The percentage of small business owners predicting growth has fallen for the fourth consecutive Quarter to a new five-year low (25%) – and in every industry sector, the percentage of enterprises predicting growth is down on the start of the year – according to new tracking research from Novuna Business Finance.
Following last summer’s General Election bounce, the percentage of small businesses predicting growth has fallen from 35% to 25% over the last 12-months. 2025 is the first time in five years that the percentage of small businesses predicting growth has fallen below 30% – and the new figures for Q4 2025 represent the lowest point for growth predictions since the outbreak of the Covid Pandemic in spring 2020.
The new Novuna Business Finance data also reveals a rise in the percentage of small business owners that fear contraction or collapse (23%) in the next three months – the highest level since Q1 2021 (27%).
Added to this, 86% of small business owners say they fear the possibility of Autumn Budget announcements that could negatively impact their growth outlook and finances.
These findings are from the Business Barometer study by Novuna Business Finance, which has been tracking small business outlook every Quarter for the last 11 years. Going beyond a general measure of confidence, the study specifically examines the percentage of enterprises that forecast growth every quarter and the factors at play in shaping this. The latest research findings relate to the final three months of 2025 (Q4), for many businesses an important seasonal trading period.
Industry Sector findings:
In every industry sector, the percentage of small businesses predicting growth is down on the position at the start of the year.
· Growth forecasts in construction (17%) are at their lowest point since Q2 2024.
· In retail, there are no signs of the Christmas countdown boost to business confidence of recent years. For 2025, the percentage of small business owners predicting growth is flat on the summer months, and significantly down on the start of the year (25% Vs 33% in Q1 2025).
· The hospitality and leisure sector sees the percentage of small businesses predicting growth (23%) fall to its lowest level since Q1 2021.
· The percentage of business owners predicting growth in the agriculture sector has halved since the start of the year (falling from 40% to 19%) – and now stands at its lowest level since Q4 2022.
· Despite the extremely challenging market conditions, growth forecasts in the manufacturing sector remain relatively flat on Q3 (25%) and are down only slightly on the start of 2025 (27%).
Percentage of small businesses predicting growth by industry sector:
Start and end of year comparisons
|
Start of the year Q1 2025 |
End of the year Q4 2025 |
|
|
Finance & accounting |
47% |
35% |
|
Medical services |
35% |
32% |
|
Education |
28% |
27% |
|
Transport & distribution |
29% |
26% |
|
Media & marketing |
47% |
26% |
|
Manufacturing |
27% |
25% |
|
Retail |
33% |
25% |
|
Hospitality & leisure |
25% |
23% |
|
Property & real estate |
28% |
23% |
|
Agriculture |
40% |
19% |
|
Construction |
26% |
17% |
|
Legal services |
43% |
16% |
UK regional findings:
Across nine of 11 UK regions surveyed, the percentage of small businesses predicting growth for Q4 2025 has fallen, compared to the position at the start of the year. Falls have been pronounced across the south of England, in the South East (down from 34% to 20%) and South West (from 17% to 13%) – both regions hitting their lowest levels since Q2 2020. London, which for years has been the engine room of UK small business growth forecasts has also seen small business confidence fall (36%) to its lowest level since Q1 2021.
Elsewhere, quarterly growth forecasts have fallen sharply this year across the East and West Midlands – and in Scotland, the percentage of small business owners predicting growth has more than halved this year (from 36% in Q1 to 15% for Q4) – hitting its lowest level since Q2 2020.
Jo Morris, Head of Insight at Novuna Business Finance comments: “Whilst small business growth forecasts are down this year, the underlying concern is the ongoing slide over consecutive quarters. Last July there were signs of optimism, an ‘Election bounce’ perhaps, as the percentage of enterprises predicting growth rose to 35% having been locked at the early 30 mark for a number of years. The value of our decade-long tracking research indicates that developments in 2025 are significant: this spring, the percentage predicting growth dropped below 30% for the first time in years and, since then, it has continued to fall.
“There are various factors at play. Market uncertainty is something small businesses do not like, US tariffs have been a cause of concern through 2025 and, for many small businesses, the long tail of Brexit still impacts business confidence – with fewer small businesses today looking to open up trading opportunities in EU markets. The looming Autumn Budget is also a concern for many, as there has been a lot of speculation about possible tax rises. At Novuna Business Finance we remain committed to helping established small businesses to secure funding to power future growth – but the message from small business owners seems to be very clear: they need a context of certainty to plan against and a tax framework that incentivises growth, expansion and investing in new staff. We need to see a reversal of the fall in small business growth forecasts we have seen over four consecutive quarters – and all eyes will be on the Autumn Budget for the stimulation package that many small business owners are crying out for. If we want to see growth in the economy, the forthcoming Budget needs to be a ‘Budget for business.’”