Price hikes are coming for the UK
Confidence among British firms continues to weaken, with more than half of firms expecting to raise prices in 2026, the latest British Chambers of Commerce (BCC) Quarterly Economic Survey shows.
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.
Less than half of responding firms (46%) said that they 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.
Tax is a key 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.
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.
An increase in 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%).
“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.
“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, said Bharier.
“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.”
