Eight in 10 UK firms impacted by Iran war fallout
A new report also says a fifth of businesses are putting investment plans on hold because of the conflict.
The impact of the fallout of the Iran war on UK firms has been laid bare in a new report as eight in 10 UK firms are reportedly suffering.
It also says a fifth of businesses are putting investment plans on hold because of the geopolitical uncertainty.
The latest Barclays Business Prosperity index revealed 80% of UK businesses reported a negative impact from the Middle East conflict.
More than two-thirds (64%) said energy and fuel costs were impacting on their business, with 34% hit by higher shipping and logistics costs and a third suffering supply chain disruption, the report found.
In a sign of the knock-on effect on consumers, 37% of the 1,000 senior company decision makers surveyed for the report between April 17 and May 5 said they expect to pass on cost hikes to customers through higher prices.
Analysis of Barclays data from around 900,000 businesses showed small companies in particular are taking action in the face of uncertainty and cost pressures, with a 13.1% drop in borrowing during the first three months of 2026 and 1.5% increase in savings as they look to build up a buffer.
"More than two-thirds (64%) said energy and fuel costs were impacting on their business"
The report showed that larger firms are still focusing on longer-term investment, with a 6.9% increase in longer-term borrowing and 5.2% drop in savings.
But 20% of companies overall are pausing investment against a backdrop of geopolitical uncertainty in a sign of the impact of the war on the UK economy.
Matt Hammerstein, chief executive of Barclays UK Corporate Bank, said: “UK businesses are now operating in an environment where uncertainty has become the norm.
“Geopolitical instability and persistently high costs are feeding directly into cashflows, borrowing decisions and investment plans.”
But the data suggests larger corporates are doubling down on their spending on technology, in particular artificial intelligence (AI) and cybersecurity.
Nearly seven in 10 (68%) firms are planning to increase their cybersecurity investment over the next year, while recent spending on AI has seen more than half (61%) now claim to be using agentic AI in their operations.
Mr Hammerstein called for an AI role to be created at the highest level of government, given the marked shift towards AI and Britain’s desire to be at the forefront of the new technology.
He said: “AI is now a defining driver of productivity and global competitiveness, so elevating AI ministerial responsibility to Cabinet level would send a clear signal of the UK’s strategic intent.
“With a cross-cutting mandate to set strategy, co-ordinate departments, lead industry engagement and oversee crisis response, this would strengthen authority without duplication and position the UK to better capture the economic opportunities of AI as a global hub for innovation and growth.”
Results of the lender’s survey suggests investment in AI is paying off, with 52% of firm saying they believe AI and automation has improved their productivity, with 38% saying employees now spend less time on administrative tasks.