Key facts
- UK business confidence fell to its lowest level since Q4 2022 in the three months to June.
- Rising costs, including input prices at 4.1%, are impacting future sales expectations.
- Companies are struggling to pass on higher costs due to weak demand.
- Concerns about labor, energy, and transport costs are elevated.
- Late payment worries are at a five-year high.
British business confidence has fallen to its lowest point since the fourth quarter of 2022, driven by rising costs and weakening expectations for future sales, according to a survey by the Institute of Chartered Accountants in England and Wales (ICAEW). The Business Confidence Monitor, which surveyed 1,000 accountants between April and June, indicated that the conflict in Iran has contributed to increased costs, impacting the UK economy.
The survey revealed that input prices rose to 4.1% in the three months to June, the highest level since the third quarter of 2024. Many companies reported difficulty in fully passing these higher costs onto customers due to weak demand. Expectations for input cost growth over the next 12 months also reached their highest level since the first quarter of 2023.
More than half of the surveyed firms expressed concerns about labor costs, while 35% cited worries about energy prices. Additionally, the proportion of businesses concerned about transport costs reached its highest in over two years, and 24% of firms reported concerns about late payments, the highest figure in five years.