UK small businesses report falling revenues and rising costs

Research from the Federation of Small Businesses (FSB) reveals that 53% of UK small firms experienced declining revenues during the third quarter of 2026, while only 23% reported an increase. The outlook for the final quarter remains cautious, with 47% of businesses expecting further revenue declines.

Operating costs continue to climb, with 89% of small businesses reporting higher expenses compared to the previous year. One-third of firms noted cost increases exceeding 10%. The primary drivers of these rising costs include taxation (55%), fuel prices (53%), utility bills (52%), and labour costs (50%).

These economic pressures are impacting employment; only 7% of small businesses increased their workforce in the third quarter, whereas 20% reduced staffing levels. Looking ahead to the fourth quarter, only 6% of firms plan to recruit, while 18% anticipate further job cuts.

The FSB has urged the Chancellor to address these issues in the upcoming Budget. Proposed measures include increasing the Small Business Rate Relief threshold, raising the Employment Allowance, providing a rebate for Statutory Sick Pay, and reducing Business Asset Disposal Relief from 18% to 14%.