"Small businesses are facing a tough start to 2026 as confidence slumps and growth plans stay out of reach, new research by the Federation of Small Businesses (FSB) reveals. The Small Business Index (SBI) plunged to -71 in the final quarter of 2025, meaning far more businesses were struggling than succeeding. This is down from -58 in Q3 and the lowest it's been since the outbreak of Covid in 2020, when it dropped to -143."
"The hospitality accommodation and food sector is the worst hit, recording a confidence score of -104 - with 46 per cent of those small firms planning to decrease staff between January and March 2026, and 58 per cent expecting a decrease in revenues. The Government promised to deliver its promised 40 per cent retail, hospitality and leisure reduction, using the full powers it took from the reduced retail, hospitality and leisure multiplier."
"Across all other small firms, taxation is the number one cost pressure, cited by a record 64 per cent of respondents, up from 62 per cent last quarter. Tax first topped the list in Q2 2025 - the first time this has happened in the SBI's history - and has stayed there ever since, showing how policy decisions are now landing directly on small business growth plans, with dividend tax rises still to come."
The Small Business Index fell to -71 in the final quarter of 2025, the lowest level since the Covid outbreak, signalling many more struggling firms than succeeding. Hospitality, accommodation and food recorded the worst confidence at -104, with 46% planning staff reductions between January and March 2026 and 58% expecting revenue declines. Firms employing 1–9 people scored -85. Taxation is the top cost pressure for a record 64% of respondents, up from 62%, and first topped the list in Q2 2025. Falling revenues and rising costs have stalled investment, with 37% planning to reduce investment next quarter and increased workforce reductions recorded in Q4.
Read at London Business News | Londonlovesbusiness.com
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