Small business owners are bracing for a challenging period ahead as growth forecasts plummet to a three-year low, according to analysis by Novuna Business Finance. Only three in 10 small business owners anticipate any form of growth in the next three months, marking the lowest level since the Covid lockdown of January 2021. Despite a brief surge in confidence following the lifting of Covid restrictions in Q2 2022, growth predictions have stagnated around 32-33% for the past eight quarters, making the current decline particularly notable.
Amid contrasting views on the UK economy’s health in this General Election year, small businesses are facing a stark reality. The percentage of small businesses predicting growth for the upcoming quarter stands at its lowest level in 14 consecutive quarters. Moreover, for the first time in a decade, five industry sectors have seen no small business leaders predict significant expansion, signaling a troubling downturn in confidence.
The construction sector, in particular, has witnessed a sharp decline in confidence, reaching its lowest level since the onset of the Covid pandemic in Q2 2020. Economic volatility, rising prices, and political uncertainty have contributed to a drastic reduction in growth forecasts, with only 15% of small businesses in construction anticipating growth compared to 31% a year ago.
Similarly, growth forecasts in the IT and telecoms sector have plummeted, hitting their lowest level since Q2 2022. Other sectors experiencing significant declines in growth predictions include agriculture, media, legal, real estate, retail, and manufacturing.
A regional analysis reveals a stark geographical divide, with growth forecasts falling in some areas while remaining relatively robust in others. While regions like East Anglia, London, the South East, and South West are witnessing quarter-on-quarter rises in growth forecasts, areas like the North East, Scotland, Midlands, and Wales are experiencing declines, with Wales hitting a two-year low-point at just 15%.
Jo Morris, Head of Insight at Novuna Business Finance, underscores the importance of supporting small businesses during this challenging period. While the decline in growth forecasts is concerning, Morris emphasizes the need for confidence and belief in small businesses’ potential. Novuna Business Finance is committed to helping small businesses navigate uncertainty and achieve growth, recognizing their vital contribution to the economy and society.
As small businesses navigate economic headwinds and market uncertainties, 2024 emerges as a pivotal year for the small business community. With strategic support and planning, small businesses can overcome challenges and thrive in the evolving economic landscape.
Percentage of small businesses predicting growth each quarter
Quarter-on-quarter falls in the percentage of small businesses predicting growth
