Small Businesses Face Growth Dry Spell: Forecasts Hit Three-Year Low

Small Business Outlook: A (Dis)Monumental Decline

For the first time since the pandemic’s maw‑shift in Jan 2021, only 30 % of UK small‑business owners are buzzing with optimism about growth over the next three months. That’s a stark drop from the high‑water mark of 37 % reached as restrictions eased in Q2 2022.

The Numbers, Unpacked

30 % this quarter (Apr‑Jun 2024) – the lowest we’ve seen in 14 straight quarters.
After a brief spike in 2022, growth expectations had been stuck between 32–33 % for the last eight quarters.
Since 2021, the 30‑point dip marks the smudgiest forecast in almost a decade.

How the Data Is Gathered

Each quarter, Novuna Business Finance’s Business Barometer surveys a grab‑bag of over 1,000 small‑biz owners, asking them two key questions:

Will you see a biggie in sales next three months?
Do you expect a steady climb instead?

Those who grade an answer as “growth” contribute to the net growth figure, giving us the pulse of the economy’s heartbeat.

What This Means for the Economy

While the political jitters around the coming General Election swirl in the media, the small‑business barometer offers a tough‑nosed snapshot: the UK’s entrepreneurial squad is holding its breath.

In a world of lofty forecasts, this 30 % plateau feels like a slow‑moving traffic jam on the economic freeway – a reminder that, despite the headlines, growth is still a long‑lived dream for many.

Regional analysis: A disUnited Kingdom?

Small‑Business Growth Takes a Bit of a Detour Across the UK

Recent regional data is showing a clear north‑south split in how businesses feel about the future. While the South enjoys a bright outlook, the North and parts of the Midlands are looking a little more cautious.

Where the Sun is Shining

East Anglia, London, the South East and South West – firms here are reporting solid growth forecasts and a healthy uptick from one quarter to the next.
These regions are running the numbers and smiling, with many companies already planning fresh projects for the coming spring and summer.

Where the Clouds Loom

Meanwhile, the “up‑and‑out” region, the North East, Scotland and the Midlands are seeing a dip in the percentage of businesses expecting growth. Even Welsh firms have slipped dramatically, with forecasts dropping to just 15% – a lull that matches a two‑year low.

Insight From the Inside

Jo Morris, Head of Insight at Novuna Business Finance, says: “The small‑business outlook has been flat for almost two years. We noticed early signs last quarter that a downturn might be coming.”

She added, “We’re not just looking at the current growth numbers. Our January study examined how many UK small firms are planning new projects for spring and summer. That percentage has fallen, aligning with the downturn seen this quarter.”

“The national slide isn’t huge, but it’s a clear change from the past two years,” Jo notes. “Some sectors are showing steeper drops, which is a real concern.”

Why It Matters

According to the Business Barometer over the last decade, businesses often hang by a thread between seeing modest or big growth, a flat period, or a decline. Now is the time for businesses to shift from caution to confidence.

Jo emphasizes that with the market rocking worldwide, 2024 is going to be a pivotal year for small enterprises and the crucial role they play in the economy and society.