Election bounce signals surge in small business confidence

The percentage of small business owners predicting growth has hit its highest level for more than two years, after a period of slow decline since the start of 2022.

The new small business survey, commissioned by Novuna Business Finance during the fortnight immediately after the General Election, revealed that 35% of UK small business owners are predicting growth for the next three months – a rise from 30% for the previous quarter. The research reveals a confidence bounce-back that is comparable to the years before Covid – and the resurgence of small business confidence at the start of 2022, when Covid restrictions finally fell away.

Set against reports of sharp falls in business confidence in France and Germany – with fears that the Eurozone’s two biggest economies could be set for a downturn – UK small business confidence has enjoyed a positive upturn in the weeks following Labour’s election win. Across most industry sectors and UK regions, more small businesses are predicting growth than was the case in the three-month period to 30 June.

Percentage of small businesses predicting growth each quarter – results over time

Q4 2021	Q1 2022	Q2 2022	Q3 2022	Q4 2022	Q1 2023	Q2 2023	Q3 2023	Q4 2023	Q1 2024	Q2 2024	Q3 2024
35%	36%	34%	34%	31%	33%	32%	32%	32%	33%	30%	35%

Sector findings

Across nine industry sectors, this quarter sees a rise in the percentage of small businesses predicting growth for the next three months (up to 30 September). Compared to the three months leading up to the General Election, there are significant rises in growth predications reported in: Construction (from 15% to 36%), Agriculture (from 28% to 40%), IT/Telecoms (28% to 38%) – and also a welcome boost for the Retail sector (rising from 26% to 37%). Overall, small businesses in the Finance, Agriculture and Media sectors were most likely to be predicting growth over the next three months.

Percentage of small businesses predicting growth by industry sector

	Q3 2024	Q2 2024
Finance/Accounting	44%	41%
Media	40%	36%
Agriculture	40%	28%
Medical	39%	36%
Legal Services	38%	33%
IT/Telecoms	38%	28%
Retail	37%	26%
Construction	36%	15%
Manufacturing	35%	37%
Transport & Distribution	31%	34%
Hospitality/Leisure	30%	30%
Real Estate	28%	25%
Education	26%	33%

Regional findings

Across nine UK regions, the new July data from Novuna Business Finance reveals a rise in the percentage of small businesses predicting growth. Confidence was strongest in London, with 49% predicting growth for the next three months. There were also significant quarter-on-quarter rises for small businesses based in the East (up from 36% to 43%), Scotland (up from 27% to 34%), Wales (up from 15% to 32%), the North East (up from 19% to 31%) and the East Midlands (up from 24% to 32%).

“The results over time show a remarkable consistency quarter-on-quarter, with outlook seldom changing significantly over a short period of time.

“Our latest research results represent the biggest quarter-on-quarter swing in growth outlook since the spring of 2021. We don’t think this is based on the political views of small business owners, it’s more a reflection of their perceived need for certainty. The sense of a new government coming in with a big public mandate, together with falling inflation, suggests solidity – and small businesses need a sense of stability and certainty to plan.”

Percentage of small businesses predicting growth by region

	Q3 2024	Q2 2024
London	49%	43%
East	43%	36%
Scotland	34%	27%
South East	33%	39%
West Midlands	32%	29%
East Midlands	32%	24%
Wales	32%	15%
North East	31%	19%
Yorkshire/Humberside	28%	27%
North West	26%	23%
South West	22%	29%