London — July 14, 2025 — Confidence among UK small businesses has dropped to its lowest level on record, according to a new survey published this week, highlighting deepening concerns over high interest rates, inflationary pressures, and stagnant consumer demand.
Survey Shows Sharp Decline in Optimism
The latest Small Business Confidence Index released by the Federation of Small Businesses (FSB) reveals that sentiment among entrepreneurs and small business owners has deteriorated significantly in Q2 2025. The index plunged to -42, a sharp decline from -27 in the previous quarter and the lowest figure since the survey began over a decade ago.
Over 60% of respondents reported reduced revenues, while almost half expressed uncertainty about their ability to maintain staffing levels or access affordable credit in the coming months.
Rising Costs and Regulatory Burdens
A majority of small-business owners cited rising utility bills, rent, and raw material costs as key factors eroding profitability. Additionally, new post-Brexit regulatory requirements and bureaucratic delays have made it harder for SMEs to import goods, hire foreign workers, and compete internationally.
Martin McTague, National Chair of the FSB, said:
“The lifeblood of the UK economy is being choked by a mix of high interest rates, policy uncertainty, and waning consumer confidence. Urgent intervention is needed before we lose a generation of entrepreneurs.”
Calls for Government Support
Business groups are calling on the UK government and Bank of England to take immediate action, including:
- Rate relief extensions for small enterprises
- Targeted financial aid for energy-intensive sectors
- Simplified loan access for struggling startups
- Tax incentives to retain and attract employees
So far, Downing Street has issued only cautious reassurances, noting that economic growth is expected to rebound in 2026, though experts say that may be too late for thousands of small firms on the brink of collapse.
