GC SITUATION REPORT AND BUSINESS SURVEY RESULTS
UK Economic Performance
Global economic conditions in 2026 remain fragile, driven by the ongoing Middle East conflict, which has disrupted oil and gas supply routes and pushed energy prices higher. These pressures are feeding directly into inflation and business costs, with fuel and transport driving recent price increases. Despite this, global growth is supported by strong investment in AI and technology, though expansion remains uneven and concentrated in major economies. The UK economy is expected to avoid recession but grow only modestly (around ~0.8%), constrained by weak investment, productivity challenges and cautious hiring. Inflation remains above target and could rise further due to sustained energy costs and wage pressures. The Bank of England has held interest rates at 3.75% and is taking a cautious, data-driven approach amid high uncertainty. Overall, while stability has improved slightly from early-2026 peaks, risks from energy volatility and geopolitical tensions continue to weigh on growth and policy decisions.
Survey Summary
Business confidence remained stable in April 2026, with the GC-BCI at 7.2, showing a slight improvement trend in recent months. Confidence is stronger in sectors such as Utilities, Agriculture and Manufacturing, but weaker across DCT, Health Care and Creative industries. Sales performance remained unchanged, while expectations for future profits softened slightly, though most firms still expect growth. Investment intentions are steady, with over a third of firms planning to increase capital expenditure, but fewer are prioritising workforce development.
Rising costs continue to be the main challenge (27%), alongside cashflow pressures and recruitment difficulties, particularly for smaller firms. While over half of businesses report sufficient cash reserves, some sectors still face higher risk. Demand-related challenges remain prominent, with many firms struggling to secure domestic sales and adapt business models. Despite this, there are signs of resilience through investment in innovation and AI adoption, alongside continued interest in expansion, skills development, and support for growth.
Key Findings
GC Business Confidence Index (GC-BCI): Business confidence for April 2026 stood at 7.2 out of 10, similar to the previous quarter, however increased by month on average in last two months. Confidence levels are above average for Utilities LCEGs, Agriculture, Manufacturing, Construction, and BFPS, and lower in DCT, Health Care, Life Sciences, Hospitality, Education and Creative industries.
Investment: 36% (unchanged) of firms expect to increase capital expenditure in the year ahead. Sectors most optimistic about increasing investment are Utilities LCEGs, Manufacturing, Engineering, Retail, Logistics, Hospitality, Healthcare; and lowest in Education, BFPS, DCTs, Construction and Life Sciences.
Cashflow Issues: 14% (vs 15%) of firms reported cashflow problems and higher risk reported in Engineering, Retail, Hospitality, DCTs, BFPS and Education.
Trade: 19% of firms (vs 17%) export goods/services, with 16% (unchanged) expanding into new markets, a trend particularly notable in the Utilities LCEGs, Engineering, Life Sciences, and Retail sectors. 10% (vs 9%) of firms engaged in overseas trade are looking to expand in their current markets.
Future Support Needs: Business planning 37% (vs 38%), innovation 35% (vs 34%), sales & marketing 32% (unchanged), WfD/skills 26% (vs 28%), and financial advice/guidance 28% (vs 26%). 9% (vs 8%) require assistance with managing their environmental impact.
Recruitment and Skills: 20% of firms recruiting; higher among SMEs; most active in Utilities LCEGs, Manufacturing, Life Sciences, Construction, Education, BFPS and Other services. Sectors least likely to be recruiting are DCTs, Hospitality, Healthcare, and Retail.
Archived Reports
For more information on this survey, please contact
Sabirah.Chowdhury@growthco.uk