The share of small businesses who said they expected their business to shrink or close, or to sell up the business over the next 12 months was 27%. This outweighed the 25% who predicted their business would expand in the second quarter of this year.
It is the first time in the history of the Small Business Index (SBI) from the FSB that the proportion of small firms bracing for contraction, sale or closure outnumbered the percentage hoping to grow.
The FSB says that the gloomy finding likely reflects small business sentiment around the introduction of higher levels of employer National Insurance contributions and rises in the National Living Wage.
It also reflects fears around the impending Employment Rights Bill, which the FSB says looks set to impose a new raft of costs and risks onto the shoulders of small employers.
Tina McKenzie, the FSB's Policy Chair, said:
"Confidence being so low and not showing any improvement since the start of the year, is bad enough.
But add in the fact that stagnation and pessimism among small businesses spells huge risk for the overall economy, and the upcoming Small Business Strategy needs to be ambitious enough to meet the scale of the challenge facing the UK's small firms."
READ MORE
28/07/2025
View all >
15/10/2026
Six months until next phase of Making Tax Digital rollout
HMRC expects that more than 1m taxpayers will be required to use digital recordkeeping and send quarterly updates to HMRC when the second phase of MTD for Income Tax is extended from 6.4.27.
Applications open for scheme to cut electricity bills for manufacturers
Applications opened on 1 October 2026 for the British Industrial Competitiveness Scheme (BICS) as part of a government project to cut costs for businesses.
Responses to Shadow Chancellor's party conference speech
On 5 October, Shadow Chancellor, Andrew Griffith, delivered his speech to the Conservative Party conference.
Sign up to keep in touch to receive our latest news and industry updates.
* *
Yes, I would like to receive email updates providing me with the latest finance news, advice guides and details of future events.