No summer bounce for Scotland’s small businesses as concerns mount

With around two-fifths of small firms regarding themselves to be seasonal businesses, alternative lender Novuna Business Finance explored whether the warm weather, summer holiday period and Scotland’s participation in the World Cup had boosted business confidence.

However, the latest findings suggest that small business growth forecasts for the third quarter to September remain flat on the position last summer (22 per cent of firms forecasting growth), and are down sharply on previous summers.

The latest summer growth forecasts in Scotland also remain below the UK average, which fell to 24 per cent of firms, from 28 per cent the previous quarter. At a time when the country prepares for a “Number 10 North” under incoming Prime Minister Andy Burnham, the north-west of England is the only region where there is a quarter-on-quarter rise in small business growth forecasts (a modest rise from 26 per cent in the second quarter to 28 per cent for Q3).

In every other area of England, the percentage of small businesses predicting growth for the next three months has fallen.

The Business Barometer tracking study from Novuna Business Finance goes beyond general feelings of confidence and, instead, every quarter tracks the percentage of small business owners that forecast “tangible business growth” for the next three months.

There was a mixed picture on small business growth forecasts across industry sectors. While manufacturing, transport and IT recorded quarter-on-quarter rises in growth outlook, there were significant falls elsewhere.

In the construction sector, the percentage of small businesses predicting growth almost halved to 15 per cent and there were also sharp falls for enterprises in the hospitality (21 per cent) and retail (21 per cent) sectors - ruling out the likelihood of a much-needed feel-good bounce from the World Cup and hot weather, Novuna noted.

Jo Morris, head of insight at Novuna Business Finance, said: “The latest findings are a concern, and particularly in Scotland, where small business growth forecasts have remained stuck at 22 per cent for the last three quarters.

“The context of geo-political tensions, rising fuel prices and political uncertainty following the local elections have probably all played out when it comes to small business planning. The one thing small businesses don’t like is uncertainty.

“Whilst small business outlook is cautious, the community continues to demonstrate strong resilience. Now is the time for everyone to support small and medium-sized enterprises with what they need to create jobs and drive future economic growth.”

In March, research from Novuna suggested that only one in five Scottish small businesses planned to take on new workers as geo-political turmoil saw many firms ramp up their cost-cutting measures.

While 84 per cent of small businesses started 2026 with hopes of growing their enterprises during the course of the year, the first quarter proved to be challenging for many, Novuna noted.