Comment: Are businesses beginning to see light at the end of the tunnel?

I’ve been picking up a change in the wind, writes Henrietta Brealey.

A tentative, subtle one. But a change non-the less.

In recent weeks, my conversations with businesses have often taken on a lighter, more cautiously optimistic tone. Not all guns blazing sunny confidence. But the cautious sense that things are feeling a bit better.

Paused customer projects unlocked. New opportunities coming onto the horizon. Headspace to look above the parapet at opportunities ahead, instead of lurching crisis to crisis. Definitely more of a steady trickle than a gushing torrent. But refreshing, nonetheless.

Those quiet conversations are also reflected in our research. The latest Greater Birmingham Chambers of Commerce Quarterly Business Report suggests confidence is recovering. Confidence in turnover reached its highest level since Q1 2025, confidence in profitability increased, cashflow improved (albeit from a low base) and domestic sales strengthened after a prolonged period of weakness.

Forty per cent of firms reported increased UK sales, up from 34 per cent in the previous quarter, while advanced bookings also edged upwards.

Business confidence has also improved nationally. Lloyds Bank's latest Business Barometer found that UK business confidence rose five points in July to 49 per cent, a four-month high and two points above its 12-month average. Economic optimism rose 11 points to 42 per cent, while firms' trading outlook remained unchanged at 56 per cent.

National indicators point in a similar direction. The Office for National Statistics estimates that UK GDP grew by 0.7 per cent in the three months to May 2026, marking a sixth consecutive rolling three-month period of growth. Construction output increased by 1.6 per cent over the same period, while services output grew by 0.7 per cent.

Nothing to break out the champagne over, but cautious optimism.

Now that optimism isn’t universal. Many hospitality, retail and consumer-facing businesses tell us consumers remain highly sensitive to prices and discretionary spending decisions.

Rising labour costs, utilities bills and broader cost pressures continue to squeeze margins in alarming fashion.

That guarded positivity hasn’t quite extended beyond our shores and into international trade either. Our aforementioned Quarterly Business Report also showed that export demand weakened. Last quarter, export sales fell to their lowest level since Q3 2025, while export bookings slipped back into negative territory.

No doubt the Iran conflict and resulting disruption to Middle Eastern trade routes has added another layer of uncertainty to an already challenging business environment.

Research conducted jointly by Chambers across the Midlands found that 80 per cent of businesses experienced increased costs as a result of the conflict.

More than a quarter said uncertainty had influenced investment or capital spending decisions, while 12 per cent of exporters reported withdrawing from or pausing activity in specific markets.

Plus, our Quarterly Business Report revealed that while confidence improved, investment intentions remain weak. Investment in capex fell to its lowest level since Q3 2025 and investment in training also declined.

Businesses may feel more positive about the future, but many are not yet sufficiently convinced to commit significant capital today.

And yet, despite the caveats and qualifiers, it does feel as though businesses are almost (almost) seeing an opportunity to forge ahead. The big question is whether improving sentiment can be translated into investment, productivity growth and job creation.

That’s where our new Prime Minister and Chancellor come in. Andy Burnham has certainly been busy announcing plenty of change in his first weeks in charge.

Some - a focus on investing in skills, reductions in business rates for pubs, clubs and live music venues, focusing procurement on UK job creation and simplifying public procurement priorities to emphasise local impact - are generally welcome (and echo what the GBCC has been calling for for some time). They come with the usual caveats of ‘the devil is in the detail’.

However, business leaders tend to judge governments less by their announcements than by the environment they create for investment. That means the forthcoming Budget matters enormously.

If policymakers want today’s improving confidence to become tomorrow’s economic growth, businesses need the right environment to invest.

If we want to encourage more UK-based manufacturing investment and jobs, for instance, the Government should help firms manage the cost of doing business through tangible action on commercial energy bills, including removing the Renewables Obligation, alongside meaningful reform of business rates.

If we want more employers to give young people their first opportunity in the workplace, an employer National Insurance cut for all under-25s would give businesses greater confidence to recruit and invest in their training.

And if we are serious about helping more British firms compete overseas, businesses across the country need access to consistent, expert export support.

The mood in many boardrooms is certainly better than it was six months ago.

The challenge for government now is to ensure today’s cautious optimism becomes real confidence.

Confidence that leads to investment, expansion and growth that is felt not just in niche pockets of the economy, but right across it.

Henrietta Brealey is chief executive of Greater Birmingham Chambers of Commerce