Businesses across the region are continuing to show resilience in a tough economy, but rising costs, weaker cashflow and global instability are putting growth and investment at risk, according to the latest Quarterly Economic Survey from Cambridgeshire Chamber of Commerce.
The 2026 Quarter 2 report shows that while some local firms saw improved domestic sales and orders during the quarter, many are still facing significant pressure from fuel, utilities, labour costs and uncertainty in overseas markets.
The Chamber says the findings point to a business community that is adapting to difficult conditions but needs greater stability and a stronger policy environment from government to unlock investment and growth.
Fuel cost pressures rose sharply in Q2, increasing from 32% in Q1 to 57%, while utilities rose from 62% to 74%. The report also shows that 67% of businesses are operating below capacity and 42% expect profitability to worsen over the next 12 months.
The impact of instability in the Middle East is being felt by some firms, with businesses reviewing prices, contracts, energy arrangements and supply chains in response to concerns around fuel, transport, delivery costs and overseas demand.
Charlotte Horobin, CEO of Cambridgeshire Chamber of Commerce, said:
“These results paint a worrying picture of the challenges facing local businesses. Confidence remains fragile into this quarter, and many firms are operating in an increasingly difficult environment where rising labour costs, higher taxation and growing overheads are steadily eroding profitability.
“Businesses are not simply expressing concern – they are already taking difficult decisions to protect their future. From reviewing contracts and reducing costs to increasing prices and delaying investment, firms are responding to relentless financial pressures that show little sign of easing.
“While there have been isolated signs of resilience in domestic trading, these are being outweighed by weakening profitability, constrained cashflow and persistent uncertainty. Too many businesses continue to operate below capacity, with confidence in future performance remaining subdued.
“The burden on business is now very clear. Labour costs, taxation and mounting overheads are placing enormous strain on firms across the region. Placing any further burden on business would be a road to ruin.
“Our message to government is simple: back business and we will deliver. We must take decisive steps to boost productivity, stimulate investment and accelerate exports. Creating the right conditions for businesses to grow is the only sustainable route to stronger economic growth, higher employment and greater prosperity.”
The survey found that domestic activity improved compared with Q1, with businesses reporting increased UK sales rising from 25% to 33%, and UK orders from 20% to 31%. However, overseas demand remains subdued, with 34% reporting decreased overseas sales and 53% saying overseas orders remained the same.
Recruitment also remains a challenge for many local employers. Although more firms tried to recruit in Q2, 73% of those recruiting experienced difficulties, up from 67% in Q1.
Charlotte added:
“Businesses across our region continue to show remarkable determination, but confidence remains fragile and resilience has its limits. Firms cannot be expected to absorb ever-increasing costs indefinitely. At the same time, a weakening global outlook and growing international uncertainty are dampening export opportunities and making it even harder for businesses to plan and invest with confidence.
“Higher labour costs, increased taxation and rising overheads are forcing businesses to postpone investment, rethink recruitment plans and focus on survival rather than growth. That has serious implications for productivity, competitiveness and the long-term strength of our economy. While there are pockets of resilience in domestic trading, the wider global picture is limiting opportunities and adding to the uncertainty businesses face.
“As global markets become more challenging, it is even more important that government gets the domestic environment right. The burden on business is already significant, and adding further costs would only undermine confidence and hold back growth. Government must work in partnership with business to create the right conditions for investment, improve productivity and help firms seize opportunities as international conditions improve.
“Our message is simple: back business and we will deliver.”
The regional findings come as the British Chambers of Commerce publishes its national Q2 results. Early national findings indicate that business conditions weakened further in Q2, with fewer firms increasing sales and exports falling into negative territory. Confidence remains fragile, investment intentions have fallen to their lowest level since the pandemic, and inflation has re-emerged as the leading business concern.
Cambridgeshire Chamber says the findings underline the importance of listening to businesses and acting on the barriers that are holding back growth.
Read the full Quarterly Economic Survey 2026 Report here
The Quarterly Economic Survey is one of the UK’s largest and most respected business surveys. The findings used to inform local and national lobbying, helping to ensure the voice of businesses of the region are heard by government, the Bank of England and other key economic decision makers.