Uncertainty dominates SME growth worries

The percentage of UK small businesses citing barriers holding their business back from growing has hit a six-year peak (84%), with the impact of overseas conflict on energy and fuel prices in the UK now a serious concern for one in three enterprises (32%).

The findings from Novuna Business Finance, show that current geo-political uncertainty is dominating the disruption felt by small business owners this spring, proving to be far more significant than local or immediate market challenges. The most significant barriers to growth cited included: macro-economic uncertainty (51%), rising oil prices (32%) and, as a consequence of this, the impact on higher running costs (31%). In contrast, the cost of skilled labour (20%), volatile cashflow (17%), fluctuating exchange rates (7%), digital proficiency (6%) and having out-dated equipment (5%) emerged as relatively smaller concerns.

Who's being held back the most by rising energy and fuel prices in the UK?

Around the UK, small business in geographical extremes were far more likely to be impacted by rising energy price rises. Business owners in Scotland (40%), Wales (38%) and the South West of England (42%) were significantly more likely than the national average (32%) to say the impact of overseas conflict on energy and fuel prices in the UK were a barrier holding their business back from growing.

By industry sector, small businesses in Transport, Retail and Manufacturing were most likely to say that rising energy and fuel prices were material barrier holding back business growth.

• Transport & distribution -58%
• Retail - 45%
• Manufacturing - 41%
• Hospitality - 36%
• Construction - 35%
• Agriculture - 35%

The general picture beyond oil

The research findings are from the Business Barometer study by Novuna Business Finance, which has been tracking small business growth outlook for more than a decade. The long-term picture suggests the percentage of enterprises experiencing barriers to growth has been slowly rising in recent years, but the new norm is at a higher level than the years before the pandemic in 2020.

• This Quarter, small businesses in the Manufacturing (94%), Retail (95%) and Transport/Distribution (90%) sectors are most likely to cite one or more barriers holding back planned business growth.
• In Agriculture, the percentage of small businesses bemoaning barriers to growth has hit a four-year peak (86%).
• In Construction, Retail and Media, growth barriers are at their highest level since 2020.
• Across six UK regions, there has been a year-on-year rise on the percentage of small businesses citing factors holding back growth - and in London, growth barriers hit a six-year peak (88%).

These findings on growth barriers come at a time when the percentage of UK small businesses predicting actual growth for Q2 2026 has fallen to a four-year low (29%) - with significant falls in the manufacturing, construction and retail sectors. The Novuna Business Finance data suggests growth outlook now stands at its lowest level since Q1 2021 (26%), and - if the first lockdown periods are taken out the equation - it is the first quarter in eleven years when the percentage of small businesses predicting growth has fallen below 30%.

The research findings are the latest from Novuna Business Finance's Business Barometer study, which has tracked the percentage of small business owners that predict growth every quarter for the last 11 years.

With UK small business confidence falling for a second successive quarter, Novuna's new data also shows that current economic volatility is a cause of serious concern to 69% of small businesses.

Whilst 12% already think US tariffs on the UK will directly impact their own businesses, a further 9% fear the supply chain disruption of tariffs on the EU. More significant, almost half of small businesses (48%) believe the current economic instability will play out in UK tax rises later this year - and 30% fear current geo-political events will trigger a fall in consumer spending this summer. All these factors are contributing to the significant fall in small business growth forecasts for the three months to 30 June.

Jo Morris, Head of Insight at Novuna Business Finance comments: "Our findings show how quickly and how deeply UK small businesses have felt the impact of rising energy and fuel prices in the UK. Businesses that rely on heavy equipment and transport seem to have felt the impact most significantly - as have those enterprises based in extreme points of the UK, businesses that may have bigger transport and shipping costs."

"Overall, the that fact four in five enterprises cite factors that are holding back business growth is significant. Actual growth forecasts each Quarter have been relatively static for some time. Whilst the vast majority of enterprises started the year working on new initiatives to secure growth, this is counter-balanced by the very high number that are trying to overcome obstacles and external market pressures. Our tracking suggests that if we want to see a major upturn in UK small business growth forecasts for the summer and autumn months, it is the barriers that need to be tackled first - and urgently. Today's figures on barriers to growth give us an early indication of what to expect for tomorrow - from actual growth forecasts for the months ahead."

Novuna Business Finance provides business finance to SMEs and bigger corporations across the UK. This includes asset finance, stocking, block discounting and sustainable project finance provided through brokers, vendor organisations, manufacturers and direct to the business community.