Small Business Growth Stalls Amid Economic Fears

The percentage of small businesses predicting growth for the next three months (28%) remains largely unchanged on last quarter (27%) – although 78% of enterprises go into the summer fearing the economic impact that geo-political and economic tensions will have on their businesses, according to new research from Novuna Business finance.

Based on polling a representative sample of 1,000 small business owners nationwide, the spring months each year usually offer a seasonal boost to small business growth forecasts. Whilst for Q2 this year there is a welcome seasonal uplift in the percentage of small business owners predicting growth in three sectors – construction, 29% (up from 22% last quarter), retail, 38% (up from 32%) and hospitality 25% (up from 22%) – nationally, the Spring 2026 figures are the lowest for a decade (allowing for the outbreak of Covid and the first national lockdown in April 2020). It is also the first time in a decade that the percentage of small businesses predicting growth has remained at under 30% for four consecutive quarters.

Percentage of small businesses predicting growth each April over the last decade

These static growth forecasts for 2026 come at a time when more than three in four small businesses (78%) fear disruption to their enterprises that result from current geo-political and economic uncertainty. Of those that expressed concerns:

·      45% of small businesses feared the impact the Middle East war would have on their business and supply chain. This rose sharply to 70% for small businesses in the transport and distribution sector, 68% for those in the agriculture sector and 61% of manufacturing small businesses.

·      17% of UK small businesses also said that the war in Ukraine and instability in the broader region would impact their business and supply chain.

·      16% of respondents said they still feared the potential impact of US tariffs on the UK.

·      As a result of all this uncertainty on the UK economy, 71% of small businesses said they feared the prospect of the UK government raising UK taxation later in the year.

These findings follow Novuna Business Finance research in March on rising energy prices, after the outbreak of war in the Middle East region, which revealed that small businesses estimated their transport costs would increase by an average of £753.56 a month, and the cost of running machinery estimated to rise by an average of £785.92.

North South growth divide emerging

Around the UK, the regional data suggested early signs of a north-south divide emerging for the summer months. In the North East, the percentage of small businesses predicting growth rose from 22% last quarter to 33% for the three-months to the end of June. There was a similar rise in the North West, with small business growth forecasts up from 22% to 26% since last quarter. In contrast, the percentage of small businesses in London predicting growth fell (from 40% to 37%). The same was true in the South East, with growth forecasts falling from (23% to 21%).

 Joanna Morris, Head of Insight at Novuna Business Finance comments: “From 10 years of tracking small business outlook, the spring months usually see a rise in confidence, but this year growth forecasts remain static. Without question, current worries over energy prices and broader economic uncertainty are of great concern to many business owners. Looking back over the decade, the growth outlook of small businesses is now settling at a level that is much lower than what was the norm before the pandemic. 

“This is a concern, but it also highlights the work that needs to be done to help small businesses take a longer-term view and feel supported in making the investments needed to secure growth. Novuna Business Finance is committed to supporting established enterprises with funding that will help them navigate market uncertainty and power future growth.”

Percentage of small businesses predicting growth each quarter

About Novuna

Novuna is a trading style of Mitsubishi HC Capital UK PLC, one of the UK’s leading financial services companies, authorised and regulated by the Financial Conduct Authority (FCA) and the Official Finance Partner for British Athletics and Title Partner of UK Athletics and the Great Britain & Northern Ireland athletics team.  With over 2,300 employees, £8.6bn of net earning assets and over 1.3 million customers we provide innovative finance solutions that helps businesses and individuals find the financial edge that turns ambition into achievement.  Our business divisions include Novuna Consumer Finance, Novuna Vehicle Solutions, Novuna Business Finance, Novuna Business Cash Flow and our European division specialising in Vendor Finance. We are a wholly owned subsidiary of Mitsubishi HC Capital Inc., strengthening our relationship with one of the world’s largest and most diversified financial groups, with over 11trn yen (£57bn) of assets.

About Novuna Business Finance 

Novuna Business Finance provides business finance to SMEs and bigger corporations across the UK. This includes asset finance, stocking, block discounting and sustainable project finance provided through brokers, vendor organisations, manufacturers and direct to the business community.  With an asset portfolio of more than £1.9bn, the business is active across multiple sectors from transport and agriculture to construction and manufacturing and was awarded Best Leasing and Asset Finance Provider at the 2025 Business Moneyfacts Awards.  The business’ Sustainable Project Finance team is also supporting the development and construction of sustainable energy and transport projects, which are critical to the decarbonisation of the UK’s infrastructure.  Novuna Business Finance is a trading style of Mitsubishi HC Capital UK PLC, part of Mitsubishi HC Capital Inc., one of the world’s largest and most diversified financial groups, with over 11trn yen (£57bn) of assets.

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