The cost of living crisis is far from over for UK small businesses. New research from Novuna Business Finance reveals that 88% of business owners say their enterprise is still threatened by aspects of the cost of living crisis – up slightly from 86% in Q2 2024.
Hospitality (97%), Manufacturing (96%) and Agriculture (95%) are the three industry sectors where the long tail of the cost-of-living crisis is still felt universally by small business owners.
Novuna Business Finance surveyed a representative sample of 1,242 small business owners. The findings reveal increases across the board in the specific cost-of-living pressures that are hurting small businesses today. Concern on customers spending less money is up sharply from 30% to 42% over the last six months. More than a third of small businesses (34%) also cited the challenge of having price increases passed on to them – yet being unable to pass these on to their own customers (34%). Energy costs and rising fixed costs are a greater concern this year than they were last year.
Aspects of the cost-of-living crisis that small businesses say still threatens them today
|
|
Dec 2024 |
June 2025 |
|
Customers spending less money with us |
30% |
42% |
|
Being hit by rising costs/charges from my suppliers |
29% |
34% |
|
Not being able to pass on inflationary prices increases to my customers /clients |
28% |
34% |
|
Rising energy costs – in terms of running the business |
26% |
32% |
|
Less customer volume |
24% |
32% |
|
Rising fixed costs – rents/ business rates |
15% |
23% |
|
Rising energy costs – impact on transport & travel |
17% |
21% |
|
Not being able to pay staff more in keeping with cost of living costs |
16% |
21% |
|
Cash flow becoming more volatile |
17% |
23% |
|
Lack of political leadership |
14% |
18% |
|
Lack of government support |
15% |
17% |
|
Rise in late / non payment |
13% |
14% |
|
Rising cost of finance with interest rates |
9% |
11% |
|
Weak pound / exchange rates |
7% |
9% |
|
Not being able to hang on to staff |
6% |
8% |
Regional highlights:
Around the UK, there was significant regional variations in the issues that small businesses were most likely to be worried about.
· Wales: Small businesses in Wales were the most worried in the UK about customers spending less money (67%), rising energy costs in terms of running the business (58%) and the impact on transport and travel of rising energy costs (34%). Welsh enterprises were also the most worried in the UK about cash flow becoming more volatile (38%).
· The North: Being hit by rising costs from suppliers (56%) and a rise in late payments (24%) were worries most strongly felt by enterprises in the North West. Small businesses in the region were also the most worried in the UK about not being able to pay staff more in order to help them keep in-line with rising living costs (36%). Businesses in the North East were most worried about the rising cost of finance (22%).
· Scotland: Small businesses in Scotland were the most worried in the UK about not being able to pass rising costs on to their customers (45%) and the perceived lack of government support (25%).
· South West: Worries about less customer volume (44%) and rising fixed costs, in terms of rents and business rates, (35%) were most strongly felt by small businesses in the South West.
· The Midlands: Enterprises in the West Midlands were the UK businesses most worried about the impact of a weak Pound and exchange rates (15%). Their counterparts in the East Midlands were the businesses in the UK most worried about a perceived lack of political leadership (25%).
Jo Morris Head of Insight at Novuna Business Finance comments: “For the vast majority of UK small businesses, the cost-of-living crisis is still something they are living with every day – whether this be through higher fixed costs, energy prices or supplier costs being passed on to them. Many small businesses are having to work harder, faster and smarter to keep their growth plans in-tact. To assist with a better understanding of small business outlook, Novuna Business Finance has prepared a new research report that chronicles how small businesses have adapted to the myriad of issues they have been confronted with over the last 12-months.”
The new findings coincide with the launch of a new report from Novuna Business Finance looking back at how small businesses have coped with a 12-month period of change from the General Election to tariffs and an Autumn Budget to a Spring statement. The new report will be free to download from the Novuna Business Finance website from 2 July 2025.