West Midlands: Growth forecasts peak after period of volatility

For small businesses in the West Midlands, the year ended as it began with around two in five business owners predicting growth – figures well above the national average. This confidence sagged significantly during the spring and summer months. The long-term picture on small business growth outlook suggests there is a pattern of volatility in the West Midlands. There are quarters when growth forecasts surge but this is often followed by confidence then falling below the national average.

The long-term picture: Percentage of West Midlands small businesses that predict growth over time

That said, growth outlook for the final Quarter of 2024 stands at its highest level for more than three years (compared to a peak of 42% in Q3 2021). Q4 2024 also represents the first time for three quarters when the percentage of West Midlands business owners beat the national average. Together with enterprises in the East Midlands, 2024 finishes with the Midlands as a whole emerging as a UK powerhouse for positive small business growth forecasts.

Top 5 regions where small businesses predicted growth in Q4 by region

Summer worries

The strong growth outlook for Q4 2024, follows a period of proactivity from Q3,  when 67% of small business owners were actively considering new initiatives to power growth: The most common projects included:  Keeping fixed costs down (59%), improving cash flow (39%), re-assessing their funding needs and finance commitments (17%) and investing in new equipment (16%).

Autumn Budget worries 

Despite buoyant outlook for Q4 2024, many business owners in the West Midlands expressed concern about Autumn Budget announcements that would negatively impact the growth outlook and finances of their business. West Midlands businesses were those most worried in the UK about changes to income tax (48%), whilst 38% feared hikes to employer National Insurance and 37% expressed concern over potential changes to fuel duty. In addition, 23% of business owners said they were worried a rise to the national living wage. 

Quick fact file: The West Midlands in numbers 

Jo Morris Head of Insight at Novuna Business Finance comments: “Whilst there was a lot of speculation on the Autumn Budget, the last four months have been a period of relative positivity and consistency for UK small businesses. For the last two consecutive quarters, 35% of small business owners have told us they forecast growth, which represents a marked upturn from 30% before July - and the years between Covid and the cost-of-living crisis, which was a period stagnation in terms of small business growth forecasts.

“As the Government pledges to create equity of opportunity more broadly across the UK, it is noteworthy from our data that small business growth is on the rise across the Midlands and the North. There are challenges ahead this autumn, as eyes turn to the Autumn Budget and the economic ramifications of the US Presidential election result, but UK small businesses go into Q4 in their most buoyant mood for two years – and we at Novuna Business Finance will be supporting mature businesses to help them invest in future growth initiatives and to realise their full potential.”

The findings are from the Novuna Business Barometer study which has been tracking small business outlook for the last 10 years. The nationally representative survey asks 1000 small business owners each about their growth predictions every three months.