Small businesses in Suffolk call on government to boost confidence and cut costs in 2026
They say they need more support following a difficult few years
Small businesses are closing out 2025 under mounting financial pressure, with rising costs and falling confidence creating what industry leaders describe as a deeply challenging environment.
Candy Richards, regional development manager at the Federation of Small Businesses (FSB), said the past year had continued a trend of financial strain following recent government decisions.
“So 2025 has actually been really challenging for small businesses,” she said. “It feels like I'm probably saying this every single year off the back of the 2024 budget that saw some huge hikes in the cost of wages.”
"They're facing increased costs across the board."
Ms Richards said increases to business rates had placed additional pressure on firms already grappling with higher day-to-day expenses.
“We've actually seen some huge increases in business rates, which is a massive cost for many small businesses,” she said. “Small businesses, as we know, they're very resilient, but the reality is they're facing increased costs across the board.”
She added that rising input costs were compounding the problem.
“They're seeing increased wage costs, increases in business rates and the input costs as well,” she said. “So things like energy, electricity, materials, products — they're all seeing huge hikes.”
As a result, Ms Richards said many firms were ending the year with limited reserves and weakened confidence.
“Small businesses right now, they're feeling quite low in confidence and low in cash,” she said. “So we know small businesses are resilient and many are already thinking about how they can pivot or do things differently. But it is challenging for small businesses.”
She warned that the outlook for the year ahead remains uncertain.
“And the outlook looks equally challenging in 2026,” she said.
Ms Richards also pointed to subdued consumer spending in the run-up to Christmas, despite key retail moments such as Black Friday and Cyber Monday.
“Speaking to many small businesses, consumer spending has actually been quite subdued in the last couple of months in the run-up to Christmas,” she said. “And this could be because people are feeling the bite on their household budgets.”
What support they want from government
Looking ahead, the FSB is calling on the government to take further steps to support small firms, particularly around employment and taxation.
“In 2026, we need to see the government move on a few things to really support small businesses,” Ms Richards said.
She highlighted planned changes to employment legislation and ongoing concerns around youth unemployment.
“The government has got a very ambitious target of getting more people back into work, particularly around youth unemployment, so that stands over 15% at the moment, which is absolutely huge,” she said.
Ms Richards said small firms are willing to create jobs but need greater security to do so.
“We know small businesses are there, ready and willing to create jobs,” she said. “But they can only do that if they have the cash and the confidence to be able to create those jobs.”
Among the measures proposed by the FSB is a statutory sick pay rebate for small businesses, alongside reforms to business rates.
“Another thing they can do, which would be a fantastic win for small businesses, would be to increase something called the small business rates relief,” she said.
Ms Richards added: “Essentially, that lifts small businesses out of paying business rates altogether, which is one of the most unfair taxes.”
She said increasing the relief could have a significant impact nationwide.
“If the government could increase the small business rates relief, that would lift around a quarter of a million more small businesses out of paying business rates altogether,” she said.
Gov response
A Government spokesperson said:
“We are determined to make the UK the best place to do business, which is why we’ve taken bold action through our Industrial Strategy and Small Business Plan to give them the tools they need to grow.
“We will continue to work with the Federation of Small Businesses in 2026 to build on the solid foundation this government has already delivered through historic trade deals and a long-term trade strategy that’s helping businesses plan ahead with confidence.”
Background
- Our increases to the national minimum wage rates for all workers will put more money in the pockets of the lowest paid.
- We have also launched the most significant package of reforms in a generation to tackle late payments, as well as to slash red tape, reduce administrative burdens, speed up licensing reforms and create a fairer business rates system by capping business rates for most properties at 15%, when they were facing a 45% hike.
- We have announced a £1.5 billion investment to create opportunities for young people, including thousands of apprenticeships, training and work experience placements, and jobs. Alongside this Alan Milburn’s investigation will help us understand the root causes to youth unemployment.
- The Youth Guarantee Advisory Panel, made up of 17 young people, has been officially launched and will help to shape employment support policy: New panel of young people to shape the Government’s Youth Guarantee.
- Former Health Secretary Alan Milburn is to lead a report into drivers of rising number of NEETs and will consider health, skills, employment, and welfare systems: Independent investigation to be launched to tackle rising youth inactivity - Independent investigation to be launched to tackle rising youth inactivity.