"UK businesses remain broadly confident in Britain as a base for growth, even as rising costs and economic uncertainty weigh on margins, according to new research from Barclays. The bank's latest Business Prosperity Index, analysing anonymised data from around one million clients alongside a survey of 1,000 business leaders, reveals a two-speed economy emerging at the end of 2025. Larger firms are pushing ahead with long-term borrowing and investment, while smaller companies are turning to short-term liquidity to manage tighter margins."
"In response, 80 per cent have passed some of these increases on to customers, with businesses transferring an average of 30 per cent of higher costs. A further 65 per cent expect to raise prices again this year. Energy pressures remain particularly acute, with 34 per cent of companies reducing consumption to offset rising bills. More than a third (37 per cent) view cutting operating costs as the most effective way to unlock investment in 2026."
UK businesses remain broadly confident in Britain as a base for starting, scaling and growing companies, though margins face pressure from rising costs and uncertainty. A two-speed economy is emerging, with larger firms increasing long-term borrowing and investment while smaller companies shift toward short-term liquidity and overdraft usage. Almost all firms reported higher trading costs, led by energy, labour and supply chain expenses, and many have passed a portion of increases to customers. Cash inflows slipped year-on-year, energy consumption reductions and operating-cost cuts are common, and a majority expect further price rises this year.
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