30 June 2026
Business confidence across the UK has fallen again as firms report growing concern about weak demand, persistent cost pressures and an uncertain outlook for the wider economy, according to a new survey of corporate sentiment.
The latest data from Lloyds shows that overall business confidence has slipped further into negative territory, with companies increasingly cautious about trading conditions over the next three months. While many firms still report resilience in their own operations, expectations for the broader economy have weakened.
The decline reflects ongoing pressure from subdued consumer spending, higher labour costs and elevated borrowing expenses, all of which continue to weigh on business planning and investment decisions.
Many companies surveyed said they were holding back on hiring and expansion until there is clearer evidence of sustained economic recovery. Others pointed to continued uncertainty in global markets, which has made forecasting demand more difficult.
Despite the fall in confidence, the survey also showed that some sectors remain relatively stable. Service-based businesses, particularly in professional and digital industries, reported steadier activity compared with retail and manufacturing firms, which continue to face softer demand.
Retailers in particular highlighted cautious household spending as a key challenge, with consumers prioritising essentials over discretionary purchases. Manufacturers also pointed to ongoing cost pressures linked to energy prices and imported materials.
Economists say the latest figures suggest the UK economy is still struggling to build consistent momentum, with growth remaining uneven across sectors. While inflation has eased from its recent peaks, businesses say the cost of doing business remains significantly higher than pre-pandemic levels.
The findings are likely to add to pressure on policymakers as they weigh the outlook for interest rates and broader economic support. If confidence continues to weaken, analysts warn it could feed through into slower investment, weaker job creation and reduced productivity growth.
However, some economists also caution against reading too much into short-term sentiment data, noting that UK businesses have remained more resilient than expected through recent periods of economic volatility.
For now, the message from firms is one of caution rather than crisis — with many businesses continuing to operate, but holding back on long-term commitments until conditions become more predictable.
Attention will now turn to whether upcoming economic data provides signs of stabilisation, or whether confidence continues to drift lower into the second half of the year.