Small Business Growth Forecasts Hit Two-Year High

• • Percentage of small businesses predicting growth jumps from 26% to 36% in just 3-months.
  • Sharp fall in enterprises fearing collapse – down from 29% to 7% over 12-months.
  • Growth forecasts recover in troubled sectors – retail, hospitality and construction.

Small business growth forecasts have finally returned to pre-Covid levels - with London, the South East and Yorkshire driving resurgent small business confidence for the next three-months.

The new research findings from the quarterly Business Barometer by Hitachi Capital Business Finance reveal that the percentage of small business owners predicting growth has soared from 26% to 36% since January – the highest quarter-on-quarter rise for four years.

Following a crash in small business growth forecasts during the first lockdown in March 2020 – falling from 39% to 14% overnight - the proportion of small business owners predicting growth levelled at around 26% for the following nine-months. The latest figures suggest that the significant progress of the Covid vaccination programme – together with easing of social restrictions – has had a profound impact on small business confidence, with the percentage of enterprises predicting growth now having fully returned to pre-pandemic levels.

Percentage of small business owners that predict growth for the next three months: Quarterly results.

Regionally, small businesses in London (48%), Yorkshire (44%) and the South East (42%) were most likely to predict growth for the three months to 30 June. In the West Midlands, growth forecasts were less emphatic (28%), although this was also the region where fewest small business owners predicted they would struggle to survive or face closure in the next three months (5%).

Perhaps a symptom of renewed economic optimism, media and marketing emerged as the sector where most small business owners predicted growth for the next three months - up sharply from 36% to 55% since January 2020. There were also significant rises in troubled industry sectors, such as retail (up from 19% to 33%), construction (up from 16% to 34%) and leisure/hospitality (up from 9% to 28%). Agriculture was the only industry sector where growth forecasts failed to rise on last quarter – here growth outlook for the next three-months remained unchanged at 22%.

Percentage of small business owners that predict net growth for the three-months to 30 June - by industry sector.

Joanna Morris, Head of Insight at Hitachi Capital Business Finance comments:

“The research, which was conducted going into the Easter weekend, could not bring more welcome news for the economy at large. More than just a breakthrough on the previous nine-months’ data, our tracking research suggests small business confidence is now back at its pre-Covid levels. These findings coincide with the impressive roll-out of the vaccine, the drop in Covid cases and the country being on-track to see the end of social restrictions by the end of June. Our research gives the clearest sign yet that small businesses have moved beyond survival mode and are now planning for recovery.

“The improved levels of business owner confidence in sectors such as retail, hospitality and construction are significant and, nationally, it is noteworthy that the percentage of small businesses fearing collapse has shrunk to single figures for the first time in 12-months. At Hitachi Capital Business Finance we have backed the small business community throughout the pandemic and, as we re-emerge from Covid restrictions, we are committed to helping established enterprises to bounce back and to achieve their growth potential.”

The research was conducted by YouGov among a representative sample of 1,306 small business decision makers between 24 March and 1 April 02021 spanning industry sectors.

Small business growth predictions for the three months ahead

A comparison over the last three quarters (column percentages)