Small Businesses Struggle Amid Rising Costs and Recession Worries

Labour’s Small‑Biz Edition: The Ugly Truth in Numbers

What the Latest iwoca SME Expert Index Is Telling Us

According to a quick poll of the people who know their way around SME finance, the first year of Labour rule has left a lot of small‑business owners looking over their shoulders. Roughly 70 % of finance brokers in the UK say the climate for small and medium‑sized enterprises (SMEs) has gone from “steady” to “steady‑grave” since the new government took office.

It’s Not a “Hey There, Surprise!” Moment

And it’s not just a one‑off. The four‑quarter 2024 Expert Index recorded a 71 % “same verdict” vote—so the gloomy feeling hasn’t eased a bit. The numbers are almost as consistent as a broken clock, but both ticks just miss the mark on what the business community wants.

The Ministerial Kiosk With No SME Tickets

When we looked under the hood of the front‑bench, we spotted a worrying pattern: only 12 % of ministers actually rolled up their sleeves in an SME in the last ten years.
In numeric terms, that’s nine ministers out of a total of 77 cabinet positions.
So, while big‑commerce giants have a front‑row seat, those small‑biz heroes seem to be stuck in the back‑cabin.

Why It Matters (and Why It Should Be a Party Issue)

Think of the smaller businesses as the indie bands of the economy—full of potential, but needing the right setlist to make noise. If the government’s playbook is still played from a big‑label script, those indie acts might never get a track on the top of the charts.

Bottom Line: The Small‑Biz Love‑Letter Is Still in Draft

With 70‑plus % of brokers flagging a negative swing and a minority of ministers with real‑world SME experience, the Labour Government’s first year reads more like a draft note than a signature. The time has come for a fresh chapter—if not a rewrite—where small businesses feel less like a side‑note and more like the headline act.

Economic pressures persist

Small Businesses on the Edge

With the big government playing hard to get, the pressure on small‑biz owners is mounting.

More than half of the brokers (52%) say the biggest worry is the rising cost of doing business.

What the Experts Are Saying

Inflation? A whopping 78% of brokers predict it will be 3% or higher by the end of 2025 – a full point above the Bank of England’s 2% goal.
Recession Angst – 43% of brokers believe many small‑biz owners fear a downturn after the ONS report the UK economy shrank 0.1% month‑on‑month in May.

So, if you’re an SME owner holding your breath, you’re not alone. It’s looking like the road ahead might be a bit bumpy.

Pressure on government to deliver for SMEs

New Small‑Business Aid? Experts Are Less Than 1‑in‑10 Optimistic

While the government is betting its Small Business Strategy will be the silver bullet that finally opens the door for SMEs, industry insiders are scrambling to stay skeptical.

Only 11 % of brokers think the new plans will actually give small firms the money they need, whereas a whopping 65 % are not convinced that the measures will make a difference.

Colin Goldstein’s Take

Colin Goldstein, Chief Commercial Officer at iwoca in the UK, says the rising costs and looming recession fears are creating a storm for small businesses.

“The government has a golden opportunity to recognize how vital small firms are to the UK’s economy and to make sure they’re adequately supported. We need to give them the best possible chance to succeed.”