That is according to the latest ACCA and IMA Global Economic Conditions Survey (GECS), which shows UK SME confidence is stuck near record lows. However, the survey – which was conducted in the early days of the Iran War – did offer a few signs of recovery beginning to emerge.

The proportion of respondents citing problems getting paid on time rose to its highest level in nearly 14 years – in Q4 2012 businesses were feeling the cash impact of the euro area crisis and grappling with a struggling UK economy.

Concerns about suppliers going out of business are also close to pandemic era highs, while those about customers are also becoming elevated by historical standards, albeit they are significantly below their peak in Q2 2020. And almost 8 in 10 businesses say their operating costs are still rising, leaving many firms struggling to stay afloat.

The survey reveals that confidence among UK SMEs was largely unchanged in Q1 2026, remaining close to its Q4 2024 record low which followed Rachel Reeves’ first Budget.

There could be some good news in the gloom though the rise in the New Orders Index pointed to signs of recovery in the UK economy. But whether the initial signs of optimism will survive the fallout from the oil price and other shocks emanating from the Middle East remains to be seen.

ACCA experts warn the situation remains tough. Susan Love, strategic engagement lead for ACCA in Scotland, said: “Businesses are facing a difficult trading environment, with global tensions over the Middle East and inflation making for challenging trading conditions in the coming months.

“This quarter’s sharp rise in concerns about supply chain reliability and the ability to secure prompt payment demonstrate the need for the government to boost confidence and swiftly provide the implementation road map for their recently announced late payment new powers for the Small Business Commissioner.”

ACCA’s chief economist, Jonathan Ashworth, says developments in the Middle East will be absolutely crucial over comings months.

He explained: “The global economy was in relatively decent shape before recent developments in the Middle East, amid the ongoing global AI boom, favourable global financial conditions and fiscal easing in a number of major economies.

“Nevertheless, the longer energy and other commodity prices remain high and uncertainty elevated, the greater the downside risks for global and UK growth.”

Mr Ashworth concluded: “Before recent events, additional rate cuts from the Bank of England looked set to provide a helping hand for UK businesses this year, but that now looks unlikely. The risk is more likely in the direction of a rate hike”. 

Read the GECS report here.