In London the percentage of small business owners predicting growth has plummeted from 57% to 39% in just three months – presenting a two-year low in confidence levels for enterprises in the Capital (lowest since Q2 2023).
Double election impact?
The latest data suggests that London’s ‘election bounce’ in small business confidence that followed the new UK Government taking office last July has now worn off. The Q3 2024 research was conducted a week after the July General Election last July and the results revealed the first meaningful rise in small business growth forecasts in nine months. Whilst London enterprises were those most likely in the UK to predict growth last quarter, the sharp fall this quarter is considerably sharper than anywhere else in the UK.
Percentage of London small businesses predicting growth each quarter – results over time
|
|
Q4
23
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Q1
24
|
Q2
24
|
Q3
24
|
Q4
24
|
Q1
25
|
|
London
|
46%
|
44%
|
43%
|
49%
|
57%
|
39%
|
|
UK national average
|
32%
|
33%
|
30%
|
35%
|
35%
|
33%
|
The new US administration taking office has also been met with concern by small businesses in recent weeks. Novuna Business Finance’s survey found that more than seven in 10 small businesses (77%) said they were fearful of how the new US administration could have a ripple effect for the UK. Chief among small business concerns were the possibility of tariffs on UK exports to the USA (43%) and concern over the impact on UK economic growth forecasts and interest rates (33%).
For Q1 2025, 86% of London-based small business owners cited major concerns for the year ahead – and their key concerns included: the prospect of further market volatility (41%), fears over hikes to interest rates and taxes (40%), managing cash flow (26%), retaining business (24%), recruitment (16%) and plugging skills shortages in the business (15%). Just under one in five London business owners (18%) said they were still experience adverse effects from the long tail of Brexit.
The findings are from Novuna Business Finance’s Business Barometer study, which has tracked the growth forecasts of more than 1,000 small business owners every quarter for the last 11 years.
Joanna Morris, Head of Insight at Novuna Business Finance comments:“For many years, London has been the engine room of small business confidence, more business owners in the Capital predicting growth than any other region of the UK. The ‘election bounce’ in July 2024 was also the steepest in London. This quarter’s fall in growth forecasts is sharper in London that anywhere else in the UK. The concern here is London’s fall goes further than simply a correction of the election bounce – today, London growth forecasts are closer to the national average than they have been for some years.”
“From the Business Barometer study over the last decade, it is clear that there are often fine margins between businesses that predict growth or contraction and decline. Now is a time for small businesses to be supported, so caution and contraction can be replaced by confidence and belief. At Novuna Business Finance, we are serious about helping established small businesses put plans in place to achieve their true potential and, midst the market uncertainty, small business confidence this year will be key to the new Government delivering on its pledge to deliver economic growth.”
Novuna Business Finance provides business finance to SMEs and bigger corporations across the UK. This includes asset finance, stocking, block discounting and sustainable project finance provided through brokers, vendor organisations, manufacturers and direct to the business community. With an asset portfolio of more than £1.8bn, the business is active across multiple sectors from transport and agriculture to construction and manufacturing and was awarded Best Service from an Asset Based Finance Provider at the 2024 Business Moneyfacts Awards.