UK business confidence weakens as tax fears, price hikes loom: survey
LONDON, ENGLAND — Confidence among United Kingdom businesses has deteriorated, with taxation remaining the foremost concern and a majority of firms now expecting to raise prices in early 2026, according to a new survey.
The latest Quarterly Economic Survey from the British Chambers of Commerce (BCC) reveals deepening pessimism among companies struggling with persistent cost pressures and stagnant investment.
“Our data shows more clouds have gathered over business confidence, and the outlook for SMEs in 2026 is unsettled,” said David Bharier, Head of Research at the British Chambers of Commerce.
UK business confidence and performance slide in Q4 2025
The survey, conducted by the BCC Insights Unit and the UK-wide Chamber network between November 10 and December 8, 2025, with over 4,600 respondents (91% of whom are small and medium enterprises or SMEs), found that less than 46% of firms expect increased turnover—a decline from 48% last quarter and the lowest expectation in three years. Nearly a quarter (24%) anticipate a decrease in turnover.
This downturn is reflected in current sales and cash flow data. Only 29% of businesses reported increased domestic sales, down from 32% in the previous quarter, while 28% reported a decrease.
At the same time, 32% of companies indicated that their cash flow had deteriorated even in the past three months. The retail and hospitality industries have been hit the hardest, with only 33% of hospitality companies and 36% of retailers forecasting an increase in turnover.
Tax anxiety stalls UK business investment, fuels price rises
Persistent anxiety over taxation is directly correlated with a continued slump in business investment and intentions to increase consumer prices.
“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,” Bharier notes.
Tax was cited as the top concern by 63% of all firms, a level consistent with the period after the previous budget and up from 59% last quarter. Notably, concern spiked to 68% before easing slightly to 61% afterward, indicating the Chancellor’s statement provided limited, temporary relief.
This environment has crippled investment and is pushing prices upward. For the fifth consecutive quarter, more businesses scaled back investment plans (27%) than increased them (19%), with over a third of hospitality (37%) and retail (36%) firms cutting back.
Facing these pressures—with labor costs cited by 72% as the main pressure—over half of all firms (52%) now expect to raise their prices in the next three months, a sharp rise from 44% the previous quarter.
Bharier notes, “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.”
The combination of deepening investment stagnation and widespread intentions to raise prices paints a grim portrait of a low-growth, high-inflation economy that threatens to erode real wages, stifle job creation, and cement a cost-of-doing-business crisis as the defining feature of the UK’s future work landscape.
