Five-year peak in UK SMEs planning growth in 2026

UK small businesses are entering 2026 with renewed confidence, as new research from Novuna Business Finance reveals a five-year high in the proportion of firms planning to invest in growth initiatives.

According to the study, 84% of small business owners say they are starting the New Year with plans to make their enterprises stronger, up from 81% in both 2024 and 2025 and the highest level recorded since 2022. The data suggests a marked shift in sentiment following a difficult trading environment in 2025, when the proportion of small businesses predicting growth fell for four consecutive quarters to just 25%.

The findings, based on a nationally representative survey of more than 1,000 small business decision-makers, indicate that resilience is replacing caution as firms look ahead to the year ahead.

Small businesses in London are the most likely to be starting 2026 with growth plans, with nine in 10 (90%) prioritising new initiatives. The East Midlands follows closely at 89%, while 84% of businesses in the North West report similar intentions.

By sector, manufacturing stands out as the most optimistic, with 94% of firms planning to invest in growth during 2026, up from 90% a year ago. Year-on-year increases were recorded across almost all of the 10 industry sectors surveyed. Particularly strong rises were seen in property and real estate (from 72% to 85%), transport and distribution (70% to 83%), and legal services (67% to 82%).

Retail and finance were unchanged on last year at 79% and 84% respectively, while media was the only sector to record a decline, falling from 92% in 2025 to 84% for 2026.

While increasing new business income remains the top priority for small businesses (46%, up from 43% last year), the research shows a notable shift towards strengthening financial resilience.

Four in 10 businesses (40%) say reducing fixed costs is a key focus for the year ahead, a sharp rise from 24% in 2025. Nearly a third (31%) are prioritising building up financial reserves, compared with 23% a year ago. A quarter of firms (25%) plan to diversify into new products or services, while 20% are reviewing back-office operations for efficiency gains, up from 12% last year.

There is also a growing emphasis on preparedness, with 17% of small businesses saying they are prioritising stronger contingency planning in case of prolonged market uncertainty.

Commenting on the findings, Jo Morris, Head of Insight at Novuna Business Finance, said the data reflects a strong sense of determination among UK entrepreneurs.

“As we all prepare to start a New Year, our data paints a picture of determination and resilience from UK small business owners,” she said. “Last year was, for many, a low point – with small business growth forecasts hitting a record low and widespread concern about external pressures such as US tariffs and potential tax rises.

“Despite all this, more than eight in 10 small business owners are going into 2026 determined to find new ways to make their enterprises stronger and more resilient. We last saw this during the pandemic era and the determination of small business owners then to flex and adapt played out in a bounce-back of sector confidence in 2022.”

Morris added that, after an economically challenging 2025, the scale of investment planning seen in the data “will hopefully result in a much-needed upturn in positive growth outlook from the small business community in the early months of 2026.”