necessary, we also encourage businesses to take loans to finance growth. Exports are key to growth, and, in the current environment, tapping into new markets as well. It is a big question whether SMEs have enough information on how to protect themselves against export risks or use financing to conduct trade,” Ketola adds.

The SME Barometer is published twice a year by the Federation of Finnish Enterprises, Finnvera and the Ministry of Economic Affairs and Employment. This time, 4200 companies responded to the survey, which was conducted from mid-June 2025 to mid-July 2025. 

Inquiries:
Lars Aikala, Special Adviser to the Minister of Economic Affairs, tel. +358 50 401 6410, [email protected]
Juhana Brotherus, Chief Economist, Federation of Finnish Enterprises, tel. +358 50 384 9479, [email protected]  
Juha Ketola, Executive Vice President, SMEs and midcaps, Finnvera, tel. +358 29 460 2658, [email protected] 
Katri Lehtonen, Development Director, Ministry of Economic Affairs and Employment, tel. +358 50 526 2515, [email protected]