Just 26 per cent of UK small businesses expect to grow in the final three months of 2026, according to Novuna Business Finance, which said this was the first full year in which its quarterly measure had stayed below 30 per cent.
The lender’s Business Barometer, which polls a nationally representative sample of 1,000 business owners, found that 50 per cent forecast no change in their trading outlook for October to December. A further 23 per cent fear they will either contract or struggle to survive the winter.
Novuna said it was the first time in more than a decade that the share of small businesses predicting growth had remained below 30 per cent for a full 12 months. The study has tracked growth forecasts every quarter since 2014.
Its figures show the quarterly average was 37 per cent between the first quarter of 2017 and the first quarter of 2020. That fell to 33 per cent between the start of 2022 and the start of 2025, and has averaged 26 per cent since the second quarter of 2025.
The measure dipped below 30 per cent in mid-2025 for the first time since the first quarter of 2021 and has stayed in the 20s for seven consecutive quarters, Novuna said.
Budget and fuel costs
The findings come before the Budget, which the chancellor, John Healey, has confirmed for 28 October. In Novuna’s poll, 53 per cent of small businesses said further increases in national insurance would harm their growth outlook and finances, and 44 per cent were worried about potential rises in corporation tax.
Other tax proposals are also being contested before the statement, with the former chancellor Jeremy Hunt urging Healey not to raise the bank surcharge.
Novuna also pointed to fuel costs. The average price of diesel passed £2 a litre for the first time on Friday last week, reaching 200.01p, according to the RAC.
Some 62 per cent of small businesses told Novuna that any further tax rises for petrol or diesel vehicles would negatively affect their growth plans. In April, The Van Insurer reported a 143 per cent rise in searches for electric vans during March, which it linked to diesel costs.
Compared with the start of the year, growth forecasts improved slightly in six UK regions, were unchanged in one and fell in four, Novuna said. The North West recorded the biggest rise, from 21 per cent to 29 per cent.
London recorded the biggest fall. The share of small businesses in the capital predicting growth dropped from 40 per cent in January to 32 per cent in October, a fourth consecutive decline and the lowest level since 2020, when it stood at 31 per cent.
By sector, forecasts fell in seven industries over the year, with the sharpest declines in agriculture, property, medical and legal services. Transport, IT and telecoms, education, and leisure and hospitality rose, while manufacturing and construction were flat.
In retail, 27 per cent expect growth as the Christmas trading period approaches, up from 21 per cent last quarter but down from 32 per cent at the start of the year.
Jo Morris, head of insight at Novuna Business Finance, said the concern was that forecasts had not returned to their usual level in the mid-thirties since falling below 30 per cent in summer 2025. Only 17 per cent of younger and start-up businesses predict growth for the final quarter, she said, while more established enterprises “remain relatively resilient”.
“Many are also concerned about how further tax, inflation and interest rate changes could impact their growth plans,” Morris said. “At the same time, the majority of smaller businesses have not yet fully worked through whether and how AI could practically help business growth.”
She added that small business owners “dislike uncertainty, but they find ways to adapt, innovate and pursue growth”. In December last year, Kunal Shah, co-head of Goldman Sachs International, said uncertainty over manifesto pledges was an “overhang” on investment confidence among small firms.
Morris said Novuna would carry out further research in 2027 to compare the growth outlook of start-up, established and mature businesses.
