Small business confidence in the UK may have improved slightly at the start of 2026, but the overall picture is still worrying. The Federation of Small Businesses said confidence remained negative in Q1 2026, with the Small Business Index at -53, up from -71 in Q4 2025. Even with that improvement, confidence has now stayed negative for 8 straight quarters.

April has brought another wave of cost increases that many smaller firms are struggling to absorb, including:

• Higher business rates
• Rising energy standing charges
• Increases to the National Living Wage
• Wider Statutory Sick Pay obligations
• Making Tax Digital compliance
• Lower take-home pay for directors due to dividend tax changes

The result is a real squeeze on cash flow.

87% of firms are seeing costs rise y ...