UK firms grow cautious as turnover expectations fall to 46%: Survey

Business confidence across the UK weakened further in the final quarter of 2025, with taxation remaining the dominant concern and a growing number of firms expecting to raise prices in early 2026, BCC said in a media release.

Fieldwork took place before and after the Autumn Budget, allowing limited pre-and post-budget comparisons, particularly around tax concerns. The full impact of fiscal measures is expected to become clearer in the first quarter of 2026.

Expectations for turnover growth have fallen to their lowest level in three years. Retail remains the most pressured sectors, with 36 per cent of retailers expecting increased turnover, while around a third in both sectors anticipate a decline. Manufacturing firms are comparatively more optimistic, with 42 per cent expecting growth.

Sales indicators also deteriorated. Only 29 per cent of firms reported increased domestic sales, down from 32 per cent in the previous quarter, while 28 per cent experienced a fall. Manufacturing recorded the weakest sales performance. Cashflow pressures intensified, with 32 per cent of firms reporting a decline, up from 29 per cent in the prior quarter.

Taxation remains the top concern for businesses, cited by 63 per cent of respondents, compared with 59 per cent previously. Concerns peaked ahead of the budget, with 68 per cent identifying tax as a major issue, before easing to 61 per cent afterwards. Inflation remains a significant worry for 56 per cent of firms.

Investment in plant, machinery and equipment stayed in negative territory for a 5^th consecutive quarter. More than a quarter of firms reduced investment plans, with the sharpest pullbacks reported in retail and manufacturing.

More than half of businesses, 52 per cent, now expect to raise prices in the next three months, up sharply from 44 per cent in the previous quarter. Labour costs continue to be the most significant pressure, cited by 72 per cent of firms, particularly manufacturing.

Commenting on the findings, David Bharier, head of research at the BCC, said business sentiment remains fragile heading into 2026. “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 will have to put their prices up in the months ahead.”

He added that while concerns about major tax rises eased slightly after the budget, the lack of strong growth measures failed to lift sentiment. “It is now critical that 2026 is a year of delivery. The Government needs to turn strategies into action, boost investment, expand trade and ease the burdens facing businesses if the economy is to move away from its current low-growth path.”

The survey, conducted by the BCC Insights Unit and the UK-wide Chamber network between November 10 and December 8, gathered responses from more than 4,600 firms, 91 per cent of which were small and medium-sized enterprises.

ALCHEMPro News Desk (SG)