Business confidence sinks to 17-month low as energy costs bite
Lloyds’ monthly barometer fell 12 points in September, with executives’ view of the global economy darkening as the Iran war pushes up costs.
British business confidence fell to its lowest level since April 2025 in September, according to the monthly barometer from Lloyds, as higher global energy prices and geopolitical uncertainty weighed on boardrooms.
The headline index dropped 12 points to 41 per cent, below its 47 per cent average over the past year. Optimism about the wider economy took the bigger hit, down 18 points to 31 per cent, six points below its 12-month average, while firms’ view of their own trading prospects fell eight points to 50 per cent.
“September’s fall in business confidence was driven primarily by a significant decline in economic optimism, with businesses responding to a combination of higher global energy prices and increased global uncertainty,” said Hann-Ju Ho, senior economist at Lloyds Commercial Banking. “(The) trading outlook also fell, suggesting that firms are becoming more cautious about the outlook for demand and activity over the coming year.”
September’s fall in business confidence was driven primarily by a significant decline in economic optimism, with businesses responding to a combination of higher global energy prices and increased global uncertainty.Hann-Ju Ho, senior economist, Lloyds Commercial Banking, 30 September 2026
One figure will worry rate-setters more than the gloom: the share of firms planning to raise prices in the next 12 months ticked up slightly, suggesting cost pressures have not fully faded even as optimism ebbs. Lloyds’ figures are based on an Ipsos survey of 1,200 British businesses with annual sales of at least £250,000, conducted between 2 and 16 September.
Reuters reported that executives’ view of the global economic outlook darkened as the Iran war pushed up costs. Not every region followed the national mood: in the West Midlands, business confidence jumped 22 points to 69 per cent in September, its highest reading of the year, according to Lloyds.
The gloom caps a difficult month for the economy. The Bank of England held rates at 3.75 per cent earlier in September, with three policymakers voting for a rise, and inflation climbed to 3.1 per cent in August as fuel and transport costs bit. With the autumn Budget still to come, the pressure on firms is unlikely to lift soon.
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