Fragile gains in small business confidence at risk from April cost rises

Small business confidence recovered slightly in the first three months of 2026, but risks further falls without Government intervention, against a backdrop of geopolitical uncertainty and energy price spikes causing risks to inflation and consumer demand

Small business confidence is crawling back from historic lows – but without government action, fresh cost pressures could drag it straight back down, the Federation of Small Businesses (FSB) has warned.

FSB’s Small Business Index (SBI), which tracks how optimistic small firms are feeling, registered at -53 in Q1 2026, 18 points up from Q4 2025’s historic low of -71, the lowest level of small business confidence outside the pandemic.

That means confidence has remained negative for eight consecutive quarters.

Below are the stats for the South East which can be compared with the national statistics in the news release.

FSB’s Small Business Index (SBI), which tracks how optimistic small firms are feeling, registered at -53 in Q1 2026

South East -60

A total of 87 per cent of firms are seeing their costs rise compared to the same period last year.

South East 86%

More small firms are seeing their incomes fall than rise, with over half (54%) reporting a drop in revenues over the last three months, compared to a quarter (24%) seeing an increase.

South East 52% drop/ 20% increase

This is feeding through into hiring, with more small firms planning to cut staff (21%) than hire (8%) over the next three months.

South East 17% cut / 9% hire

Growth expectations for the next year are also low, with more small firms expecting to contract, close or sell than to expand (30% vs 22%).

South East 32% contract, close, sell / 16% expand

Late payments remain widespread, with 69 per cent affected – but new legislation announced last week means the Government will act following FSB’s campaigning and reform proposals.

South East 66%

To view the full release from the FSB: click here.