Novuna Research Shows 26% of Welsh Small Businesses Forecast Growth Before Christmas 2026

Novuna Business Finance research reveals 26% of Welsh small businesses forecast growth between October and December 2026, a significant rise from 20% in summer. This upward trend surpasses the 23% recorded at the same point last year, signalling improving optimism despite persistent economic uncertainty.

The data indicates strengthening growth expectations as the year draws to a close, although the outlook remains mixed across various sectors. Retailers specifically report a more positive stance heading into the critical Christmas trading period.

In the retail sector, 27% of small businesses now anticipate growth, compared with 21% in the previous quarter. However, this figure remains below the 32% recorded at the beginning of the year, reflecting continued volatility since the pandemic.

Encouraging annual improvements in growth expectations have been identified across several industries, including transport and distribution, IT and telecommunications, education, and leisure and hospitality. Transport and distribution businesses have reported increased growth forecasts compared with the start of the year.

Rising operating costs remain a significant concern for these firms, exacerbated by the fact that the average UK diesel price has risen above £2 a litre for the first time. This price increase adds further pressure to businesses reliant on vehicles and distribution networks.

The research found that 62% of small businesses believe further tax increases affecting petrol or diesel vehicles would negatively impact their growth plans. These concerns highlight the sensitive balance between fiscal policy and operational viability for smaller firms.

Elsewhere, growth expectations in manufacturing and construction have remained broadly unchanged over the year. In contrast, agriculture, property, medical, and legal services have experienced declines in their growth forecasts.

Despite the overall improvement in growth forecasts, the findings highlight continuing concerns about the economic environment and the potential impact of further business taxation. With the Budget approaching later this month, 55% of Welsh small businesses surveyed said additional increases in National Insurance would negatively affect their finances.

A further 40% expressed concern about the potential impact of increases in Corporation Tax. These anxieties come against a backdrop of wider economic volatility, including uncertainty over government borrowing, inflation, and interest rates.

Nevertheless, the increase in the proportion of Welsh small businesses anticipating growth provides a more encouraging picture heading into the final months of the year. Growth expectations have improved since the summer and exceed levels recorded a year ago.

Jo Morris, Head of Insight at Novuna Business Finance, commented on the resilience of the sector. “Our quarterly research this year shows that many small businesses across Wales are working hard to absorb the pressures of rising fuel and energy costs.

She added: “Many are also concerned about how further tax, inflation and interest rate changes could impact their growth plans. At the same time, the majority of smaller businesses have not yet fully worked through whether and how AI could practically help business growth.

Morris noted that despite headwinds, small business owners have demonstrated resilience since the Covid era and the cost-of-living crisis. “They dislike uncertainty, but they find ways to adapt, innovate and pursue growth. Looking ahead to 2027, the UK’s growth ambitions depend heavily on their success.

She concluded: “The autumn and winter months are an important time to step up and support UK small businesses. At Novuna Business Finance, we continue to support established businesses by helping them invest in essential assets, preserve cash flow and ease pressure on other areas of their budget.