The Office for National Statistics (ONS) released its latest Business Insights and Impact on the UK Economy bulletin on 19 February 2026, capturing data from early February that paints a cautiously hopeful picture for British firms.

Around one in five (21%) trading businesses now forecast an increase in turnover for March 2026 compared to the prior month, up from 15% expected for February. This marks the highest expectation since similar peaks in previous years, though businesses have historically been somewhat pessimistic, with actual January 2026 turnover growth at 16% against 13% anticipated.

Persistent Headwinds

Despite the uptick, challenges abound. Economic uncertainty tops the list, affecting 30% of trading businesses' turnover—stable from January and dominant since October 2022. Other pressures include competition (21%), cost of materials (20%), and labour costs (18%, down slightly).

Nearly three in ten (29%) firms report no turnover challenges, steady from last month but down two points year-on-year. Workforce issues persist, with 16% of businesses employing 10 or more staff facing shortages, unchanged since October 2025. Labour costs remain the primary concern for larger firms at 36%.

Trading Status and Pricing Outlook

Trading activity holds firm: 93% of businesses are active (82% fully, 11% partially), 4% paused, and 3% permanently closed. Price increase expectations have eased to 17% for March, down three points from February but stable annually.

One in eight (13%) anticipate turnover declines in March, down seven points from February levels and matching last March.

Broader Economic Context

This ONS snapshot aligns with tentative optimism elsewhere. The Bank of England's February 2026 Monetary Policy Report notes subdued growth projections but potential Bank Rate cuts from 3.75%, with markets pricing 3.3% by late 2026. S&P Global's flash PMIs signal faster UK output growth in February.

Yet forecasts remain modest: OECD and HMT at 1.2% GDP growth for 2026, OBR at 1.4%. Businesses brace for below-trend expansion, squeezed spending, and rising service sector costs.

The ONS data offers a rare bright spot, potentially heralding stabilisation if expectations materialise amid policy easing and easing inflation pressures.