More small firms expect to shrink than grow

03 Nov 2025

Research published by the Federation of Small Businesses (FSB) has revealed that more small firms expect their business to shrink rather than grow over the next year.

Just 18% expect to grow, according to the business group. Confidence amongst business owners fell to -58 in the third quarter of this year from -44 in the second quarter.

The FSB is calling on Chancellor Rachel Reeves to take 'dramatic action' in the Autumn Budget to help ease the burden of business rates on small firms and minimise the impact of increasing employment costs.

Tina McKenzie, Policy Chair at the FSB, 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.'