Trading businesses in the UK demonstrated modest resilience at the start of 2026, with 94% reporting active operations82% fully trading and 13% partially soper the ONS's Business Insights and Conditions Survey (BICS) released this week. Only 4% had temporarily paused trading, while 2% had ceased permanently, reflecting limited disruption amid broader economic headwinds.

Turnover Expectations Reflect Cautious Outlook

Nearly one in five trading businesses (20%) anticipate a turnover decrease for February 2026, a 5 percentage point improvement from January expectations and stable year-on-year. Meanwhile, 16% expect growth, up 3 points from last month, with larger firms (100-249 employees) most optimistic at 28%.

Economic Uncertainty Remains Top Challenge

Despite the easing, economic uncertainty affected 31% of trading businesses' turnover, down 2 points from early December 2025 and the leading issue since October 2022. Other persistent hurdles included labour costs (22%), materials (20%), and competition (19%), all holding steady month-on-month, while 29% reported no challenges.

For businesses with 10 or more employees, labour costs topped the list at 36%. This group also faced heightened turnover pressures, with 35% reporting decreases in recent months, broadly stable from prior periods.

Price Pressures and Future Plans

Over a quarter (26%) of businesses noted rises in input prices in December 2025 compared to November, consistent with recent trends and highest in accommodation and food services at 48%. Looking ahead, 21% expect to raise selling prices in February, aligning with historical norms.

Labour costs were the primary driver for potential price hikes at 29%, followed by energy and raw materials (both 20%) and finance costs (17%). Notably, 41% plan no increases, indicating restraint.

These findings, captured in early January, highlight a UK business landscape adapting to softening uncertainty while grappling with cost pressures. Larger firms show greater confidence, potentially signalling broader recovery if trends hold.