Survey shows SMEs still cautious on hiring and investment, despite a modest lift in new orders

UK SMALL firms are still feeling gloomy about the economy, with confidence stuck near historic lows as weak growth and rising costs continue to bite, according to a quarterly survey by ACCA and the Institute of Management Accountants.

The UK edition of the Global Economic Conditions Survey (GECS) found confidence among small and medium-sized businesses dipped slightly in the final quarter of 2025, after a sharper fall in the previous quarter. The findings suggest many SMEs are still struggling to shake off the depressed mood that set in at the end of 2024.

Measures tracking investment and staffing also point to caution. Only a small number of respondents said their businesses – or their clients – had increased spending on capital projects over the past three months, while a higher-than-normal proportion reported cutting back.

On employment, the survey recorded a notable share of businesses reducing headcount or pausing recruitment, with relatively few saying they were hiring or restarting recruitment.

There was, however, a small sign of improvement in future demand. The survey’s forward-looking New Orders Index rose in Q4. While still weak by long-term standards, it was reported to be well above the low point seen during the COVID-19 pandemic – suggesting the underlying picture may not be as bleak as other indicators imply, and that some firms may be positioning themselves for better trading conditions.

Lloyd Powell, head of ACCA Cymru/Wales, said confidence remains “fragile,” arguing that businesses have seen little recovery since a sharp drop following the 2024 Budget. He added that the decline after the 2025 Budget was smaller, but said the impact on SMEs and the wider economy remained significant.

Powell said the modest improvement in new orders could indicate some firms are starting to consider investment again as they spot opportunities emerging.

Cost pressures, meanwhile, remain a major concern. More than four in five respondents reported higher operating costs during Q4, and early warning signs of corporate stress – including late payment issues and worries about customers or suppliers going out of business – stayed high compared with historic levels.

Jonathan Ashworth, ACCA’s chief economist, said the Q4 indicators continue to paint a “very downbeat” picture for UK SMEs, with confidence still struggling to recover from the lows seen at the end of 2024. He warned that 2026 is likely to remain difficult, citing sluggish UK growth and global uncertainty.

The survey notes that further interest rate cuts could ease some pressure on businesses, though ongoing domestic cost inflation suggests the Bank of England may have to approach any reductions carefully.

PLANS to convert a vandalised former Pembrokeshire town centre Chinese restaurant to a flat and bedsits which were expected to be approved have been put on hold after concerns about the impact on a neighbouring property.

In an application recommended for approval, the January 13 meeting of Pembrokeshire County Council’s planning committee, Mr S Sahin and Miss S Ahmed, through agent Hayston Developments & Planning Ltd, seek permission for a change of use of Grade-II-listed 20 Hamilton Terrace, Milford Haven from the former Mandarin Restaurant to one flat and eight bedsits, an amendment of an original scheme which included one extra bedsit.

The scheme, in the town’s conservation area, was before committee rather than delegated to officers as it was recommended for approval despite being contrary to a policy of the development plan.

The application for the Mandarin follows a withdrawn scheme for three flats deemed invalid by council planners.

A supporting statement said: “The property has historically been in use as a Chinese restaurant on the ground floor with two flats on the upper floors of the building. The ground floor use of the building ceased some 10 years ago and currently lies vacant. Due to the lack of use of the building, it is in a very poor condition and has been the subject of unfortunate vandalism particularly to the interior of the building.”

It says that, after the previous scheme was withdrawn, the applicants have “since reviewed their position and now present revised applications to be considered by the council”.

It went on to say: “The clients have re-thought on what type of accommodation is needed and required in this part of Milford Haven,” adding: “The proposal is considered to put an important Grade-II-Listed Building back into beneficial use and would help to secure its long-term future. The proposal would represent a high-quality and sympathetic conversion and extension of the building, and which would make a positive contribution to the locality and conservation area status.”

An officer report recommending approval said one letter of objection was received raising concerns including potential impact on a neighbouring property and boundaries, and the discharge of the sewer under number 20.

At the meeting, member of the public Jessica Clarke raised concerns about the potential impact on her mother’s neighbouring property, with issues of height and massing, surface water discharge, and shared boundary walls, asking for a site visit before any decision was made.

Cllr Brian Hall, who moved a site visit, was one of several members who raised their concerns about potential impacts, members unanimously backing that move.

The application will return to a future planning meeting.

Earlier this week utilities companies were cutting off services to the building following a warrant from a magistrate.

LOCAL businesses are being urged to check their new rateable values immediately to understand whether recent changes could increase their business rates bills.

Senedd Member Samuel Kurtz has warned that many firms may be unaware of how the updated valuations could impact them financially and is encouraging business owners to act quickly.

“Business rates are already a major burden for many local businesses,” Kurtz said. “With new rateable values now in place, it’s vital that businesses check their valuation as soon as possible to see whether it will affect what they pay. Too many businesses only realise there’s an issue when the bill arrives. Businesses can visit the VOA website and search their property by postcode or address.”

Rateable values are used to calculate business rates and are based on factors such as rental values and property use. Changes to these valuations can result in higher bills, even where a business has not expanded or increased turnover.

Kurtz stressed that early action is key, particularly for small and independent businesses operating on tight margins.

“Checking your rateable value early gives you time to understand the changes, seek advice, and challenge the valuation if it appears incorrect. Waiting could mean missed opportunities to reduce costs or appeal.”

Businesses are also being encouraged to attend the local information event online to better understand reliefs, exemptions, and the appeals process.

“At a time when costs are rising across the board, businesses need clarity and support, not surprises. I would urge every business owner to take a few minutes to check their rateable value and make sure it’s right.”

Samuel Kurtz MS has also written to the Cabinet Secretary for Finance, Mark Drakeford MS, calling on the Welsh Government to follow the UK Labour Government’s apparent change of direction on business rates in England warning that rising rateable values are pushing Welsh businesses to the brink.

For more information on business rates and for a chance to attend the upcoming advice session with the Valuation Office Agency hosted by Kurtz and Paul Davies MS on the 26^th January, businesses are encouraged to register their interest on www.samuelkurtz.wales