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Confidence among British businesses has rebounded following the recent changes in Government, with 63 per cent now optimistic about the UK economy, up from 57 per cent in the first quarter, according to Barclays’ latest quarterly health check on the nation’s firms.
The bank’s Q2 Business Prosperity Index, which combines survey findings with anonymised client data from more than 900,000 UK businesses, also found that firms’ optimism about their own prosperity over the next 12 months has risen to 86 per cent, up from 83 per cent in the first quarter.
Business leaders appear to have welcomed the shift towards regional decision-making, with 60 per cent agreeing that devolution will improve economic opportunities in their area. Support was strongest in areas with prominent mayoralties: London (68 per cent), the West Midlands (64 per cent) and the North West (63 per cent).
More than a third (34 per cent) expect their business to benefit from the creation of No.10 North, and over half of those (55 per cent) expect it to increase investment and opportunities for their region. That sentiment was most prominent in London (69 per cent) and the Midlands (54 per cent), while 59 per cent of businesses in the North West believe it will enable greater control over regional decision-making. By sector, Technology (81 per cent) and IT and Telecoms (75 per cent) firms are the strongest supporters of devolution, and also expect to see the most benefit from No.10 North.
Abdul Qureshi, head of Barclays Business Banking, said: “Greater regional decision-making gives local leaders the opportunity to align skills, infrastructure, finance and business support more closely with the distinctive strengths of local economies. From technology clusters and advanced manufacturing to professional services, life sciences, clean energy and creative industries, the UK has deep regional specialisms that can be engines of national growth.”
The confidence is starting to show up in behaviour. Barclays’ client data, comparing the second quarter of 2026 with the same period last year, shows SMEs increased savings by 1.5 per cent while the number of loans rose 0.9 per cent. Larger firms went further: among the bank’s corporate clients, the number of loans rose 3.2 per cent and lending values were up 9.3 per cent, suggesting some are already borrowing to fund investment and growth.
Several sectors delivered notably strong quarters. Software businesses recorded a 21.9 per cent rise in incoming cash flows, while commercial property investors focused on healthcare and residential developments saw increases of 22.5 per cent and 10.3 per cent respectively. Residential property firms lifted lending balances by 7.6 per cent, with loan numbers up 7.0 per cent, a rise beaten only by housing associations (14.4 per cent) and restaurants and cafes (14.5 per cent).
Looking ahead, 56 per cent of businesses plan to increase investment over the next 12 months and 46 per cent are likely to seek new finance to support expansion and build resilience. Top priorities are staff training and development (41 per cent), research and development (36 per cent), new or upgraded equipment (34 per cent) and digital products (33 per cent). That marks a sharp shift in intent after a year in which just 23 per cent of businesses said they borrowed to fund investment.
The legacy of the pandemic still weighs on some financing decisions. Of the 42 per cent of businesses that received financial support during Covid, 67 per cent have since taken out additional finance. Among those that have not, 36 per cent cite concerns about taking on more debt and 26 per cent say borrowing costs are too high.
Firms also made clear that confidence alone will not unlock spending. Almost a quarter (23 per cent) believe the new Government should prioritise reforming or reducing business taxation, a policy backed by 32 per cent of small and micro businesses, while 32 per cent of larger businesses want investment in technology and digital infrastructure to be the key focus.
Matt Hammerstein, chief executive of Barclays UK Corporate Bank, said: “The UK’s growth prospects depend on businesses having the confidence to invest. It is encouraging to see firms preparing to commit capital again, particularly in skills, R&D, equipment and digital capability, which are critical to improving productivity.
“The priority now is turning that intent into action. With clearer policy direction and the right access to finance, ambitious businesses across every region and sector can invest with confidence, scale faster and contribute to stronger economic growth.”
Barclays said its Business Prosperity Fund, part of the £22 billion of lending it has made available to business banking and corporate clients in 2026, is open to new and existing customers seeking to invest in resilience and growth.
