UK SME growth forecasts crash to lockdown levels – after falling for four consecutive quarters
The percentage of UK small businesses predicting growth has fallen for the fourth consecutive quarter, plummeting to the low levels seen during the lockdown era of 2020, according to new research from Novuna Business Finance.
A year on from the Labour government taking office, the immediate ‘Election Bounce’ in small business confidence (35%) has fallen every quarter since – this month hitting a new five-year low of 26%.
Percentage of small businesses predicting growth each quarter – results over time
| Q2 2020 | Q3 2020 | Q4 2020 | Q1 2021 | Q2 2021 | Q3 2021 | Q4 2021 | Q1 2022 | Q2 2022 | Q3 2022 | Q4 2022 |
| 13% | 27% | 26% | 26% | 35% | 36% | 35% | 36% | 34% | 34% | 31% |
| Q1 2023 | Q2 2023 | Q3 2023 | Q4 2023 | Q1 2024 | Q2 2024 | Q3 2024 | Q4 2024 | Q1 2025 | Q2 2025 | Q3 2025 |
| 33% | 32% | 32% | 32% | 33% | 30% | 35% | 35% | 33% | 29% | 26% |
In London, typically the UK’s engine room of confidence in small business growth forecasts, there was a sharp fall in the percentage of enterprises predicting growth in the next three months – 37%, falling from 48% last quarter. Elsewhere around the UK, there was also significant falls from Q1 in the North East (falling from 42% to 29%), the West Midlands (falling from 36% to 24%) and Scotland (falling from 29% to 22%).
Drawing on 11 years of tracking data, the July 2025 research findings are from the Business Barometer study by Novuna Business Finance. Each quarter, the poll of a representative sample of 1,000+ small business owners tracks how many forecast growth for the three months ahead.
By industry sector, the growth picture for the next three months was mixed: Whilst growth outlook in the manufacturing (up from 19% to 25%) and construction (up from 19% to 24%) sectors showed modest recovery from record low-points Q1 2025, there were significant falls in real estate, transport and distribution. Of concern, the more seasonal businesses in the agriculture, hospitality and leisure sectors also reported sharp falls in growth outlook for the next three-months.
Quarter on quarter falls in the percentage of small businesses predicting growth since Q1
| Q2 2025 | Q1 2025 | |
| Transport & distribution | 26% | 31% |
| Hospitality and leisure | 25% | 32% |
| Agriculture | 22% | 34% |
| Real estate / property | 15% | 27% |
Jo Morris, head of insight at Novuna Business Finance comments: “This time last year, the election bounce of a new government taking office saw an immediate rise in small business confidence – with the percentage predicting growth rising from 30% to 35%. Ever since then, small business growth forecasts have fallen over four consecutive quarters. The new low of 26% for the three months to 30 September is on a par with the lockdown months of 2020.
“Our new report on small business outlook over the last year looks closely at how recent market developments – such as the NI hike for employers, uncertainty over tariffs and fears over autumn tax rises – have played out on small business confidence and their growth predictions. Whilst the economic picture for many enterprises is challenging, periods of uncertainty can also be times to invest in long-term success, and Novuna Business Finance is committed to helping established enterprises make the investments that will power future growth.”