Rising costs, late payment problems and concerns over supply chain resilience are creating a gloomy outlook for small and medium sized enterprises.
The latest ACCA and IMA Global Economic Conditions Survey (GECS) shows that UK SME confidence is stuck near record lows. The proportion of respondents citing problems getting paid on time rose to its highest level in nearly 14 years.
Concerns about suppliers going out of business are also close to pandemic-era highs, while those about customers are also becoming elevated by historical standards, albeit they are significantly below their peak in Q2 2020. Almost eight in 10 businesses say their operating costs are still rising, leaving many firms struggling to stay afloat.
The survey reveals that confidence among UK SMEs was largely unchanged in Q1 2026, remaining close to its Q4 2024 record low which followed Chancellor Rachel Reeves’ first Budget.
A rise in the New Orders Index pointed to signs of recovery in the UK economy, but whether initial signs of optimism will survive the fallout from the oil price and other shocks emanating from the Middle East remains to be seen, researchers said.
Lloyd Powell, head of ACCA Cymru/Wales, said:
“Businesses are facing a difficult trading environment, with global tensions over the Middle East and inflation making for challenging trading conditions in the coming months.
“This quarter’s sharp rise in concerns about supply chain reliability and the ability to secure prompt payment demonstrate the need for the Government to boost confidence and swiftly provide the implementation road map for their recently announced late payment new powers for the Small Business Commissioner.”
Jonathan Ashworth, ACCA’s chief economist, said that developments in the Middle East will be crucial over coming months:
“The global economy was in relatively decent shape before recent developments in the Middle East, amid the ongoing global AI boom, favourable global financial conditions and fiscal easing in a number of major economies. Nevertheless, the longer energy and other commodity prices remain high and uncertainty elevated, the greater the downside risks for global and UK growth.
“Before recent events, additional rate cuts from the Bank of England looked set to provide a helping hand for UK businesses this year, but that now looks unlikely. The risk is more likely in the direction of a rate hike.”
