Two in five businesses admit their futures are in doubt as financial pressures mount
More than two fifths (43%) of UK businesses fear they will be unable to continue operating as they are beyond the next two years, as mounting financial pressures threaten their long-term survival.
Research by Flagstone found a worrying picture of business confidence across the UK, with one in nine businesses having considered closing altogether and fewer than a quarter of SMEs confident they can withstand ongoing financial pressures indefinitely.
Flagstone’s survey of 1,000 UK SME businesses* highlights the realities of running – and sustaining – a UK SME business in today’s market conditions – with 37% of businesses ranking energy prices among their top three financial challenges. Energy is the single biggest concern across businesses of all sizes and the majority of industries, but economic uncertainty (30%), the cost of labour (28%), high operating costs (26%) and the cost of materials and stock (25%) follow closely behind. Energy costs are high on businesses’ list of priorities for government action.
Asked what they most want to see from the Chancellor at the Budget, 43% of SMEs demand a reduced tax burden, and 30% call for support with energy costs. In the research, 1,000 UK businesses were asked how long their businesses can continue operating as they do today if the current financial pressures they face continue unchanged: 15% of UK business leaders believe they could only continue for up to one year; 29% believe they could continue for 1 to 2 years; a further 29% feel they could continue for two years or more. Less than a quarter (23%) are confident they can remain operating indefinitely on the current basis. 1 in 9 (11%) reveal that they have considered closing altogether.
To assess the impact these financial pressures put on UK companies, and to establish how real these concerns surrounding change and closure might be, Flagstone assessed recent ONS data* on business launches and closures. Between April and June 2026, almost 77,000 UK limited companies deregistered, up by 2% from the same period in 2025.
Katie Horne, savings expert at Flagstone: “UK businesses are absorbing significant financial pressures, but there can come a point when the cost of keeping up outweighs the benefit of keeping going. Whether they’re tackling energy costs, National Insurance, business rates, or costs associated with labour, supplies and operations, UK businesses are telling the government they need greater support and the data shows that many are at a tipping point. The UK’s SME community employs 16.9 million people nationwide. UK PLC needs to rally now to ensure that the future health and prosperity not just of these businesses but of the people who work for them are front of mind in the Budget.”
Regional breakdown: the risk of business failure around the UK
Concerns among businesses over their future ability to operate as they do now are fairly evenly spread throughout the UK.
27,000 of the companies closed in London and the South East between April and June 2026, accounting for over a third (35%) of all UK closures in that period. Businesses in these regions remain among the most pessimistic about their futures. Half (50%) of businesses in the South East and 46% in London say they can only carry on as they are for another two years at most if current pressures persist. London also has the highest proportion of businesses that have considered closing their doors altogether, at 15%.
In the North East of England, 44% of businesses fear they will have to make changes to their operations within two years if conditions do not improve. ONS figures show 2,235 North East businesses closed between April and June 2026 – the region’s highest number of closures for three years.
8,015 companies in the North West of England closed between April and June 2026, marking a 4% increase year-on-year which is twice the UK-wide total of 2%. Despite this, North west businesses are more resilient. One in ten (10%) North west companies say they could continue for up to a year in their current situation, versus a 15% UK average, and 39% of businesses could remain as they are for up to two years, below the UK average of 43%.
The West Midlands accounted for 8% of all UK company closures between April and June 2026 (6,170). 45% of West Midlands businesses do not expect to be able to carry on as they are for more than 2 years without making changes to how they operate.
While in the East Midlands, a smaller proportion (42%) of companies fear they cannot continue to operate as they are for more than two years, one in five (20%) has considered closing their businesses altogether.
Scottish SMEs are equally pessimistic about their futures: almost half (48%) expect to have to make changes to their businesses within two years. Welsh and North Irish companies buck the trend, however, and demonstrate greater positivity. 35% of Welsh and just 27% of North Irish firms consider they would need to make changes within two years to remain in business.
