Overall, about one-fifth of surveyed firms are pausing investment amid uncertainty, while investment in AI and cybersecurity is rising as something firms are leaning into in response to the shifting environment.

The Barclays Business Prosperity index finds that eight in ten UK firms report a negative impact from the Iran war and related Middle East conflict.

On AI and productivity, more than half of firms (52%) say AI/automation has boosted productivity, and 38% report employees spending less time on administrative tasks.

The report draws on Barclays data covering around 900,000 UK businesses and a survey of about 1,000 senior decision makers conducted between mid-April and early May 2026, with trends analyzed for the first quarter of 2026.

Small businesses tightened their belts in Q1 2026, with borrowing falling about 13% and savings rising about 1.5%, while larger firms increased longer-term borrowing by around 6.9% and reduced savings by about 5.2%.

Major cost pressures cited include energy and fuel costs, shipping expenses, and supply chain disruptions, with roughly four in ten firms expecting to pass these increases to customers.

Barclays CEO called for an AI ministerial role at Cabinet level to coordinate strategy, industry engagement, and crisis response for the UK’s AI-driven growth and global competitiveness.