Business confidence in the United Kingdom has slumped as the ongoing Middle East conflict exacerbates cost pressures for employers, according to a survey by the Institute of Chartered Accountants in England and Wales. Confidence fell from +2.8 to -1.1.

The quarterly Business Confidence Monitor showed that rising energy prices and supply chain disruptions were key concerns for firms. Higher input costs are expected to weigh on margins and future investment decisions.

Many businesses also cited increasing labour costs and uncertainty about the economic outlook. These factors have dampened optimism about sales growth and hiring plans for the coming year.

Export expectations have softened, while fears of further price increases remain elevated. This signals that firms may pass higher costs onto customers, potentially fuelling inflation.

Economists say the decline in confidence highlights how geopolitical shocks and cost pressures can quickly change business sentiment, even as some sectors had begun 2026 with cautiously positive outlooks.

Source: Reuters