Nearly half of British companies plan to increase investment over the next year despite ongoing geopolitical uncertainties, according to recent research by Lloyds Banking Group. The findings suggest that 47 percent of businesses intend to boost spending, while just 7 percent reported a decline in their willingness to invest.
The survey highlights that around three-quarters of respondents view investment as vital for future growth and resilience, with confidence notably strongest among businesses based in the East Midlands, Scotland, London, and the northwest. Most planned spending is expected to focus on technology and artificial intelligence infrastructure.
Amanda Murphy, chief executive of business and commercial banking at Lloyds, noted that while many firms have already secured funding for their investments, a considerable number have yet to deploy these resources. She emphasized the importance of investment for driving productivity, competitiveness, and long-term growth, stressing the need for continued business confidence and support.
The survey’s positive outlook on investment comes amid broader concerns about the UK’s economic environment. Andy Burnham, the current prime minister, has identified increasing business investment as a priority, acknowledging it as a relative weakness in the UK economy. Official statistics indicate that total investment in the UK, which includes both business and public sector spending, was the lowest among G7 economies in the first quarter of 2026.
Several factors may encourage companies to increase their spending, including a recent decline in energy prices and relatively stable economic conditions. However, the Lloyds research also points to significant challenges. Rising operating costs, weaker trading conditions, and liquidity constraints remain key deterrents for many businesses.
Energy costs remain a particular concern, with inflation in production expenses partly linked to higher energy prices caused by renewed tensions in the Gulf region. Specifically, the escalation of hostilities between the United States and Iran has pushed Brent crude oil prices back to approximately $93 per barrel.
Reflecting these pressures, the Lloyds index measuring sentiment among private sector businesses fell by three points to 44 percent in June, dipping below the 12-month average of 47 percent. Economic optimism also declined by four points to 31 percent as political instability added to uncertainty. Burnham is the fifth UK prime minister in four years, a factor that analysts say contributes to apprehension among business leaders.
Burnham has pledged to lead the Labour Party with a pro-business agenda, drawing on his previous role as mayor of Greater Manchester. Last week, his administration announced a 20 percent cut in business rates for pubs, clubs, and live music venues in England, describing it as an initial step to support struggling firms. Still, industry representatives have urged the government to undertake more comprehensive reforms of the business rates system to foster a more favorable investment climate.