SLEEPLESS IN THE CAPITAL: ECONOMIC UNCERTAINTY WEIGHS ON SME LEADERS

Running a small business in London has rarely been straightforward. Yet new data suggests that for many entrepreneurs, the pressures of economic volatility, tax uncertainty and growth ambition are no longer confined to office hours — they are following them home.

Research from Novuna Business Finance shows that 79% of London small business owners say worries about everyday business issues keep them awake at night. At the same time, 50% cite the impact of economic volatility and geo-political uncertainty as a major source of concern, underlining the uneasy climate in which the capital’s SMEs are operating.

The findings come against a paradoxical backdrop. Only last month, Novuna reported a six-month high in the proportion of London small businesses predicting growth for the first quarter of 2026. Four in ten (40%) forecast expansion — well above the national average of 27%. Yet optimism about revenue growth appears to sit alongside mounting personal strain.

Concerns about further tax and interest rate rises were cited by 37% of London-based small business owners, a figure that has grown more prominent since the National Insurance increase for employers took effect last April. Business owners also reported anxiety over retaining existing customers (31%), managing cash flow (23%) and the burden of business rates (20%).

Workforce pressures remain acute. Seventeen per cent pointed to employee shortages, while 11% expressed concern about recruitment challenges, reflecting the persistent difficulty many SMEs face in hiring skilled staff in London’s competitive labour market.

The geopolitical backdrop adds another layer of complexity. As the UK Government explores the prospect of resetting relations with the European Union and strengthening ties with Brussels, around one in seven London small business owners say they continue to feel the legacy effects of Brexit. Nineteen per cent reported that concerns over Brexit’s impact on their business still keep them awake at night.

The data forms part of Novuna Business Finance’s Business Barometer study, which surveyed 1,000 business owners nationwide. Rather than measuring profitability or turnover, the study examined which issues business owners could not “switch off” from — using sleeplessness as a proxy for intensity of concern.

The results challenge the assumption that anxiety is concentrated among struggling enterprises. In fact, firms anticipating growth appear to be under greater strain. Among London small businesses predicting significant expansion in the first quarter of 2026, 85% said business worries kept them awake at night — up from 75% two years ago. By contrast, those not forecasting growth were less likely to report broken sleep (73%).

Joanna Morris, Head of Insight at Novuna Business Finance, says the data reveals the human cost of scaling in uncertain conditions.

“At the start of 2026 we saw a rise in London small business growth outlook. That said, our latest data suggests that this comes at a human cost for many business owners, many of whom take their business worries home with them and struggle to switch-off. When business owners are kept awake at night working through enterprise issues, we gain a sense of the intensity of some of these concerns for entrepreneurs. Further, our research suggests that sleepless nights are not just confined to businesses that are struggling to grow. Managing fast-paced or significant growth can also be stressful for established businesses. Among those enterprises surveyed that predicted significant expansion this quarter, there was a significant rise in the percentage of business owners that said business worries kept them awake at night.”

For policymakers and lenders alike, the findings highlight a defining tension in the UK small business economy. Growth forecasts may be improving in London, but confidence does not necessarily equate to calm. In a climate shaped by inflationary pressure, tax changes, interest rate uncertainty and evolving UK–EU relations, expansion can amplify exposure as much as it signals opportunity.

For many of the capital’s entrepreneurs, ambition and anxiety are now advancing in tandem.