Not doom and gloom, but a general sense of unease
The outlook for most of the businesses that we spoke with was described as challenging: price issues, labour shortages (short and longer term), covid, geopolitical risk, and a decline in orders or expected orders over the months and quarters to come all conspire to create a difficult operating environment for businesses. There are also concerns that weakness in the underlying economy will continue to weigh on consumer (and business) confidence, and a drop in real household income due to inflation will harm discretionary spending, leading to an evaporation of order visibility. This comes at a time when cost pressures are forcing many businesses to consider raising prices if pressures are sustained.

Businesses were not, overall, downbeat about their prospects, albeit confidence has definitely taken a hit. Many feel that they had already made sufficient alterations to business plans to weather the coming storm, but there was a fear that, should the Bank of England continue to raise interest rates, at a time when the economy was already slowing, that could extend and intensify the downturn to come. The next few months will be crucial for the UK economy.
View a one-page summary of the survey findings (PDF, 152KB ).
Source: Graphics are from NatWest Markets SME Survey H1 2022.