Government financial support and policy interventions
The primary development in UK small business news is the major funding and policy shakeup introduced by outgoing Chancellor Rachel Reeves to unlock billions in finance for SMEs. This comes alongside significant leadership changes at 10 Downing Street, where incoming Prime Minister Andy Burnham has taken office.
The UK government has launched a multi-billion-pound package targeted at rescuing fading small business growth.
- Growth Guarantee Scheme: The Chancellor expanded the British Business Bank‘s cornerstone programme, unlocking a further £6.5 billion in market lending. Eligibility turnover limits rose from £45 million to £54 million, extending loan terms up to 10 years.
- Innovation and export backing: A dedicated £500 million in government funding was announced to directly support innovative scale-ups and community lenders.
- Electricity tax cuts: Prime Minister Andy Burnham announced the complete removal of VAT from domestic electricity bills starting 1 October. While targeting households, this is a bid to ease wider consumer cost-of-living stresses and free up retail spending.
Low growth forecasts and economic realities
Despite new finance options, small business confidence has hit a historical milestone. Data from the Novuna Business Finance Barometer shows overall growth forecasts have plunged to an all-time 12-year low of 24%, driven by rising fuel costs and geopolitical tensions in the Middle East.
| Sector | Q3 2026 Growth Forecast | Q2 2026 Growth Forecast |
|---|---|---|
| Finance and Accounting | 34% | 45% |
| Transport | 35% | 28% |
| IT and Telecoms | 32% | 29% |
| Manufacturing | 31% | 29% |
| Agriculture | 27% | 20% |
| Medical Services | 25% | 21% |
| Retail | 21% | 38% |
| Hospitality | 21% | 25% |
| Media | 21% | 35% |
| Construction | 15% | 29% |
Late payments and enforcement pressures
The Business and Trade Committee formally requested that the Department for Business and Trade reconsider its current growth strategy. MPs warned that the cumulative burden of policy decisions, combined with systemic high street strains and inadequate business rates relief, is forcing small firms to close at unsustainable rates.
Concurrently, HMRC has increased its scrutiny of small business tax gaps. New reports confirm that small businesses make up two-thirds of the UK’s £59.2 billion uncollected tax shortfall, prompting harsher compliance audits and expanded whistleblower incentive programmes.