LONDON ENTERPRISES SET THE PACE AS SMALL BUSINESSES PLAN TO INVEST AGAIN
London’s small businesses are emerging as the most optimistic in the UK as the sector enters 2026, with a renewed focus on growth, resilience and long-term sustainability following a challenging year for the economy.
Research from Novuna Business Finance shows that 84 per cent of UK small business owners are starting the year with plans to invest in new growth initiatives — the highest proportion recorded in five years. The findings suggest that, despite lingering concerns over market volatility, inflationary pressures and global trade uncertainty, confidence among smaller enterprises is beginning to recover.
That growth agenda is being driven decisively from the capital. Nine in ten London-based small businesses said they intend to invest in new growth initiatives at the start of 2026, the highest level of any UK region. The East Midlands followed closely at 89 per cent, with the North West at 84 per cent.
The research also indicates a shift in priorities among London firms compared with a year ago. Nearly half of small businesses in the capital — 46 per cent — are entering the new year with a focus on increasing new business income, up from 41 per cent at the same point last year. Meanwhile, more than a quarter are prioritising diversification through the introduction of new products and services, a notable rise from 20 per cent in 2025.
Cost discipline is also moving higher up the agenda. The proportion of London-based small businesses seeking to reduce fixed costs has climbed sharply to 36 per cent, compared with 22 per cent a year earlier. At the same time, more firms are focused on strengthening their balance sheets, with 26 per cent prioritising the building of financial reserves, up from 18 per cent. A growing number are also putting contingency planning at the centre of their strategy, as prolonged economic uncertainty remains a concern.
Jo Morris, Head of Insight at Novuna Business Finance, said: “Ahead of the New Year starting, we asked a nationally representative sample of 1,000 small business owners what growth initiatives, if any, they were prioritising to make their enterprises stronger for the year ahead. Small businesses in London emerged as those most likely to be starting 2026 with plans to invest in new growth to build greater strength and resilience into their enterprises.
“Our data paints a picture of determination from small business owners. Last year was, for many, a low-point – with small business growth forecasts hitting a record low and many concerned about external factors, such as US tariffs and fears of tax rises in the Autumn Budget. Despite all this, more than eight in 10 small business owners are going into 2026 determined to find new ways to make their enterprises stronger and more resilient. We last saw this during the pandemic era and the determination of small business owners then to flex and adapt played out in a bounce-back of sector confidence in 2022. After an economically challenging 2025, the sheer scale of businesses prioritising plans to build strength into their enterprises for the year ahead will hopefully result in a much-needed upturn in positive growth outlook from the sector in the early months of 2026.”
The findings point to a cautious but meaningful shift in sentiment across the small business community. While uncertainty remains a defining feature of the economic landscape, the emphasis on investment, diversification and financial resilience suggests that many firms are positioning themselves not just to survive, but to emerge stronger as conditions stabilise.
