Home Business News Small business growth forecasts reach a three year low

Small business growth forecasts reach a three year low

by LLB Finance Reporter
22nd Apr 24 11:20 am

Only three in 10 small business owners (30%) predict any form of growth in the next three months – the lowest it has been since the Covid lockdown of January 2021 (26%).

After small business confidence enjoyed a slight peak after Covid restrictions finally fell away by Q2 2022 (37%) – the percentage of business owners predicting growth has doggedly remained flat at 32/33% for the last eight quarters – which makes a fall this quarter appear to be significant.

These findings from Novuna Business Finance form part of its Business Barometer study, which has tracked small business growth forecasts every quarter for the last decade.

At the start of each quarter, a representative sample of more than 1,000 small business owners are asked to state their trading outlook for the next three months, capturing a net percentage growth score from those that predict either significant expansion or modest, organic growth.

At a time when the political narrative of General Election year is delivering contrasting views on the health of the UK economy, the small business position for April 2024 is clear: The percentage of small business currently predicting growth for the three-months to 30 June stands at its lowest level for 14 consecutive quarters.

Regional analysis: A disUnited Kingdom?

A regional analysis also revealed clear signs of a sharp geographical divide between areas where growth forecasts were falling and regions where the picture seemed relatively bright.

Compared to strong growth forecasts and quarter-on-quarter rises in in East Anglia, London, the South East and South West – there were falls in the percentage of enterprises predicting growth in the North East, Scotland and the Midlands. In Wales, growth forecasts crashed to just 15%, hitting a two-year low-point [see notes to editor for table].

Jo Morris, Head of Insight at Novuna Business Finance said, “Whilst the growth outlook of small businesses has stood unchanged for nearly two years, we saw early signs last quarter that a fall was on the cards.

Beyond just looking at current growth status,  our January study also looked at the percentage of UK small businesses that were considering new projects to achieve future growth for the spring and summer months – and here there was a fall. This has played out this quarter, with a fall in the percentage of small businesses predicting growth this quarter.

“The national fall is not sharp but it is certainly a departure on the last two-years. Within some sectors there have been sharp falls, which is a significant concern.

“From the Business Barometer over the last decade, it is clear that there are often fine margins between businesses that predict significant or modest growth, a flat period or consolidation – and moderate or significant 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 small businesses put plans in place to achieve growth and boost capability and, midst the seismic market uncertainty, 2024 will be a key year for the small business community and the contribution they make to the economy and society at large.”

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