Barclays Reports Strong UK Business Confidence Despite Middle East Conflict and Persistent Cost Pressures

Barclays Reports Strong UK Business Confidence Despite Middle East Conflict and Persistent Cost Pressures

(IN BRIEF) Barclays’ Q1 2026 Business Prosperity Index shows that UK businesses remain broadly confident despite geopolitical pressures, with 85% confident in the strength of their business and 83% confident in their prospects over the next year. The report finds that 80% of businesses have been negatively affected by the Middle East conflict and one in five has paused overall investment due to geopolitical uncertainty, yet 54% still plan to increase investment over the next 12 months. Companies are increasingly prioritising resilience through technology, with 68% planning to increase cybersecurity investment and 61% already using agentic AI to some extent. Barclays’ data also shows that SMEs are building savings buffers and reducing borrowing, while larger firms are increasing longer-term borrowing, suggesting that their investment plans remain active. Cybersecurity has become a major concern, with fewer than three in 10 firms confident in their ability to respond to a major cyber incident, while AI and automation are increasingly seen as productivity tools that can help businesses manage costs and improve efficiency.

(PRESS RELEASE) LONDON, 27-May-2026 — /EuropaWire/ — Barclays has reported that UK businesses are increasing investment in cybersecurity and artificial intelligence as they navigate geopolitical uncertainty, rising costs and shifting financial pressures.

The findings come from the Q1 2026 Barclays Business Prosperity Index, which shows that 85% of UK businesses remain confident in the strength of their operations despite 80% reporting a negative impact from the Middle East conflict. The report indicates that companies are not simply pausing activity in response to uncertainty, but are increasingly directing investment toward resilience, productivity and long-term competitiveness.

The Index found that one in five businesses has paused overall investment because of geopolitical uncertainty. However, many firms still expect growth, with 81% anticipating higher revenues in the next quarter and 83% expressing confidence in their prospects over the next 12 months. More than half of businesses, 54%, plan to increase overall investment during the coming year.

Barclays’ anonymised client data, drawn from around 900,000 UK businesses and comparing Q1 2026 with Q1 2025, shows that smaller and larger firms are responding differently to current pressures. SMEs within Barclays Business Bank recorded a modest 0.2% increase in cash inflows, continued to build savings buffers with a 1.5% rise, and reduced borrowing by 13.1%. Larger corporates within Barclays UK Corporate Bank saw cash entering businesses fall by 7.0% and cash leaving businesses decrease by 6.1%, while savings declined by 5.2%.

At the same time, larger firms increased longer-term borrowing by 6.9% and reduced shorter-term overdraft borrowing by 11.8%, suggesting that many long-term investment plans remain in place despite a more cautious operating environment. Businesses are also divided over how to respond to rising costs, with 37% passing increases on to customers and 32% absorbing the pressure within their margins.

Matt Hammerstein, CEO of Barclays UK Corporate Bank, said UK businesses are operating in an environment where uncertainty has become normal. He noted that geopolitical instability and persistently high costs are influencing cashflows, borrowing decisions and investment plans, but added that many businesses are adapting by improving financial discipline, managing cash carefully and prioritising investment that supports resilience and productivity.

Cybersecurity has become a growing boardroom priority as companies face a more complex risk environment. Fewer than three in 10 businesses, 29%, said they are confident in their ability to respond to a major cyber incident. In response, 68% of firms expect to increase cybersecurity investment over the next 12 months.

The report also highlights the challenge of balancing technology adoption with increased exposure to risk. While 82% of businesses are confident that their cybersecurity capabilities are keeping pace, 46% believe the adoption of new technologies is increasing their exposure to cybersecurity threats.

Investment levels vary significantly by company size. Since the start of 2026, 36% of large firms have increased cybersecurity investment, compared with 26% of smaller businesses and 4% of micro businesses. Large firms said that, with additional finance, they would prioritise further investment in cybersecurity and AI, each cited by 24% of respondents.

The average amount spent on cybersecurity by business decision makers so far in 2026 is £505,000. This rises to £1.3 million among large businesses, compared with £134,000 for small businesses and £15,000 for micro businesses.

Alongside cybersecurity, UK businesses are increasing their use of AI and automation to improve efficiency and help offset cost pressures. More than half of businesses, 52%, said AI and automation have improved productivity. Reported benefits include employees spending less time on administrative tasks, faster decision-making and more time devoted to higher-value work.

The Index also found that 61% of businesses now use agentic AI to some extent in their operations. Cloud, cybersecurity and AI together account for 44% of planned technology budgets over the next year, showing that digital capability is becoming central to business resilience and growth planning.

Abdul Qureshi, Head of Barclays Business Banking, said SMEs continue to face higher costs and uncertainty, which are affecting day-to-day decisions. He noted that while larger companies are continuing with longer-term borrowing, many smaller firms remain focused on building cash reserves and carefully managing their financial position. He added that AI is beginning to offer practical opportunities for SMEs, particularly in improving productivity and everyday efficiency.

To support investment in resilience and growth, Barclays is making the Barclays Business Prosperity Fund available to new and existing Business Banking customers and UK Corporate Banking clients across the UK for lending and refinancing on existing projects. Barclays said it has £22 billion available in 2026 to support business growth among Business Banking and UK Corporate Banking clients, subject to normal lending assessment, status and application.

The Barclays Business Prosperity Index was launched in November 2024 as a trackable measure of business performance and future growth, with economic modelling produced in partnership with the Centre for Economics and Business Research. The Q1 2026 Index includes survey data, proprietary Barclays client data, research conducted among 1,000 senior business decision makers by Opinium Research, and research among 500 B2B leaders by Focaldata.

Notes to Editors

1The Barclays Business Prosperity Index

In November 2024 Barclays launched the Barclays Business Prosperity Index, a trackable measure of business performance and future growth, with economic modelling produced in partnership with the Centre for Economics and Business Research (Cebr).

Unless otherwise stated, this press release is based on the Barclays Business Prosperity Index, which comprises survey data and proprietary Barclays client data. Proprietary data has been weighted by company size to represent the UK business population, with the top five percent of all metrics values removed, to best reflect the typical behaviour of the average business.

The Index includes research conducted among 1,000 senior business decision makers, between 17th  April -5th May 2026, by Opinium Research on behalf of Barclays.

The businesses represented in both surveys include micros (1-9 employees), small businesses (10-49 employees), medium businesses (50-249 employees), and large businesses (250+ employees) representative across sectors, and regions of the UK.

The Index also includes research conducted among 500 B2B leaders (250 SMEs and 250 large corporates), between 27th April-1st May 2026, by Focaldata on behalf of Barclays.

For more information read the report in full at: home.barclays/businessprosperity

About Barclays

Our vision is to be the UK-centred leader in global finance.  We are a diversified bank with comprehensive UK consumer, corporate and wealth and private banking franchises, a leading investment bank and a strong, specialist US consumer bank.  Through these five divisions, we are working together for a better financial future for our customers, clients and communities. For further information about Barclays, please visit our website home.barclays

Media Contact:

email: harry.neicho@barclays.com

SOURCE: Barclays