 has said as it warns the chancellor must act "urgently" in the Budget on 26 November.){kind=link}
Almost one in three small firms expect to downsize, sell or shut down in the next 12 months, while only 18% plan to grow, the Federation of Small Businesses (FSB) has said as it warns the chancellor must act “urgently” in the Budget on 26 November.
The group’s latest research showed confidence and growth hopes among UK small business community “nosedived” in the third quarter of 2025.
FSB described it as “overwhelming pessimism”, with the headline confidence reading falling to -58 points, even worse than -44 points in the previous three months.
The percentage of those predicting that they will close the business in the next year has jumped to 6%, up from 4%, which equates to more than 330,000 potential closures.
FSB urged the chancellor Rachel Reeves to take “dramatic action” in the Budget, including tackling the business rates burden, the impact of increasing employment costs, and high tax levels.
Tina McKenzie, FSB policy chair, said:
“The fact that under a fifth of small firms predict they will grow in the next 12 months, while nearly a third are looking at shrinking, selling or closing down, is horrifying – and a stark wake-up call for the government.
“We’re calling on Rachel Reeves to take bold action in the Budget to support entrepreneurship and ease tax and employment cost burdens on small firms – we must turn this around and enable small businesses to grow rather than having their ambitions held back, and in turn hampering economic growth.”
When it comes to revenue, 21% of small firms said sales rose over the previous three months, with 55% saying they fell.
Despite being the so-called ‘golden quarter’ for many consumer-facing businesses in retail and hospitality, only 21% predicted revenue growth in the final three months of the year, with 49% bracing for a fall.
On financing, just one in 10 small businesses said they rate the availability and affordability of new finance as good, while 54% rate it as poor. One in five small businesses who successfully applied for credit were offered an interest rate over 20%.
Late payments continue to be an issue. Two thirds of small firms reported experiencing late payments, and 34% said they worsened over the past three months.
Tina McKenzie added:
“Millions of small businesses shrinking, closing, or selling up instead of growing means a vicious cycle of a lower tax take, higher unemployment, and greater demands on the state all exacerbating each other in a downward spiral.
“The chancellor’s Budget speech will be a make-or-break moment for small businesses. The stakes couldn’t be higher. Without small businesses economic growth is a lost cause. Small firms will be looking for positive backing.”