British Chambers of Commerce data shows UK business investment intentions have fallen to their weakest level since the Covid period, adding another warning signal to the country’s growth outlook.
The organisation’s latest Quarterly Economic Survey found that only 17% of responding businesses plan to increase investment in plant, machinery, or equipment over the next three months. That is down from 21% in the first quarter and represents the lowest reading since the pandemic.
A quarter of businesses said they planned to cut investment, while 57% said their plans were unchanged. The fall was sharper in some consumer-facing sectors, with 38% of hospitality companies and 35% of retailers reporting that they had scaled back investment plans.
Based on 4,744 responses, the survey points to a more cautious private sector entering the second half of the year. Only 44% of businesses said they expected turnover to improve over the next 12 months, down from 49% in the first quarter, while 23% expected a decline. Less than a third reported increased sales over the previous three months.
Inflation has also returned as the dominant concern. The share of businesses citing inflation as a worry rose to 66%, up from 50% in the previous quarter. Fuel costs were cited by 52% of respondents as a price pressure, nearly doubling as a concern, while taxation was cited by 51%. Concern over borrowing costs also rose, reaching 29%.
The figures deepen a pattern already visible across recent sentiment data. Lloyds Banking Group’s latest Business Barometer showed confidence falling despite stronger overseas expectations, with the divide between domestic and internationally exposed companies explored in business confidence falls despite overseas resilience. The CBI has also warned that the private-sector outlook is at its weakest since 2022.
The BCC survey adds a more direct capital spending measure. Confidence indicators capture sentiment, but investment intentions show how caution is feeding into decisions on machinery, equipment, technology, premises, and productivity improvements. When those projects are deferred, the effect is often gradual rather than immediate. Output can be maintained for a period, but capacity, efficiency, and competitiveness become harder to improve.
That creates a difficult policy backdrop. The UK has been trying to lift long term growth through infrastructure, planning reform, industrial strategy, technology adoption, skills, and pension capital mobilisation. Those policies rely heavily on private investment responding. If companies are preserving cash because costs, tax, interest rates, and demand remain uncertain, public policy has less immediate traction.
The pressure is not evenly distributed. Hospitality and retail are more exposed to wage costs, property costs, business rates, consumer confidence, and price sensitivity. Manufacturers face energy, input, trade, and financing pressures. Service companies may be less capital intensive, but many still need technology, training, automation, and cyber investment to improve productivity.
Weaker sales indicators make investment harder to justify. Domestic sales growth fell to 29% of businesses in the second quarter, down from 32% in the first, while 28% reported a decrease. The lowest increased-sales reading came from hospitality, at 20%, while transport and logistics recorded the highest, at 34%. Capital projects are easier to approve when demand is visible, order books are secure, and margins can absorb execution risk.
Inflation concern changes the calculation further. Higher fuel, labour, borrowing, and tax costs reduce the cash available for investment. They also make it harder to price long term projects and assess payback periods. In that environment, management teams may decide that preserving liquidity is more prudent than committing capital to projects that depend on stable demand and predictable input costs.
The UK’s productivity problem makes the decline more serious. Technology adoption, management capability, automation, energy efficiency, and skills development all require capital, planning time, and confidence. A cautious response may protect individual balance sheets in the near term, but repeated across the economy it risks weaker output per worker, slower innovation, and reduced resilience to future shocks.
The findings will increase pressure on policy designed to support growth. Business rates reform, tax certainty, energy-cost relief, export support, digital adoption schemes, and labour market policy will all be tested against the same question: whether they unlock investment. Measures that support demand but add compliance cost may fail to shift behaviour, while measures that reduce friction without addressing weak margins may also struggle.
Investment decisions are rarely reversed by a single announcement. Companies look for durability: stable demand, clear regulation, predictable taxes, manageable wage costs, and finance that can be serviced under conservative assumptions. The latest BCC data shows that many are not yet seeing that combination. The second half of the year will test whether confidence stabilises before deferred investment becomes a deeper drag on growth.
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