Armstrong Watson’s Business Confidence Survey, conducted in March 2026, explores how businesses feel about the year ahead, their expectations for trading conditions, and the challenges shaping decisionmaking as the new tax year begins.
The state of business confidence
As UK businesses head into the new tax year, confidence remains finely balanced. While resilience is evident, many business owners are approaching the months ahead with caution rather than optimism.
The survey shows that 39.6% of the 245 respondents feel pessimistic about the economic outlook for their business, compared with 33.8% who feel optimistic. A further 26.5% describe themselves as neutral, reflecting uncertainty rather than disengagement.
This cautious sentiment becomes more pronounced when looking ahead. More than half of businesses (53.9%) expect trading conditions to worsen in 2026/27, while only 20.8% anticipate an improvement. One quarter expect conditions to remain broadly unchanged.
Cost pressures dominate decisionmaking
The most consistently cited challenge is the increase in tax and operating costs, selected by 69.8% of respondents. Rising employment costs are a major contributor, with 61.3% expecting increases in National Minimum Wage or National Living Wage costs to have a negative impact.
As a result, many businesses are reviewing how costs feed through into pricing. Over the next three months, 70.6% of respondents expect to increase prices, suggesting margin pressure is becoming harder to absorb.
Stability over expansion
Despite these pressures, most businesses are prioritising continuity. 71.8% plan to maintain workforce levels during the current tax year, with fewer businesses planning to increase or reduce headcount. This reflects a desire to retain skills while avoiding overcommitment in an uncertain trading environment.
Global uncertainty remains influential
External factors continue to shape sentiment. Almost four in five businesses (79.2%) say they are concerned about the potential impact of conflict in the Middle East, highlighting the sensitivity of UK businesses to energy prices, supply chains and wider economic confidence.
The survey suggests that many businesses are navigating uncertainty rather than standing still. In our experience, those who forecast early, review cashflow regularly and plan tax proactively are better placed to respond as conditions change.
If you would like support to gain clear financial insight, practical tax planning and forward looking advice please get in touch. Call 0808 144 5575 or email help@armstrongwatson.co.uk.
