Small Business Confidence Hits 12-Year Low
Nationwide growth predictions drop to 24%, with London seeing a 12-month low.
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Nationwide small business confidence has reached its lowest level in 12 years, with only 24% of enterprises anticipating growth. This figure matches the percentage of businesses expecting contraction or difficulty, a situation not seen since the initial COVID-19 lockdown in 2020. The survey by Novuna Business Finance, which polled 1,000 small businesses between July 5 and July 8, indicates a widespread economic challenge.
Regional Variations in Growth Forecasts
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Every region in England, except for the North West, experienced a decline in growth forecasts. London's small business confidence recorded a 12-month low, falling to 36%. While this performance was described as slightly more robust than other areas, it represents a significant drop from 48% a year ago and 40% at the start of 2024. The North West was the sole region to see a quarter-on-quarter increase, with growth forecasts rising from 26% in the second quarter to 28% for the third quarter.
Sharp downturns were observed in the South East, where confidence fell from 21% to 16%, and the South West, which dropped from 22% to 15%. The construction, retail, and hospitality sectors reported particularly steep declines.
Factors Influencing Confidence
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Jo Morris, Head of Insight at Novuna Business Finance, suggested that geopolitical tensions, rising energy costs, and political uncertainty following recent local elections likely influenced business planning. Morris stated that uncertainty is a significant deterrent for small businesses. The overall confidence level for English small businesses previously peaked at 35% two years ago, during a period of optimism surrounding a pro-growth administration.
Questions this report answers
+What does the 24% figure mean for small businesses?
Only 24% of small businesses nationwide expect growth, matching the percentage anticipating contraction or difficulty. This balance has not occurred since the 2020 COVID-19 lockdown, indicating widespread economic challenges.
+Which region bucked the downward trend in confidence?
The North West was the only region to see a rise in growth forecasts, increasing from 26% to 28% quarter-on-quarter. This contrasts with declines across all other English regions.
+How much did London’s confidence drop compared to last year?
London’s small business confidence fell to 36%, a 12-month low and a significant drop from 48% a year ago. It also declined from 40% at the start of 2024, reflecting growing economic concerns.
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