Small businesses’ plans to create jobs hit five-year low – as many focus on cost control to navigate geopolitical disruption and market uncertainty

Two in three UK small businesses (67%) are working on plans to strengthen and grow over the spring months, although plans to hire new staff (14%) has hit a new five-year low, according to new research from Novuna Business Finance.

Whilst 84% of small businesses started 2026 with hopes to grow their enterprises during the course of 2026, the first quarter has proved to be challenging for many. The outbreak of war in the Middle East has already impacted energy prices - and at a time when the Chancellor has also warned that the ​Iran ​conflict is likely ⁠to see inflation rise in the coming months. Set against this challenging market context, the majority of UK small businesses remain committed to working on short-term growth plans, but the key priority areas all now focus on measures to protect cashflow and minimise costs.

Nationally, the Novuna Business Finance data reports a four-year peak in the percentage of small businesses prioritising the need to keep fixed costs down (65%). The importance attached to protecting cashflow has hit a seven-year peak – at 34%, the highest figure since 2019. In addition to this, more than one in four small businesses are prioritising the need to chase late payments (26%).

Nationally, plans by small businesses to protect costs has had a direct impact on the prospect for employment opportunities from this section of the business community. Only 14% of enterprises plan to hire new staff this spring – hitting the lowest level since 2021.

Beyond these defensive measures to protect cashflow and control costs in a challenging economic and geo-political climate, some small businesses are looking at creative and proactive ways to achieve business growth. Nationally, 28% of enterprises plan to expand into new markets overseas - despite the legacy of Brexit still being seen as a growth barrier to 19% of respondents. In addition, 15% of small business owners are using the context of market uncertainty to free up working capital by re-assessing their funding arrangements – whilst 14% of respondents are looking to invest in new equipment. Here, modernisation offers the potential to reduce overall energy usage and bills.

The regional and sector picture

Enterprises in the North West (68%) and South East (68%) are most likely to be working on initiatives to boost their financial strength during the spring months, with keeping fixed costs down the top priority in both regions (68% and 63% respectively). Across five regions, there was actually a six-month rise in the percentage of businesses working on short-term plans to strengthen and grow.

Across nine industry sectors there was an uptick in the percentage of small businesses working on short-term growth projects but, in these sectors (below), actual growth plans for the quarter were far lower and these were largely flat on previous quarters.