BCC: costs up 70 percent in a decade, only 17 percent investing

The investment figure

Source: British Chambers of Commerce, September 2026 Budget submission and Q2 2026 QES.

Only 17 percent of firms planned to increase investment in plant, machinery or equipment over the next three months, the lowest since the Covid pandemic, down from 21 percent in Q1. The figure comes from the British Chambers of Commerce Quarterly Economic Survey Q2 2026, published on 6 July 2026, which drew on 4,744 businesses, 92 percent of them SMEs, with fieldwork running from 11 May to 8 June 2026. A further 26 percent planned to cut back investment and 57 percent planned no change, leaving the balance of firms expanding capacity at its weakest in more than five years. The sector split sharpens the picture: 38 percent of hospitality firms and 35 percent of retail firms scaled back. Both are labour intensive, both carry heavy business rates bills, and both have been named by the BCC as among the most exposed to the cost stack.

The forward looking measures in the same survey point the same way. 44 percent expected improved turnover in the next 12 months, down from 49 percent in Q1, while 23 percent expect a decline. On current trading, 29 percent reported increased domestic sales, 28 percent a decrease and 44 percent no change. That is a flat reading rather than a falling one, but it sits beneath a weaker investment intention, which matters because capital spending is the part of the cycle that responds first to a change in expected returns. The BCC's own June 2026 forecast put business investment down 2.2 percent in 2026, with GDP growth of 0.9 percent in 2026 and 1.0 percent in 2027, unemployment at 5.2 percent in 2026, youth unemployment at 16.9 percent in 2026 rising to 17.8 percent in 2027, and average earnings growth easing to 3.7 percent by Q4 2026. The survey and the forecast are two views of the same restraint.

Costs and prices

Inflation was cited as a concern by 66 percent of firms, up from 50 percent in Q1, making it the single most widespread worry in the survey. Taxation followed at 51 percent, business rates at 35 percent and the cost of borrowing at 29 percent, up from 24 percent. Fuel costs were named as a price pressure by 52 percent, up from 28 percent in Q1, a jump the BCC links to the Iran conflict. Labour costs remained the main price pressure at 70 percent overall and 78 percent in construction and engineering. Taken together, 48 percent of firms expect to raise prices in the next three months, which places the survey's price intentions above its investment intentions by a wide margin.

The energy picture adds a second layer. In August 2026 the BCC reported that three quarters of firms expect energy costs to rise over the next 12 months, and that 56 percent are under pressure to raise prices because of utility costs. For a small manufacturer or a cafe, utility bills and labour are the two lines that cannot easily be deferred, which is why the BCC frames the issue as a cost stack rather than a single tax or levy. The survey does not measure the size of that stack directly. The BCC's Budget submission does, and it is the number that gives the rest of the data its shape.

The Budget ask

In its Budget submission in September 2026, the BCC said domestic policies have increased the cost stack facing a typical SME by over 70 percent in the past decade, around a quarter of that since the 2024 Budget. The submission calls on the Chancellor to back business, cut costs and set out a medium to long term reform roadmap. Separately, the BCC wants the British Business Bank and the National Wealth Fund to maintain and grow capacity, a point that speaks to the supply of finance as much as its price. The cost stack figure is built from the cumulative effect of domestic policy decisions over ten years, with the post 2024 period isolated because that is where the most recent changes sit. It is a decade long measure, not a single year measure, and it is presented as an aggregate rather than a line by line breakdown.

The ask is therefore threefold in practice: a near term reduction in costs, a medium term roadmap so that firms can plan capital spending, and a finance supply that can fund that spending when confidence returns. The BCC's June 2026 forecast, with business investment down 2.2 percent in 2026, gives the roadmap argument its urgency. A firm that expects energy costs to rise, labour costs to rise and business rates to rise has little reason to commit to plant and machinery in the next three months, which is exactly what the 17 percent investment reading shows. The submission does not put a number on the cost of its proposals, and it does not specify which taxes or levies should change. It sets the direction and leaves the arithmetic to the Treasury.

KT analysis

Read alongside today's UK Finance postcode data, analysed on 15 September 2026, showing high street bank lending to SMEs in Great Britain down 30 percent between H2 2022 and 2025, and the LCCI survey of 15 September 2026 finding that 77 percent of large London firms say housing costs damage recruitment and retention, the picture is consistent rather than contradictory. Fewer firms are borrowing, fewer are investing, and more are raising prices. The lending decline and the investment decline are two ends of the same decision: a firm that will not commit to capital is unlikely to draw down new credit, and a firm facing a 70 percent higher cost stack over a decade has less headroom to service it. The LCCI finding adds a labour channel, because housing costs that damage recruitment and retention feed into the 70 percent of firms naming labour costs as their main price pressure.

What changes in the Budget is now the question for every small business page on this site. The BCC has set out what it wants: costs cut, a medium to long term reform roadmap, and maintained capacity at the British Business Bank and the National Wealth Fund. The survey data sets out what firms are doing without it: 17 percent investing, 26 percent cutting back, 48 percent planning to raise prices, and 44 percent expecting better turnover against 23 percent expecting worse. The gap between the 44 percent who see improvement ahead and the 17 percent who will fund it is the measure to watch. If the Budget closes that gap, the investment reading should move first. If it does not, the cost stack remains the constraint and the lending data will keep reflecting it.

Source: BCC: Budget must back business.

Related coverage on Kael Tripton: Pubs and Music Venues Get 20% Business Rates Cut From 2027, Pubs Get a 20% Business Rates Cut From April 2027: What the £1,100 Saving Means, Buying or selling a small business in the UK: tax, TUPE, insurance and the due diligence checklist, Mobile Card Readers for Small Businesses: Cost, Connectivity and Limits, Do You Need a Business Energy Tariff If You Work From Home.

Frequently asked questions

How many firms planned to increase investment in the BCC's Q2 2026 survey?

17 percent planned to increase investment in plant, machinery or equipment over the next three months, down from 21 percent in Q1 and the lowest since the Covid pandemic. 26 percent planned to cut back and 57 percent planned no change.

How many businesses took part in the BCC Quarterly Economic Survey Q2 2026?

4,744 businesses took part, 92 percent of them SMEs. Fieldwork ran from 11 May to 8 June 2026 and the survey was published on 6 July 2026.

What did the BCC say about the cost stack facing a typical SME?

In its Budget submission in September 2026, the BCC said domestic policies have increased the cost stack facing a typical SME by over 70 percent in the past decade, around a quarter of that since the 2024 Budget.

What is the BCC asking the Chancellor to do?

The BCC calls on the Chancellor to back business, cut costs and set out a medium to long term reform roadmap. Separately it wants the British Business Bank and the National Wealth Fund to maintain and grow capacity.

What were the top concerns cited by firms in the Q2 2026 survey?

Inflation was cited by 66 percent, up from 50 percent in Q1. Taxation was cited by 51 percent, business rates by 35 percent and the cost of borrowing by 29 percent, up from 24 percent.