Business confidence continues to weaken with firms expected to raise prices – British Chambers

Confidence among firms has continued to weaken, with tax remaining the biggest concern, according to the UK’s largest business sentiment survey. 

The British Chambers of Commerce (BCC) Quarterly Economic Survey also found more businesses now expect to raise prices in 2026.  

Less than half of responding firms (46 per cent) are expecting increased turnover over the next 12 months (compared with 48 per cent in Q3), while nearly a quarter (24 per cent) expect a decrease (21 per cent in Q3). 

Meanwhile, only 19 per cent have increased investment and 27 per cent have scaled back plans.  

The survey was carried out by the BCC Insights Unit and the UK-wide Chamber network, before and after the Budget, with the fieldwork conducted between 10 November and 8 December.

Over 4,600 businesses across the UK (91 per cent of whom are SMEs) responded online. 

Confidence among business has fallen again, with only 46 per cent of responding firms expecting an increase in turnover (compared with 48 per cent in Q3). This is the lowest level in three years.

Retail and hospitality continue to be the sectors suffering the most. Only a third (33 per cent) of hospitality firms expect increased turnover in the next 12 months, with 38 per cent expect a decrease. 

The percentage of responding businesses reporting increased domestic sales has fallen to 29 per cent (from 32 per cent in Q3). 42 per cent reported no change, and over a quarter (28 per cent) said they had seen a decrease in sales (up from 25 per cent in Q3).  

The percentage of firms reporting a fall in cashflow over the last three months has risen to 32 per cent, compared with 29 per cent in Q3. 

Tax remains the biggest concern for business, cited by 63 per cent of firms, up from 59 per cent in Q3. This is the same level of concern seen in Q4 2024, after the previous Budget. 

However, concern about taxation was heightened prior to the Budget on 26 November. Before the Chancellor’s statement, 68 per cent of businesses who had taken part in the survey said tax was a concern. After the Budget tax concern fell to 61 per cent of responding firms. Worries about inflation remain high, cited by 56 per cent of firms, broadly similar to Q3.  

With businesses facing a raft of persistent cost pressures, investment levels in plant, machinery and equipment, are stuck in negative territory for the fifth quarter in a row.

Over a quarter (27 per cent) of businesses say they have cut back on investment plans, while 53 per cent say they have remained unchanged, and just 19 per cent of firms increased their plans.  

Labour costs continue to be far and away the main cost pressure for firms, cited by 72 per cent of respondents, unchanged from Q3. The issue remains the most significant in the hospitality sector (82 per cent) and manufacturing (80 per cent).  

David Bharier, head of research at the British Chambers of Commerce, said: “Our data shows more clouds have gathered over business confidence, and the outlook for SMEs in 2026 is unsettled.  

“Firms tell us they are worried about tax, struggling to invest and fear they’ll have to put their prices up in the months ahead. Firms’ confidence in their turnover growth  has been stuck stubbornly below 50 per cent for the last 12 months.  

“After a long period of uncertainty and speculation heading into the Budget, concerns about major new tax rises eased somewhat in the aftermath. 

“However, a Budget fundamentally light on growth measures did little to boost business confidence, and sentiment overall has worsened since the previous quarter. 

“It is now critical that 2026 is a year of delivery. The Government needs to turn last year’s strategies into action; boost investment, significantly expand trade, and ease the myriad burdens facing businesses.

“Only then will the economic outlook shift from its current low-growth trajectory.”