BCC press release: More clouds gathering over business confidence

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%) are expecting increased turnover over the next 12 months (compared with 48% in Q3), while nearly a quarter (24%) expect a decrease (21% in Q3). Meanwhile, only 19% have increased investment and 27% 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% of whom are SMEs) responded online. Some pre-and-post Budget comparisons are possible, particularly on tax concerns, but the full impact of the Chancellor’s speech will be clearer in the Q1 2026 results.  

Confidence continues to fall  

Confidence among business has fallen again, with only 46% of responding firms expecting an increase in turnover (compared with 48% in Q3). This is the lowest level in three years. Meanwhile, 30% expect no change, and 24% expect a decrease in turnover.  

Retail and hospitality continue to be the sectors suffering the most. Only a third (33%) of hospitality firms expect increased turnover in the next 12 months, with 38% expect a decrease. 36% of retailers expect increased turnover, while a third (33%) forecast a decrease. 42% of manufacturers and 43% of firms in the construction industry are expecting increased turnover.  

All sales indicators decline 

The percentage of responding businesses reporting increased domestic sales has fallen to 29% (from 32% in Q3). 42% reported no change, and over a quarter (28%) said they had seen a decrease in sales (up from 25% in Q3). Sectoral breakdowns show increased sales were at their lowest among hospitality (22%) and manufacturers (23%). 

The percentage of firms reporting a fall in cashflow over the last three months has risen to 32%, compared with 29% in Q3. 23% report an increase in cash flow, while 45% say it remained the same.  

Tax remains the top concern  

Tax remains the biggest concern for business, cited by 63% of firms, up from 59% 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% of businesses who had taken part in the survey said tax was a concern. After the Budget tax concern fell to 61% of responding firms. Worries about inflation remain high, cited by 56% of firms, broadly similar to Q3.  

Investment levels down for fifth consecutive quarters 

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%) of businesses say they have cut back on investment plans, while 53% say they have remained unchanged, and just 19% of firms increased their plans.  

The issue is more marked in certain sectors. Over a third of hospitality firms (37%) and retail businesses (36%) report scaling back investment plans. While 32% of manufacturers say they have cut back their investment plans.   

More firms expecting to raise their prices 

Over half of firms (52%) are expecting to raise their prices in the next three months, up significantly from the previous quarter (44% in Q3). 45% say their prices are likely to remain the same in the early part of 2026, and only 3% are expecting to cut prices.  

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

What businesses say: 

Pre-Budget 

“Market sentiment has been badly affected by uncertainty caused directly by the government in the run up to the budget.” Micro services firm in Hertfordshire 

“Rise in Employer national insurance contributions had an impact on overhead costs which reduces investment in our current employees.” Medium construction firm in Greater Manchester  

"Decisions on new orders appear to be getting delayed pending the Autumn Budget" Medium construction firm in East Midlands  

Post-Budget 

“The impact of employer national insurance and doubling of business rates continues to hit hard. Food inflation continues to hit our cost base, as does an increase in electricity prices.”  

Micro transport firm in Hampshire  

“Government induced uncertainty over the Budget has worsened the sense of indecision and low confidence in the market.”

Micro professional services in Cambridgeshire 

"Now that we have visibility on the current position, we can at least move forward, but confidence remains subdued.”

Medium professional services in Liverpool  

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% 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.” 

For more data, click here to view or download the infosheet.