Rise in percentage of London small businesses citing barriers to growth 

More than eight in ten London-based small business owners (84%) cite barriers holding their businesses back from growing – a rise on 77% this time last year – according to new research from Novuna Business Finance.

The findings from Novuna’s Business Barometer tracking research come at a time when the Government is grappling with delivering on its growth pledges for the UK economy. Despite the IMF recently revising its UK economic forecast for the year, overall UK growth remains sluggish – with analysts warning that the disruption caused by US trade tariffs will negatively impact UK growth in the second half of the year. Set against this context, the Novuna poll of a nationally representative sample of 1,242 small business owners gives cause for concern.

Market uncertainty is the biggest perceived growth barrier for London small business owners because it is hard to plan against. This summer, 43% of business owners cited it is a key factor holding back their business growth – up from 39% this time last year.

Fixed costs: For small businesses, the cost-of-living crisis is far from over. The percentage of enterprises that say rising fixed costs are holding back growth has risen in the last year from 20% to 23% – a three-year peak.

The long tail of Brexit is still felt by many London-based small businesses – with one in five (22%) citing its consequences as still presenting barriers to growth today.

Red tape: Whilst fewer London businesses view the cost of hiring skilled labour as a barrier to growth (falling from 27% to 20% since last summer), this summer does see a rise in the percentage of London small business owners that cite red tape as a barrier holding back growth (23%, rising from 16% last year).

Finance: The latest Novuna Business Finance data also suggests that a significant number of London-based small businesses view financial factors as barriers holding back their growth – with concerns voiced over high street bank fees and charges (15%) and challenges relating to volatile cash flow (18%).

There is also a rise in the percentage of London small business owners that say that the inability to finance a modernisation of outdated equipment is also a growth barrier (up from 7% to 11% in a year). The financial barriers are significant because the percentage of London small businesses that rely on finance or funding to invest in business growth has reached an eight-year high – with 75% of the Capital’s small business owners saying they would have to put one or more growth projects on hold in the coming months if they were unable to secure funding or finance to power their growth plans – significantly higher than the national average (42%).

Jo Morris Head of Insight at Novuna Business Finance said, “Despite all the recent news on UK trade deals, the view from small businesses – the powerhouse of the UK economy – is far less congratulatory.

“Our research shows that the percentage of London small businesses that cite barriers holding back their growth is on the rise. Some of the challenging issues are local and specific, but many relate to the macro-economic position. Nine years on from the Referendum, one in five small businesses say they are struggling with the consequences of Brexit.

And the dark cloud of US tariffs and sluggish economic growth gives small businesses a level of market uncertainty that is disruptive and hard to plan against. At Novuna Business Finance, we are working hard to support established small businesses plan for the future – but it’s a challenge for them to realise their full potential when they feel the economy is working against them.”