UK bizs optimistic about 2026; economic uncertainty high: S&P Global

Export growth, new business acquisition, innovation and adaptation are driving pockets of expansion, but uncertainty—rooted in policy, economic instability and cost pressures—remains the dominant undercurrent.

The next few months will hinge on government policy decisions, the evolution of inflation and demand, and the ability of firms to work through business challenges and prepare for the coming year, David Owen, economist responsible for economic indices at S&P Global wrote on the company website.

The survey signalled a slight improvement in business confidence across the private sector compared to that seen in the summer, but the mood among firms remained distinctly cautious.

It reveals that optimism is still below the long-term average, and shadowed by a web of business risks that include global economic headwinds and policy uncertainty.

However, qualitative evidence from survey panellists shows that many businesses have detailed strategies and widespread opportunities to overcome risks.

The headline measure of UK business activity sentiment ticked up to a net balance of 33 per cent in October, just above 32 per cent in June. This headline figure rose further following a sharp fall in the February survey, but the overall degree of confidence is still weaker than the long-term average observed over the past 16 years (43 per cent).

UK businesses nonetheless remain more upbeat than their European and global peers, with euro area sentiment slumping to a 12-month low (17 per cent) and the global average staying at 24 per cent.

Both the services and manufacturing sectors experienced a modest uptick in business confidence.

While there was a high degree of uncertainty about the economic climate, UK firms still see wide ranging opportunities. Looking at the qualitative responses from surveyed businesses, S&P Global saw opportunities emerging across several broad themes, though the balance of optimism differed sharply by sector.

Across all sectors, the drive to win new business and expand the customer base stands out as a key opportunity.

Manufacturers signalled they were prioritising new business, often in tandem with product innovation. These are especially focused on opportunities abroad. New export growth was cited as the leading opportunity by surveyed producers, with these firms pointing to new trade deals, demand from overseas markets and the ability to differentiate products internationally.

Market expansion, both geographically and into new segments, is also gaining traction as manufacturers look to offset domestic headwinds, Owen noted.

However, economic uncertainty is still elevated. Indeed, of the business challenges comments received in the latest survey, around half of them pointed to some measure of economic uncertainty and instability restraining growth potential.

ALCHEMPro News Desk (DS)