April ‘prices crunch’ may snuff out enterprise confidence amid fears over new sick pay legal guidelines and minimal wage hike

An April ‘costs crunch’ threatens to crush a revival in small business confidence, Labour has been warned.

Figures from the Federation of Small Businesses (FSB) show that confidence improved in the first quarter of this year, having hit a record low at the end of 2025.

But it has still been negative for eight quarters, the FSB said. 

Now, cost increases including business rates and energy charge increases as well as a rise in the minimum wage and the expansion of sick pay rules threaten to drag them back. 

The FSB’s poll found 87 per cent are seeing their costs rise compared to a year ago. Taxes remain the top driver of cost increases, followed by labour and utility costs. 

As a result, more than twice as many small firms (21 per cent) plan to cut staff than hire (8 per cent).

Squeezed: Some 87% of firms are seeing their costs rise compared to a year ago. Taxes remain the top driver of cost increases, followed by labour and utility costs 

Taxes remain the top driver of cost increases followed by labour and utility costs. As a result more than twice as many fall firms (21 per cent) plan to cut staff than hire (8 per cent).

The FSB is urging measures from government including business rate cuts and the removal of green levies from energy bills.

FSB policy chair Tina McKenzie said: ‘The outlook for small business growth is bleak, and you can’t get growth in the economy relying just on the UK’s large corporate firms.

‘The numbers tell a brutal story, and behind every one of these numbers are business owners who went to bed last night wondering if and how they can make it work.’