The latest results from the British Chambers of Commerce Quarterly Economic Survey (QES) for Q1 2026 present a familiar picture1. Business confidence remains subdued. Investment intentions are weak. Cost pressures, though no longer accelerating, remain elevated. Firms continue to report difficulties in recruitment, while a significant proportion expect to raise prices in the coming months.
None of this, on its own, is remarkable. What matters is how these signals fit into the longer narrative the QES has traced over the past decade, and what they imply as businesses brace for a potential new shock arising from escalating conflict in Iran.
One earthquake after another
The QES is often described as a snapshot. A better metaphor is a seismograph. It does not always predict earthquakes, but it records their tremors with precision. Over time, distinct patterns emerge which can be explored in the new QES dashboard2.
Using the dashboard, we can consider the aftermath of the EU referendum. The QES did not register a sudden collapse. Instead, it showed a long plateau of hesitation. Investment balances weakened and remained weak. Confidence drifted rather than fell. Firms delayed decisions. The signal was not panic but paralysis.
Contrast that with the onset of Covid-19. In Q2 2020, the QES recorded the sharpest contraction in its history. Sales, orders, and cashflow indicators fell in unison. The data showed a sudden stop in economic activity. This was not uncertainty. It was absence: of customers, of revenue, of normal business conditions.
The recovery that followed introduced a different pattern. Demand returned, but supply struggled to keep pace. By 2021 and into 2022, the QES began to register acute recruitment difficulties and surging input costs. After Russia’s invasion of Ukraine, those cost pressures intensified. The survey captured a shift from a demand shock to a cost shock. Firms were operating, but under strain. Margins tightened. Price rises became more widespread.
The market reaction to the September 2022 mini-budget produced yet another signature. Confidence fell sharply and quickly. Investment intentions dropped. The QES reflected a loss of financial stability rather than a collapse in demand or supply. Businesses did not stop trading, but they became more cautious about the future.
More recently, the 2024 Autumn Budget introduced a different kind of pressure. While not a shock in the same sense as a pandemic or geopolitical crisis, its effects were visible in the QES data. Firms reported rising concern about the tax burden and employment costs, alongside continued caution on investment. The survey suggested not a sudden break, but a tightening of conditions: businesses adjusting to a more demanding fiscal environment, with implications for hiring and growth plans.
Since then, the survey has pointed to a period of stagnation. Growth indicators have been weak but not catastrophic. Costs remain a concern. Confidence has struggled to recover. The dominant feature is persistence: problems that do not resolve, only shift.
Tremors ahead
The Q1 2026 results sit squarely in this phase. Firms are not reporting crisis conditions. But neither are they signalling momentum. The economy appears to be operating below potential, with limited resilience to absorb further shocks.
This context matters. Because the nature of the next shock will determine how these indicators move, and how severe the impact will be.
An escalation of conflict in Iran would most likely transmit through energy prices and global supply chains. If so, the QES would be expected to register a familiar pattern: rising input costs, increased price expectations, and a renewed squeeze on margins. Confidence could weaken further, particularly if financial markets react sharply. Investment, already subdued, may be delayed again.
The risk is not simply the shock itself, but the accumulation of shocks and their long-term economic consequences. Over the past decade, UK businesses have had little time to rebuild buffers. Each episode – uncertainty, shutdown, inflation, volatility – has left its mark. The QES shows an economy that has adapted, but not fully recovered.
This is why the survey remains essential. It provides early evidence not just of change, but of strain. It shows whether firms are absorbing pressure or passing it on. And it reveals, in real time, whether the foundations of growth are strengthening or eroding.
The QES Q1 2026 data does not yet show a new earthquake, but does reveal some very shaky ground.
2 https://www.britishchambers.org.uk/insights-unit/quarterly-economic-survey/
Further reading
New QES Dashboard: https://www.britishchambers.org.uk/insights-unit/quarterly-economic-survey/
QES Q1 2026: https://www.britishchambers.org.uk/news/2026/03/business-confidence-fragile-going-into-global-turmoil/
BCC Insights Unit publications: https://www.britishchambers.org.uk/insights-unit/publications-and-commentary