The percentage of barriers to growth hits five-year high

And in the Manufacturing (96%) sector the figures have hit a 10-year high - 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. The percentage of small businesses saying they are experiencing barriers that are holding back growth has been deeply-rooted at a consistent level for five years - and is now rising to a new five-year peak.

 Percentage of UK small businesses that cite barriers holding back growth: Results over time

 The key barriers to growth for small business owners this summer?

• Market uncertaintyis the biggest perceived growth barrier for small business owners because it is hard to plan against. This summer, 48% of business owners cited it is a key factor holding back their business growth - up from 41% this time last year. The current figure is at its highest level since the outbreak of Covid in 2020 (49%). Further, general market uncertainty has had a knock-on effect on small businesses now feeling uncertain about their own trading prospects for the months ahead - up sharply from 16% last June to 28% this year.
• Fixed costs:For small businesses, the cost-of-living crisis is far from over. The percentage of enterprises that say rising fixed costs is holding back growth has risen in the last year from 25% to 31%. This challenge is most intensely felt in three sectors: Hospitality (53%), Manufacturing (42%) and Transport/Distribution (39%).
• The long tail of Brexitis still felt by many small businesses - with one in five (19%) citing its consequences as still presenting barriers to growth today. This is most strongly felt in the Transport/Distribution (24%) and Manufacturing (21%) sectors. Beyond access to overseas markets, there are further spin-off challenges since Brexit: Red tape is a bigger barrier to growth today (up from 16% to 26% in the last year) - and the percentage of enterprises that bemoan the cost of skilled labour has doubled since 2020 (up from 10% to 20%). This summer, the cost of skilled labour is the biggest growth barrier for small business owners in the Construction sector (37%).
• Finance:The latest Novuna Business Finance data also suggests that a growing number of small businesses regard financial factors as barriers holding back growth. Complaints over high street bank charges and fees have almost doubled in a year (from 8% to 15%), challenges relating to volatile cash flow have also risen (from 14% to 18%) - and there is also a rise in the percentage of business owners that say that the inability to finance a modernisation of outdated equipment is also a growth barrier (up from 3% to 8% in a year).

Jo Morris Head of Insight at Novuna Business Finance comments: "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 UK small businesses predicting growth this quarter has fallen to a four-year low (29%) - with significant falls in the manufacturing, construction and retail sectors. Added to this, we also have a five-year high in the proportion of enterprises that cite barriers holding back their growth. Some of these 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."

Additional findings

The Manufacturing and Transport/Distribution sectors have experienced the biggest rises in the percentage of small businesses citing barriers to growth in the last year. For the manufacturing sector, the latest figures represents a 10-year peak - and for Transport/Distribution, the percentage of enterprises citing barriers to growth is its highest level since the Covid outbreak in 2020.

Percentage of small businesses that cite barriers holding back growth: Results over a decade

 Looking at the issue of barriers to growth across all industry sectors, the new Novuna data reveals year-on-year rises in seven sectors - and all these are up on the position 10-years ago. 

Percentage of small businesses that cite barriers holding back growth by sector

 A geographical analysis reveals that, in all but two UK regions, more business owners feel barriers to growth in summer 2025 than they did 10 years ago. This is a surprise, given seismic events such as Brexit, Covid and the cost-of-living crisis were all experienced during the intervening years. Small businesses in the North West are most likely to feel barriers to growth this summer - and the biggest rises in the last year were recorded in the North East, the North West, London and Scotland. 

Percentage of small businesses that cite barriers holding back growth by region

 For further information please visit Novuna Business Finance