London small business confidence slumps to levels not seen since the pandemic
A year on from Labour's landslide election win the percentage of small businesses in the capital predicting growth in the coming quarter has slumped from 48% to 37% over the last three months. It peaked at 57% in the last quarter of 2024.
Nationally the proportion forseeing growth fell for the fourth consecutive quarter to 26%, plummeting to the low levels last seen during the lockdown era of 2020 and 2021, according to new research from Novuna Business Finance.
The draining away of confidence in the engine room of the private sector spells more bad news for a Government that promised to make boosting economic growth its top priority.
In London there was a sharp fall in the percentage of enterprises predicting growth in the next three months – 37%, falling from 48% last quarter and a peak of 57% in the final months of 2024.
The Spring quarter of the year was a tough one for business that saw new rates of employer National Insurance contributions kick in on April 6.
The July 2025 findings are drawn from Novuna's quarterly Business Barometer study a poll of more than 1000 small businesses that has been running for 11 years. The research was conducted by YouGov between 16th June and 3rd July.
By industry sector, the growth picture for the next three months was mixed: manufacturing saw a jump from 19% to 25% while construction rose from 19% to 24%, perhaps both sectors boosted by the cut in interest rates in February and May. However, there were significant falls in real estate, transport and distribution and hospitality and leisure.
Jo Morris, head of insight at Novuna Business Finance said: 'This time last year, the election bounce of a new Government taking office saw an immediate rise in small business confidence – with the percentage predicting growth rising from 30% to 35%.
'Ever since then, small business growth forecasts have fallen over four consecutive quarters. The new low of 26% for the three months to 30 September is on a par with the lockdown months of 2020.
'The picture in London is of particular concern because small businesses in the capital have always shown resilience in leading the growth agenda for the country at large. If the sharp fall in growth forecasts on London from 57% to 37% since the end of last year stands as a weather vane for the country, then small businesses are set for a challenging second half of 2025.'
'Our new report on small business outlook over the last year looks closely at how recent market developments - such as the NI hike for employers, uncertainty over tariffs and fears over autumn tax rises - have played out on small business confidence and their growth predictions.
'Whilst the economic picture for many enterprises is very challenging, periods of uncertainty can also be times to invest in long-term success, and Novuna Business Finance is committed to helping established enterprises make the investments that will power future growth.'
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