Confidence among businesses 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 respondents (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, including Cumbria Chamber of Commerce, 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 respondents 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 businesses expect increased turnover in the next 12 months, with 38% expecting a decrease. 36% of retailers expect increased turnover, while a third (33%) forecast a decrease. 42% of manufacturers and 43% of construction businesses 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 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%, 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 26th November. Before the Chancellor’s statement, 68% of businesses which had taken part in the survey said tax was a concern. After the Budget tax concern fell to 61% of responding businesses. 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 (37%) and retail businesses (36%) report scaling back investment plans. While 32% of manufacturers say they have cut back their investment plans.
More businesses expecting to raise their prices
Over half of businesses (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, 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
Hospitality business
“Government policy is rolling all adverse effects downhill and hospitality employers are among the hardest hit. Wait until January when numerous small hospitality business will go to the wall or simply give up the struggle. Please help us!”
Business services provider
“The business landscape if changing rapidly. Costs are rising and companies are are not investing in the way they were. Controlling costs and maintaining business volumes are top of the agenda and recent hikes in NI and other costs have had an adverse effect on business confidence to invest.”
George Rutherford
“The Government has stifled interest in retail spending”
SME manufacturer
“Increases in cost are putting a strain on the business and cannot always be passed on. Banks seem reluctant to lend whilst the business is slowing down.”
Large manufacturer
“Ongoing weakness in consumer confidence is the biggest challenge we face.”
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.”
Suzanne Caldwell, Managing Director, Cumbria Chamber of Commerce, said:
“While there’s still business opportunity out there, this survey doesn’t make good reading. So it’s 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.
“The Chambers’ Quarterly Economic Survey is the largest UK private sector survey of business sentiment and a leading indicator of UK GDP growth, closely watched by policymakers, including HM Treasury and the Bank of England. So I’m pleased that so many Cumbrian businesses continue to take part, ensuring the Cumbrian experience is well represented.”
