UK business conditions show mixed trends, easing cost pressures

The Bank of England's latest Agents' Summary for March 2026 highlights a nuanced picture of the UK economy.

Businesses reported a general moderation in turnover growth, particularly within consumer-facing services, while manufacturing output showed some resilience, especially in export-oriented sectors.

Investment intentions remained subdued overall, with firms citing ongoing economic uncertainty and higher financing costs as primary deterrents.

However, there were signs of easing in material costs, which provided some relief to supply chains.

Labour market conditions continued to be tight, though the pace of wage growth appeared to stabilise.

Capacity utilisation remained broadly in line with historical averages, suggesting some slack in the system.

The report also noted a slight improvement in credit availability for larger firms, contrasting with persistent challenges for small and medium-sized enterprises.

The Agents' Summary provides a qualitative and quantitative assessment of business conditions, drawing on intelligence gathered from the Bank of England's network of Agents across the UK.

These Agents conduct around 9,000 interviews annually with businesses of all sizes and sectors, offering a timely and granular view of economic activity that complements official statistics.

The March 2026 report reflects insights from interviews conducted throughout February and early March, capturing immediate business sentiment regarding current trading conditions, investment plans, and inflationary pressures.

This unique perspective helps the Monetary Policy Committee understand real-time economic developments and their potential implications for inflation and growth, informing policy decisions beyond aggregate data.