Confidence and growth hopes among the UK’s small business community in the London region nosedived further in the third quarter of 2025, according to newly-published research.
FSB’s Small Business Index (SBI) for Q3 shows overwhelming pessimism among small firms in the London region, with a headline confidence reading of -46 points.
Across the UK small business community, confidence fell to -58 points in the third quarter, a notable deterioration from Q2’s -44 points.
The proportion of small firms in the London region are bracing for contraction, be it downsizing, closure, or a sale, in the next 12 months has risen to 30% per cent. Meanwhile, just 26% per cent of small businesses say they expect to grow in the next 12 months. Nationally, just 18 per cent of small firms anticipate growth over the next 12 months, while 30 per cent predict they will contract.
Across the UK as a whole, the percentage of small firms specifically predicting that they will close the business in the next year has jumped to 6 per cent, up from 4 per cent in Q2. That equates to more than 330,000 potential business closures.
FSB is urging the Chancellor, Rachel Reeves, to heed this stark warning and to take dramatic action in next month’s Budget to ease the small business rates burden and the impact of increasing employment costs, and to lower the sky-high tax levels on entrepreneurship.
Among the UK small business community, the factor driving this pessimism around growth was predominantly the domestic economy, cited by over two-thirds of small firms (68%), followed by the tax burden (45%), labour costs (34%), and then consumer demand (28%).
Revenue outlook bleak
Looking at revenues over the third quarter of 2025 provides little relief. Around one in six small firms in the London region (17%) said their revenues rose over the previous three months, while over half (60%) said they fell.
Nationally, one in five small firms in the UK (21%) said their revenues rose over the previous three months, while over half (55%) said they fell.
Revenue predictions for the final quarter of the year – usually the so-called ‘golden quarter’ for many consumer-facing businesses in retail and hospitality – were also very subdued, with around one in four small businesses in the London region (27%) predicting revenue growth, but 48 per cent bracing for a fall.
Financing is another area of significant concern on a national level. Across the whole country, only one in ten small businesses (10%) say they rate the availability and affordability of new finance as good, while over half (54%) rate it as poor. A staggering one in five small businesses (21%) who successfully applied for credit were offered an interest rate over 20%.
Late payments were yet again a drag on small businesses’ finances and future plans. Two thirds of small firms in the UK (68%) reported experiencing late payments, and one third (34%) said they worsened over the past three months.
Laura Timm, FSB London Regional Chair said: “Small firms here in the London region are really feeling the pressure of tax and cost burdens, and the growth outlook is deeply concerning. The upcoming Budget must be used as an opportunity by the Government to support small business growth and rebuild confidence.”
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