Burnham urged to cut costs for small firms as sales slow and hiring hits a six-month low

See more This is Money on Google - save us as a Preferred Source Updated: 07:14 EDT, 30 July 2026 Small businesses are urging the new Labour government to make it easier to hire and grow as they suffer from a third consecutive quarter of slowing sales.Higher energy prices and continued economic uncertainty due to the Middle East conflict are piling pressure on small firms already suffering from a slowdown in sales.Sales across small businesses rose by just 3.6 per cent year-on-year in the three months to June, slowing from 4.2 per cent in the previous quarter and 5.5 per cent in the final three months of 2025. It represents a significant drop from the historic average of 8.5 per cent sales growth.The aggregated data from 440,000 customers of business software firm Xero reveal that the pressure on small firms shows no sign of letting up, which is having a knock-on effect on hiring and investment.Jobs growth among small businesses slowed to 1.7 per cent over the period, the slowest hiring pace since the end of 2025, according to Xero’s research. Small firms are urging Burnham to cut costs as hospitality sales and hiring slow The healthcare sector recorded the strongest employment growth - up 3.8 per cent year-on-year - during the quarter, followed by real estate services and retail, both up 3.5 per cent.Hospitality saw hiring fall by 0.7 per cent over the quarter as firms grapple with higher taxes and labour costs.‘Things aren’t improving for our small business economy, which should be a real wake-up call for the new Labour government,’ said Kate Hayward, UK managing director of Xero. 'Even the warmer weather in June hasn’t given our retail and hospitality sectors the boost they so desperately needed. We’re seeing businesses holding back on hiring and growth, and all of this pressure is being compounded by payment times creeping up and rising fuel costs. It’s not sustainable.' Hospitality saw year-on-year sales fall by 0.5 per cent in the quarter, followed by just a 2 per cent increase in retail.Pubs and restaurants have called on Burnham to ditch policies imposed by the previous government, including the increased employer National Insurance contributions (NICs) and higher minimum wage.Kyle Hyams, owner of Orla's Coffee & Gelato and Aoife's Gelato, said staff and produce costs have ‘never been higher, so we’re constantly weighing up whether to reduce our team’.‘We provide income to 50 people employed across our businesses, but the support for businesses that are improving their communities isn’t there. We’d love to see some control on food prices, a cut in VAT for hospitality, and grants or government-backed loans would make a real difference right now.’Last week, Burnham announced he would cut business rates by 20 per cent for pubs, clubs and live music venues but excluded hotels, restaurants and cafes.Hayward added: ‘The Autumn Budget is shaping up to be a real test for the new government to show they are listening and backing their pro-small business rhetoric. We need policies that restore small business confidence, improve cash flow and create the conditions to invest, hire and grow.’SAVE MONEY, MAKE MONEYUp to £200 cashbackUp to £200 cashback5% cashback when investing at least £1004.71% cash Isa4.71% cash IsaTrading 212: 1.11% fixed 12-month bonus£200 Sipp cashback£200 Sipp cashbackFund a pension with at least £20,000Up to £750 cashbackUp to £750 cashbackOpen a savings account with at least £10,000Welcome bonusWelcome bonusGet up to £200 when you invest £100Affiliate links: If you take out a product This is Money may earn a commission. These deals are chosen by our editorial team, as we think they are worth highlighting. This does not affect our editorial independence. Terms and conditions apply on all offers.