UK business confidence rebounds but firms seek greater policy certainty

UK business confidence improved in the second quarter of 2026, with more firms planning to invest and seek finance, although concerns around tax, infrastructure and skills remain, according to new Barclays research.

The latest Barclays Business Prosperity Index found confidence in the UK economy rose to 63%, from 57% in Q1, while businesses’ optimism about their own prospects increased three percentage points to 86%.

The findings indicate that improved sentiment is beginning to translate into investment intentions, with 56% of businesses planning to increase investment over the next 12 months and 46% expecting to seek new finance.

Training and staff development is the leading investment priority, cited by 41%, followed by R&D at 36%, new or upgraded equipment at 34% and digital products at 33%.

Barclays’ anonymised data covering more than 900,000 UK businesses also showed signs of increased borrowing during Q2.

Among SMEs using Barclays Business Banking, the number of loans increased by 0.9% compared with Q2 2025, while savings rose 1.5%.

Larger businesses showed stronger borrowing growth. Barclays UK Corporate Bank clients increased the number of loans by 3.2%, while lending values were 9.3% higher, suggesting some larger companies are using additional finance to support investment and expansion.

Several sectors also recorded strong cashflow growth, including software businesses, where incoming cash flows increased 21.9%. Commercial property investment businesses focused on healthcare and residential developments recorded increases of 22.5% and 10.3%, respectively.

Businesses back greater regional decision-making

The research also found support for increased devolution, with 60% of businesses believing it will improve economic opportunities in their area.

More than a third (34%) expect their business to benefit from the creation of No.10 North. Among these respondents, 55% expect the initiative to increase investment and opportunities in their region.

However, businesses are calling for greater policy certainty before translating confidence into investment.

Almost a quarter (23%) said reforming or reducing business taxation should be a priority for the Government, rising to 32% among small and micro businesses. Meanwhile, 32% of larger businesses identified investment in technology and digital infrastructure as a priority.

“Greater regional decision-making gives local leaders the opportunity to align skills, infrastructure, finance and business support more closely with the distinctive strengths of local economies. From technology clusters and advanced manufacturing to professional services, life sciences, clean energy and creative industries, the UK has deep regional specialisms that can be engines of national growth.

“If local leaders can make these clusters easier to identify, connect and invest in, devolution can help turn regional ambition into stronger productivity and broader UK economic growth.”

Investment appetite returns

The increased appetite for finance represents a shift from the previous year, when just 23% of businesses said they had borrowed to fund investment.

Barclays also found that Covid-era financial support continues to influence borrowing behaviour. Of the 42% of businesses that received financial support during the pandemic, 67% have since taken out additional finance.

Among those that have not borrowed again, 36% cited concerns about taking on further debt, while 26% pointed to high borrowing costs.

“The UK’s growth prospects depend on businesses having the confidence to invest. It is encouraging to see firms preparing to commit capital again, particularly in skills, R&D, equipment and digital capability, which are critical to improving productivity.

“The priority now is turning that intent into action. With clearer policy direction and the right access to finance, ambitious businesses across every region and sector can invest with confidence, scale faster and contribute to stronger economic growth.”