UK Small and medium-sized enterprise (SME) growth predictions have hit their lowest point since January 2021, according to the latest Business Barometer study by Novuna Business Finance. The study, which tracks small business growth forecasts every quarter, indicates a concerning trend in business confidence.
Only three in 10 small business owners (30%) anticipate any form of growth in the upcoming three months. This is the lowest level recorded since the COVID lockdown of January 2021, when growth predictions stood at 26%.
After experiencing a slight peak in confidence following the lifting of COVID restrictions in Q2 2022 (37%), growth predictions have stagnated, remaining between 32% and 33% for the past eight quarters. This quarter’s drop to 30% signals a significant decline in optimism among small business owners.
The study captures a net percentage growth score based on predictions of either significant expansion or modest, organic growth from a representative sample of over 1,000 small business owners.
Amid contrasting views on the health of the UK economy in this General Election year, the current small business sentiment is clear: growth predictions for the three months leading to June 30 are at their lowest level in 14 consecutive quarters.
The study also provides insights into industry-specific trends. For the first time in a decade, five industry sectors reported no predictions of significant expansion. Confidence in the construction sector has plummeted to its lowest level since the COVID outbreak in Q2 2020, dropping from 31% predicting growth last year to just 15% currently.
Similarly, growth forecasts in the IT and telecoms sectors have sharply declined, falling from 50% predicting growth in Q4 2023 to a mere 28% this quarter – the lowest since Q2 2022.
Regional analysis further highlights a geographical divide in growth forecasts. While areas like East Anglia, London, the South East, and the South West report strong growth predictions, other regions such as the North East, Scotland, and the Midlands are witnessing declines. Wales, in particular, has seen growth forecasts plummet to a two-year low of 15%.
Overall, the Business Barometer study paints a bleak picture of small business confidence, reflecting the challenges posed by economic volatility, rising prices, and political uncertainty.
