Regional SME data paints bleak picture

Novuna Business Finance has today published figures which show small businesses losing optimism. The percentage of small businesses predicting growth has fallen to 24pct - its lowest level for twelve years.
The data also reveals significant downturns in the construction (15pct), retail (21pct) and hospitality (21pct) sectors. And 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. 
Two years on from the Labour Government taking office in July 2024, the immediate ‘election bounce’ in small business growth forecasts (rising from 30pct to 35pct between April and July 2024) then went on to fall over four consecutive quarters. The hint of a slight rally in small business growth outlook last quarter has been followed by a further fall – the biggest single quarterly fall in eighteen months (down from 28pct in Q2 to 24pct this quarter).
Novuna Business Finance’s figures for July mark the first time since the UK went into Covid lockdown that the percentage of small businesses contracting or struggling to survive (24pct) has matched the proportion predicting growth (24pct).
The Business Barometer tracking study goes beyond general feelings of confidence and, instead, every quarter tracks the percentage of small business owners that forecast tangible business growth for the next three months.
 
The regional picture across the UK
At a time when the country prepares for a ‘Number 10 North’, the north-west is the only region where there is a quarter-on-quarter rise in small business growth forecasts (a modest rise from 26pct in Q2 to 28pct for Q3). Everywhere else in England, the percentage of small businesses predicting growth for the next three months has fallen – and most significantly in the south east (falling from 21pct to 16pct) and the south west (from 22pct to 15pct). London, historically the engine room of small business growth, saw forecasts fall to 36pct from 37pct last quarter and 40pct for Q1.  
In Wales, the percentage of small businesses predicting growth fell sharply from 28pct to 20pct and whilst growth outlook in Scotland remained unchanged on last quarter at 22pct – the latest figures represent a sharp fall on 36pct for Scottish enterprises in Q1 2025.
 
Sector by sector
In July 2026 there was a mixed picture on small business growth forecasts across industry sectors. Whilst manufacturing, transport and IT recorded quarter-on-quarter rises in growth outlook, there were significant falls elsewhere. In the construction sector, the percentage of small businesses predicting growth almost halved to 15pct and there were also sharp falls for enterprises in the hospitality and retail sectors - ruling out the likelihood of a much-needed ‘feel-good’ bounce from the World Cup and hot weather.
 
Jo Morris, Head of Insight at Novuna Business Finance, said the findings were “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 28pct by the Spring.
“However, the fall to 24pct 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. 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.”

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