Meagre GDP Growth Not Felt By Small Businesses As Costs Mount

Gross Domestic Product (GDP) rose by a lacklustre 0.1% in December, and by 0.1% in the final quarter of 2025, while confidence levels among small businesses and self-employed people fell in every quarter of 2025.

Responding to the announcement that Gross Domestic Product (GDP) rose by 0.1% in December, and rose by 0.1% in the final quarter of 2025, Policy Chair of the Federation of Small Businesses (FSB), 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 more margin pressures 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.

“To turn this around, more focus needs to be given by the Government to rebuilding small business confidence levels. It is small businesses and self-employed people which have helped drag the economy out of previous periods of stagnation, and it is therefore extremely concerning that huge numbers of them do not feel they are in a position to take risks in order to grow. The King’s Speech needs to include a bill to tackle the issue of late payment, which strangles the cashflow and futures of far too many ventures, while the upcoming Spring Forecast is another opportunity which could be used to announce measures to support the small business and self-employed community.”