The percentage of small business owners predicting growth across England has slumped to 24%, its lowest level in 12 years, with sharp downturns in construction, retail and hospitality sectors. The findings from Novuna Business Finance, based on a survey of 1,000 small enterprises conducted between 5 and 8 July, show no sign of a 'Burnham bounce' following the former Manchester mayor's entry into Downing Street as Prime Minister.
Regional divide
The north west is the only region where growth forecasts rose quarter-on-quarter, increasing from 26% in the second quarter to 28% in the third. Everywhere else in England, the percentage of small businesses predicting growth for the next three months has dipped to 24%. The most dramatic drops were in the south east, falling from 21% to 16%, and the south west, from 22% to 15%.
London, historically a small business growth engine, saw 36% predicting expansion, but this was a 12-month low, down from 48% a year ago and 40% at the start of the year. Small business confidence across England peaked at 35% in the April-to-July quarter two years ago amid optimism about a pro-growth Labour administration, but fell over the next four quarters amid tax hikes and anaemic growth.
Uncertainty weighs on businesses
Following a slight rally in the last quarter, confidence is again on the slide against a backdrop of turmoil in the Middle East and a new spike in energy costs. For the first time since the UK entered Covid lockdown in 2020, the percentage of small businesses contracting or struggling to survive (24%) is at the same level as those predicting growth (24%).
Jo Morris, Head of Insight at Novuna Business Finance, said: 'The context of geo-political tensions, rising fuel prices and political uncertainty following the local elections have probably all played out when it comes to small business planning. The one thing small businesses don’t like is uncertainty.'
