The Department for Business and Trade (DBT) has announced millions of pounds of investment in a bid to ensure “promising UK companies can scale up at home”, rather than moving their operations overseas.

It confirmed that the British Business Bank (BBB) will provide £100m to investment funds focused on life sciences and cutting-edge technologies, as well as a £25m investment in AI-led customer services and billing firm Kraken (a spin-off from energy company Octopus).

The Kraken investment is the first direct investment by the government-funded bank, a notable move, according to David Petrie, ICAEW’s Head of Corporate Finance.

“Kraken looks like a great business and this direct investment by the BBB looks like a clear step change in its business model,” he says. “If this strategic stake ensures that Kraken chooses to list in London, then it looks like good value for money for the British taxpayer.”

Backing batteries

Alongside the BBB’s investment plans, the DBT revealed that £180m has been earmarked to support research and development in UK battery manufacturing, one of the sectors highlighted as a priority for growth in the government’s industrial strategy published in June 2025.

The support is aimed at start-ups and scale-ups, and aims to encourage greater private investment by matching funds through ‘investor partnership grants’.

“Long-term support for valuable infrastructure projects and innovative technologies, such as battery storage, is exactly what the BBB was created to support,” says Petrie. “Areas like these where there are equity gaps and returns may be longer term, are entirely understandable options for public capital to support.”

More than funds needed

While access to funds is one aspect of growth, ICAEW’s Head of Business, Simon Gray argues that the government must do more if it is to deliver on its plans for growth and inspire businesses to act on scale up ambitions.

“Our Business Confidence Monitor shows that appetite for investment among UK businesses continues to wane, which means that even if funds are available you won’t see investments being made,” says Gray.

“That lack of appetite is driven by uncertainty – both economic and political. Businesses are wanting to have a sense of economic stability, but also consistency around policy, which has arguably gotten worse in the UK with multiple policy u-turns in recent months.”

Figures from the Office for National Statistics published at the same time as DBT’s announcement, confirmed that employment levels remained at their lowest level since 2021 and wage growth in the private sector had slowed to its lowest rate in five years.

ICAEW’s Director, Economies, Suren Thiru, said: “The figures show that the UK labour market ended 2025 in poor health as skyrocketing staffing costs and concerns over the Employment Rights Bill increasingly hampered hiring and limited pay awards”.

Certainty, clarity and cost cutting

The results of ICAEW’s latest Business Confidence Monitor revealed confidence had fallen for the six consecutive quarter to its lowest rate for three years.

Uncertainty over the Budget and its financial implications were seen as contributing factors in declining confidence with the tax burden and regulation sited as the two biggest barriers to business performance.

ICAEW has been consistently urging government to tackle uncertainty, as well as the administrative and tax burdens facing businesses over the past year. 

Alan Vallance, ICAEW Chief Executive, said: “It is incumbent on government to deliver the conditions businesses need for growth. There are amazing businesses across the UK with huge potential to grow if complexity, cost and uncertainty are reduced.

"As long as these burdens remain, achieving the government's growth mission will remain out of reach.”