The UK’s gross domestic product (GDP) rose by 0.1% last December and by the same figure in the final three months of 2025, but the Federation of Small Businesses (FSB) said any positives are not being felt by small firms.
Responding to the Office of National Statistics data, chancellor Rachel Reeves said the UK’s economy grew the fastest among the European G7 countries in 2025.
She admitted “there is more to do”, but claimed “we’ve created the conditions for growth and I am confident this will be the year we will see the results of that”.
The GDP growth figures were slower than economists had predicted.
Commenting on the news, FSB policy director Tina McKenzie, said:
“Small business owners looking at the GDP result for December – while being relieved that it was at least weakly positive – would be forgiven for feeling that it largely appears to have passed them by. A small uptick in a necessarily very broad figure shouldn’t disguise the tough reality being felt on the ground.
“The Autumn Budget did not do enough for small businesses and self-employed people, although it was received with some surprise and relief by large corporates, whose huge balance sheets already provide them with a cushion in difficult trading circumstances.
“The cost pressures on small businesses and self-employed people have built and built, and too many within the community are now at a very dangerous point. Late payments from large companies are exacerbating the pain they are feeling, while the prospect of a ‘costs timebomb’ hitting in April – a potentially fatal combination of higher business rates bills, hikes to standing charges on energy bills, and a higher National Living Wage – presents a moment of real danger to small firms.”
“Last year was one many small business owners would prefer to forget. Confidence fell in every quarter, according to our research, ending in a post-COVID nadir of -71 points in the final three months of 2025. The sluggish performance of the UK economy was the top-cited barrier to small firms’ growth prospects across all four quarters of last year, followed by the tax burden, showing how small businesses and self-employed people are caught in a tricky spot, between low growth and rising fixed costs.”
McKenzie added that the government needs to place more of a focus on rebuilding small business confidence levels and encouraging them to grow, given the key role small firms play in the economy.
She said the next King’s Speech should include a bill to tackle late payment, and the Spring Forecast on 3 March should be used to announce new measures to support small businesses.
On Wednesday, a major report by the Business and Trade Committee warned small businesses are “facing pressures comparable to the pandemic” which pose a “real risk to business viability”.