Fears of Scotland’s small businesses in 2026 laid bare in stark new study

The percentage of small companies north of the Border predicting growth for the next three months - 22 per cent - has remained largely unchanged on last quarter (23 per cent), according to the findings of the latest business barometer study by Novuna Business Finance.

While historically, the spring months each year usually offer a seasonal boost to small business growth forecasts, the like-for-like figures for April show that small business growth outlook is sitting at its lowest level since the country went into the first Covid lockdown in 2020.

The alternative lender’s barometer report has tracked small business growth outlook every quarter since 2015.

The new figures also highlight the challenging context in which Scottish firms are currently operating, with 72 per cent of smaller businesses fearing disruption to their enterprises that would result from current geo-political and economic uncertainty.

Of those that expressed concerns, 54 per cent feared the impact the Middle East conflict would have on their business and supply chain. This rose sharply to 70 per cent for small businesses in the transport and distribution sector, 68 per cent for those in the agriculture sector and 61 per cent of manufacturing small businesses.

A fifth - 20 per cent - of respondents in Scotland said they still feared the potential impact of US tariffs on the UK, while 17 per cent of small businesses also said that the war in Ukraine and instability in the broader region would impact their business and supply chain.

As a result of all this uncertainty on the UK economy, 74 per cent of Scottish small businesses said they feared the prospect of the UK government raising taxation further later in the year.

The latest findings follow Novuna’s research in March on rising energy prices, after the outbreak of war in the Middle East region, which revealed that small businesses estimated their transport costs would increase by an average of £753.56 a month, and the cost of running machinery estimated to rise by an average of £785.92.

Sabrina Ahmed, customer engagement manager at Novuna Business Finance, said: “After ten years of tracking small business outlook across Scotland, it is clear how serious current worries have become around energy prices, the fear of future tax rises and general macro-economic uncertainty.

“We have learned so far this year that many small businesses are working hard to reduce fixed costs, free up working capital and are taking steps to diversify their business.

“Novuna Business Finance is committed to helping established Scottish enterprises with funding that will help them to navigate market uncertainty and power future growth,” she added.

Last week it emerged that one in eight small businesses in Scotland has experienced a cyber-attack and more than half fear they could be vulnerable to a critical data breach.

The majority of respondents to the poll of 500 businesses said they lacked the resilience to withstand a prolonged operational shutdown, while fewer than one in ten provide regular cyber security awareness training for staff.