Three in five small businesses based in London (62%) are planning to strengthen and grow during the spring months, down from 84% at the same time last year.
However, the intention to hire new staff has dropped to a five-year low of just 17%, according to new research from Novuna Business Finance.
While 84% of small businesses began 2026 with hopes of growth throughout the year, the first quarter has proven challenging for many.
The outbreak of war in the Middle East has already affected energy prices, amid concerns that inflation may rise in the coming months. Despite this difficult market environment, most London-based small businesses remain committed to short-term growth plans.
However, their key priorities now focus on protecting cash flow and minimising costs.
According to data from Novuna Business Finance, 63% of small businesses in London are prioritising keeping fixed costs down. Additionally, 33% emphasize the importance of maintaining cash flow, and more than one in four respondents (27%) are focusing on chasing late payments.
As small businesses work to control costs, this has directly impacted their plans for job creation. Only 17% of London-based enterprises intend to hire new staff this spring, marking the lowest level since 2021. This figure is down from 24% last year and a high of 41% in 2022.
Beyond these defensive measures to protect cash flow and manage costs amid a challenging economic and geopolitical climate, some small London businesses are seeking creative, proactive ways to achieve growth.
Approximately 21% of enterprises plan to expand into new overseas markets, despite the challenges presented by Brexit, which 19% of respondents view as a growth barrier.
Furthermore, 15% of London small business owners are reassessing their funding arrangements to free up working capital, while 12% are considering investing in new equipment. This modernisation could reduce overall energy use and lower bills.
Joanna Morris, Head of Insight at Novuna Business Finance said: “Given the severity of market uncertainty, the fact that many London-based small businesses are working on growth initiatives is a huge positive – although much of this relates to practical measures to protect costs and cashflow.
“Job creation is a casualty of this defensive, cost-control posture and is not good news.
“At Novuna Business Finance, we specialise in supporting established small businesses as an alternative to the high street banks.
“Whether investing in new equipment or reviewing existing funding arrangements, our asset finance solutions help businesses manage overall cash flow and ease pressure on other areas of their budget.
“With an expert team and award-winning service, we provide access to the financial solutions our customers need and are committed to helping them develop and grow.”
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