West Midlands businesses remain resilient despite cost pressures and uncertainty - Barclays reports

Businesses across the West Midlands are demonstrating resilience despite persistent cost pressures and economic uncertainty, with confidence in their own prospects remaining strong, according to Barclays’ Q1 2026 Business Prosperity Index.

Research by Barclays which has a large regional hub in Birmingham, shows 59 per cent of businesses in the West Midlands reported stronger than normal demand levels - a 20 per cent lead over the rest of the UK (39 per cent).

However, businesses remained cautious about the outlook, with many citing economic uncertainty (39 per cent) and high cost pressures (32 per cent) as key concerns.

Businesses reported being split on their pricing strategy in response to rising costs, with 41 per cent passing them on to customers and 39 per cent absorbing the impact.

Meanwhile, more than four in five (80 per cent) said they expect revenues to increase next quarter as 87 per cent said they were confident in their prospects for the next year

Looking ahead, more than half (57 per cent) said they plan to increase investment in the next 12 months

Anonymised Barclays client data from more than 59,000 West Midlands firms showed West Midlands SME cash inflows into Barclays Business Banking accounts rose +0.1 per cent, while larger corporates within Barclays UK Corporate Bank saw cash flows decline 5.7 per cent, indicating SMEs remained comparatively resilient despite softer broader economic conditions.

Meanwhile, West Midlands SMEs increased savings buffers (+0.9 per cent) and cut borrowing (-12.4 per cent), broadly mirroring a cautious national picture.

At the same time, larger corporates in Barclays Corporate Bank continued to increase longer-term borrowing (+11.1 per cent), notably above the national average of 6.9 per cent, suggesting investment intentions may remain intact.

Barclays Business Prosperity research suggests that, despite the pressures, firms are continuing to prioritise investment that supports resilience and long-term growth with around 35 per cent of businesses planning to invest in increasing training and development of existing staff.

While confidence in own businesses prospects remains high, sentiment towards the broader economy is more cautious. Around 69 per cent of firms say they are confident in the UK economy, highlighting a gap between business-level resilience and the wider economic outlook.

Paul Faulkner, Barclays vice chairman - Midlands, said: “Businesses throughout the West Midlands are navigating a challenging landscape, with economic unpredictability, labour skill gaps and rising costs impacting expansion.

“Yet they are demonstrating remarkable resilience with a large number of firms focused on managing costs and prioritising investment in areas that support long-term efficiency.”

To support businesses to invest in resilience and growth, The Barclays Business Prosperity Fund is available for new and existing business banking customers and UK Corporate Banking clients across the UK to apply for lending and refinancing on existing projects. Businesses can find out more at home.barclays/businessprosperity