Price hikes threaten as business confidence and outlooks dip

The UK’s largest business sentiment survey has revealed that confidence among businesses has continued to dip and that more than half are not expecting their turnover to increase in the next six months. This is the lowest level in three years. 

While pessimism among hospitality businesses has been voiced for months, if not years, this survey from The British Chambers of Commerce (BCC) reveals that low confidence is widespread. 

It also highlights that the tax burden is playing on many business owners’ minds as the decisions made for the Autumn Budget now start to become reality. 

Tanking confidence

The Quarterly Economic Survey from the BCC was carried out before and after the Budget, with the fieldwork conducted between 10 November and 8 December. It gathered responses from more than 4600 businesses across the UK, and of these, 91% were SMEs.

When asked about projected turnover, less than half were optimistic, and nearly a quarter (24%) said that they expect a decrease, which is up from 21% in Q3. This has had an impact on business plans, with only 19% having increased investment in Q4 while 27% have scaled back plans.  

What this translates to is likely price hikes for customers. More than half of respondents (52%) are expecting to raise their prices in the next three months, which is up significantly from the previous quarter, which sat at 44%. 

A further 45% of respondents say their prices will probably remain the same in the early part of 2026, but a mere 3% are expecting to cut prices. 

Retail and hospitality sectors struggling

When the results were broken down into sectors, retail and hospitality businesses stood out, but for all of the wrong reasons. They continue to be the sectors suffering the most. 

More than a third (38%) of hospitality firms expect their turnover to decrease in the next 12 months, and 33% of retailers. However, 33% of those working in hospitality were optimistic of an increase, and, in a positive spin, 36% of retailers expect increased turnover.

However, respondents shared that labour costs continue to be a concern, especially in the hospitality sector, where 82% of respondents pointed straight at it as an issue. This is compared to 80% in manufacturing, which was a close second. 

Hospitality also reported the lowest increased domestic sales at 22%, as compared to 29% overall. 

Tax remains a concern

A clear message from the survey is that business owners are concerned that their tax burden is going to impact their outcomes. It was cited by 63% of firms, which is up from 59% in Q3. 

Interestingly, though, concerns fell from before to after the Budget announcement, suggesting that businesses were preparing for a worse situation than prevailed. Before the Chancellor’s statement, 68% of businesses said tax was a concern, but this fell to 61% after the Budget was announced.

However, inflation still remains a massive issu,e and this, coupled with rising costs, means that businesses are nervous of investment. “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,” share the researchers.

David Bharier, Head of Research at the British Chambers of Commerce, says that the results suggest “more clouds have gathered over business confidence” and he added that “the outlook for SMEs in 2026 is unsettled”.

While the Budget is now set in stone, businesses remain fearful and uncertainty reigns. Businesses need action – whether relief or investment. As Bharier says: “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.”