Small business growth has crashed to a 12-year low under Labour, with owners calling on the Government to take action. The latest Business Barometer from Novuna Business Finance found that the percentage of small businesses predicting growth has fallen to 24%, its lowest level in 12 years. Significant downturns were recorded in construction (15%), retail (21%) and hospitality (21%) sectors.
Regional declines
While small business growth forecasts rose modestly in the North West, they fell in every other region of England and Wales, with the position flat in Scotland. Despite hopes of a post-election boost, the data shows that the initial rise in optimism following Labour’s election victory has faded. Growth forecasts increased from 30% to 35% between April and July 2024, but have since declined for four consecutive quarters. A brief improvement earlier this year has now been reversed, with forecasts falling from 28% in the second quarter of 2026 to 24% this quarter, marking the largest quarterly decline in 18 months.
Expert reaction
Jo Morris, Head of Insight at Novuna Business Finance, said: "The latest findings are a concern. Following a quarter-on-quarter slide in small business growth forecasts during 2025, this year promised hope of recovery – with the percentage of small businesses forecasting growth edging up to 28% by the Spring. However, the fall to 24% this quarter is a setback and (excepting the quarter when the UK went into the first Covid lockdown) growth forecasts now stand at their lowest level since the Business Barometer study began in 2014. The content 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."
Morris added: "At Novuna Business Finance, we remain committed to supporting established businesses as they plan for the future, helping them invest in long-term opportunities that can drive growth, improve operational efficiency and strengthen cash flow. Whilst small business outlook is cautious, the community continues to demonstrate strong resilience. Now is the time for everyone to support SMEs with what they need to create jobs and drive future economic growth."
Public opinion
The latest July figures mark the first time since the UK went into Covid lockdown that the percentage of small businesses contracting or struggling to survive (24%) has matched the proportion predicting growth (24%). As the UK welcomes a new Prime Minister and leadership team, 9 in 10 adults (90%) said they would like to see the Government do more to support small businesses in the UK, a rise on 87% two years ago, when Labour won the General Election in July 2024.
Novuna Business Finance polled 2,000 adults to gauge the importance of Government support for small businesses. With a new Prime Minister taking office, the poll asked what the public would like to see more of. Tackling financial pressures was seen as an immediate priority: 27% called for a reduction in business rates, 25% wanted a reduction in corporation tax for small businesses, and 22% sought a reduction in National Insurance – following the hike, which 49% of small business owners said would negatively impact their finances and growth outlook.
Energy costs were another concern. With the Government announcing that VAT will be scrapped from household electricity bills in October, 23% called on the Government to give small businesses a cap on energy costs. A further 23% wanted major investment in re-generating the high street. On international business, 19% wanted the Government to overturn Brexit and allow the UK to re-join the EU, and 16% called for reduced red tape for overseas business. Additionally, 20% wanted more investment in apprenticeships, while 18% thought more training and development programmes would help small business owners and employees.
