Equity deals and values grow in the East Midlands, while external finance usage falls
The East Midlands was one of only three of the UK’s Nations and regions to achieve annual growth in both equity deal numbers (7.8%) and investment values (26.1%) in 2024 amid more mixed trends elsewhere. However, smaller businesses across the region took a largely cautious approach to borrowing in 2024 as external finance use fell, according to the British Business Bank’s fifth Nations and Regions Tracker, published today.
The region had the sharpest fall in the use of external finance amongst smaller businesses (-9 percentage points) of any region, with similar reductions across other lending types, including bank loans, credit cards and leasing, hire purchase and vehicle finance.
East Midlands sees growth in equity deals and values against overall national contraction
The East Midlands was one of only three UK Nations and regions to achieve annual growth in both equity deal numbers (7.8%) and investment values (26.1%) in 2024 amid more mixed trends elsewhere. The number of equity deals in the region rose to 55, with investment totalling £91m.
Comparing equity deals and investment value per high-growth enterprise in each UK Nation and region, the East Midlands, continues to lag. Along with the West Midlands and Yorkshire and Humber, the East Midlands shows the lowest levels on this indicator with 8 equity deals and £13m investment per 100 high-growth enterprises, far below the UK average outside London (14 deals and £54m) between 2022 and 2024. This points to structurally lower equity activity in these regions relative to their high-growth enterprise base. Looking to help address this equity funding gap,the Bank’s Midlands Engine Investment Fund II (MEIF II) has supported more than 100 businesses since itslaunch in 2024, with investments totalling in excess of £17million.
Equity investment across the UK fell slightly (-2.5%) to £10.8bn in 2024, while equity deal volumes were down 15.1%, returning close to 2018 levels. Initial H1 2025 data suggests that this contraction is continuing, reflecting continued market uncertainty.
Use of external finance fell in the region
External finance use amongst smaller businesses fell in half of the UK’s Nations and regions in 2024, including the East Midlands. External finance use dropped to 39% (-9 percentage points) amongst smaller firms in the region, with similar drops seen in the North East (-8) and Wales (-7).
Overall, the share of UK smaller businesses using external finance was steady, declining by just one percentage point to 45% in 2024.
The Nations and Regions Tracker also shows a reduction in the use across most types of finance across smaller businesses in the East Midlands, with credit cards use down (-7) as well as leasing, hire purchase and vehicle finance (-6).
Increased openness to external finance
Businesses that did not need to borrow, or already had the facilities that they needed, are described as ‘future happy non-seekers of finance’ by the Nations and Regions Tracker. The East Midlands had one of the largest declines of ‘future happy non-seekers’ (-6 percentage points), indicating a growing appetite for future borrowing. However, a cautious approach still dominates, with 17% of smaller firms in the East Midlands reporting they were open to using external finance, but thought this would be difficult to secure – 5 percentage points higher than in 2022.
British Business Bank driving impact across the UK
The British Business Bank has continued to deliver significant support to smaller businesses across the UK through its debt and equity finance programmes, with a focus on benefitting firms outside of London.
Throughout 2024/25, 84% of the Bank’s newly supported businesses were outside the capital, which is expected to result in £4.7bn in additional GVA and support around 22,100 jobs across the rest of the UK.
Along with the Midlands Engine Investment Fund II, the Bank is expanding geographically-focused interventions to support the UK’s Modern Industrial Strategy and unlock regional potential. In June 2025, the government committed £6.6bn to the Bank, increasing its total financial capacity to £25.6bn.
As part of this increased capacity, the Bank’s Regional Angels Programme, which saw record activity in 2024/25, has been expanded by £340m and will be combined with new support for diverse angel networks and innovation-led businesses.
Vicky Mears, UK Network Director, North of England and Midlands at the British Business Bank, said: “Smaller businesses in the East Midlands appear to have been taking a cautious approach to external finance in 2024. However, now that interest rates have fallen and inflation is more stable, many are considering growth - and how to fuel it. It is crucial that these ambitious firms are backed and given the support and access to the finance they need to grow
“The British Business Bank is committed to supporting businesses wherever they are in the UK. From the Midlands Engine Investment Fund II to our expanding Regional Angels programme, the Bank is here to support the region’s entrepreneurs to ensure that promising companies are connected to the right capital at the right time.”
Richard Bearman, Chief Development Officer of British Business Bank, said: “In the face of a challenging economic environment, it is encouraging that use of external finance has remained stable. This year’s Nations and Regions Tracker also indicates that optimism is brewing for small businesses, and we hope to see this reflected in their use of external finance in the near future.
“The British Business Bank is pivotal to providing businesses across our regions with access to the finance they need. With the expanded capacity of the Bank under the Modern Industrial Strategy, we are poised to build on our existing work across the Nations and regions.”