Intuit QuickBooks Small Business Index Annual Report 2026

UK small business employment declines in 2025

UK small business employment declined by 5,400 jobs in 2025 (-0.13%) according to the latest estimates from the Small Business Index, with 4,153,900 people now employed at businesses with 1-9 employees. 

2025 was the fourth consecutive year of declining employment at small business but the rate of decline slowed in 2025, as the chart below shows. This was largely due to strong quarterly growth in Q3-2025 (14,900 jobs). Get a deeper dive into the latest quarterly trends here.

Key trends in 2025

• Small business employment declined by 5,400 jobs in 2025 compared to 2024 (-0.13%).

• The fastest decline (-1.55%) was in the transport and storage sector (SIC H). The largest decrease (-2,400 jobs) was in the wholesale and retail sector (SIC G).

• The fastest growth and largest increase were in the professional services sector (SIC M), adding 8,900 jobs, with its first annual growth (1.60% ) since 2021.

Economic analysis

“The UK’s small business story in 2025 was one of slow healing rather than fresh damage,” said Ufuk Akcigit, Professor of Economics at the University of Chicago. “Employment slipped again, but the pace eased markedly as services, especially professional and business services, picked up the baton that manufacturing and logistics dropped. This pattern mirrors the wider UK economy, where growth was carried almost entirely by services while production output continued to sag under weak demand and high costs. 

“Small firms ended the year more selective about hiring but less constrained by labour shortages, increasingly leaning on marketing and AI to protect margins and raise productivity. The result is an economy that isn’t powering ahead, but is proving more resilient and adaptive than the headline job numbers suggest.”

Official statistics

Growth in the professional services sector (noted above) is recorded in the latest available official statistics published by the Office for National Statistics (ONS)—which include large and mid-size businesses as well as small businesses—showing the services sector overall was responsible for most of the UK’s GDP growth over the 12 months to November 2025. ONS data also shows the UK’s production sector, which relies on transport and storage businesses, experienced its third consecutive three-monthly decline in output in November 2025. Data for the wholesale and retail sector is more mixed. While lower production output may have affected some in the sector, ONS data shows monthly retail sales growth in 9 of the 11 months for which data is available in 2025 (the exceptions being January and May). In the three months to November 2025, retail sales grew by 0.6% compared to the previous three-month period.

Survey insights 

Recent surveys of UK businesses with up to 100 employees (commissioned by Intuit every 3 months) show more than a third of UK respondents (38%) had plans to expand their workforces over the three months to January 2026. Reflecting recent employment declines, this is six points lower than the peak recorded in April 2023, when 44% intended to hire. On a more positive note, the number of respondents reporting that it’s easier to find skilled workers when hiring increased to more than 60% in July and October 2025, which is notably higher than the low of 17% recorded in October 2022. 

Turning to business challenges and priorities, inflation remains the number one challenge identified by respondents. The number predicting costs will continue to rise over the next three months remained above 50% in October 2025, with 60% concerned about the impact of these potential increases. Asked what would be most beneficial to their business over the next three months, the top response throughout 2025 was a “successful marketing/advertising campaign” to boost revenue or demand. Many also want to boost productivity (defined as “higher output for the same or lower input costs”) and respondents are increasingly turning to AI as a potential solution. In October 2025, more than two-thirds (68%) reported regular use of AI—up from 42% in July 2024. Of these, 76% said AI is making them more productive.

Dive deeper into small business employment trends for 2025

Sector trends

In 2025, small business employment declined in 11 of the 13 sectors tracked by the Index. Three sectors lost more than 2,000 jobs each: the wholesale and retail trades sector, the transport and storage sector, and the administrative and support services sector. In each sector, the longer-term trend has been downward for the past 3 to 4 years but the declines slowed in 2025.

The professional services sector was a notable bright spot in 2025, with its first annual growth in small business employment since 2021, adding 8,900 jobs (1.60% annual growth). Real estate (SIC L) had its third consecutive year of annual growth (0.17%), adding 300 jobs. See the table and charts below for more details.

National trends

Small business employment declined in three of the four UK nations in 2025. As the table below shows, England was the exception, with a small annual increase of 200 jobs (0.01%) driven by growth in London and the South East (more on this below). 

Regional trends

As the table below shows, most regions of England had declining small business employment in 2025. North East England had the fastest decline (-1.41%), followed closely by North West England (-1.32%), which had the largest decrease (-5,400 jobs). In contrast, small businesses in London and the South East added 16,400 jobs at small businesses in 2025, which is why we see a net gain in employment for England as a whole.

Methodology: For more information about the sample, data sources, and calculations used in the Small Business Index, read the full methodology here.

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