London small businesses show a “remarkable” level of expectation of growth in the final quarter of the year as the capital outpaces the rest of the country, a new report reveals today.
However, it reveals there is also rising concern about predicted measures in the Budget that is undermining business confidence and could result in slower growth next year.
The research from Novuna Business Finance finds that 57% of small businesses are expecting growth in the fourth quarter, the highest level for nine years. This compares with just 35% nationally, though this was up from 30% in the summer. The highest reading of any region outside London was 40% in the West Midlands.
The growth outlook has been steadily improving since the election in July that appeared to bring back stability after years of political turmoil under the Tories.
Jo Morris, head of insight at Novuna Business Finance, said: “The position for London is quite remarkable; despite a period of economic uncertainty with the Autumn Budget ahead, London continues to be the small business powerhouse for growth this autumn.”
However, weeks of intense speculation about the contents of Rachel Reeves’s long awaited statement to the Commons next Wednesday, risks jeopardising the new found optimism, according to Novuna.
Nationally, 86% of UK small business owners are fearful of Autumn Budget announcements that could harm the growth outlook and finances of their enterprises.
For those that expressed concerns, the prospect of national insurance hikes (49%), rises to VAT (48%) and income tax (50%) were issues small business owners believed would damage business growth.
Angela Rayner’s new plan for flexible working was major a concern in many sectors, whist the property sector feared the fall out if there were rises to capital gains tax or inheritance tax.
Joanna Morris, head of insight at Novuna Business Finance said: “Whilst almost daily there seems to be speculation over what will be announced in the Autumn Budget, in truth no one actually knows at this moment in time.
What our survey does reveal, however, is how hard-fought but frail the upturn in small business confidence has been since the General Election. After two-years of small business confidence not moving each quarter, the upturn in July was welcome news for the economy and coincided with inflation falling and reports of modest growth to the UK economy in August.
“All this makes the timing of the Autumn Budget important. Small businesses want support to power their growth plans forward – it is a critical time to build on the signs of upturn since July - but fiscal changes that add to the cost burden of UK small businesses, increase red tape or dampen consumer spending confidence could see trigger a fall in small business growth outlook for the final months of 2024 and going into 2025.”
