Mid-market firms’ confidence dented by Middle East conflict
A SUSTAINED expansion of UK private sector output in the first quarter of 2026 was supported by a solid growth performance among mid-market businesses, according to the NatWest UK Business Growth Tracker.
However, the survey also found that confidence eased in March as the Middle East conflict and sharply rising input prices weighed on business optimism.
NatWest’s Tracker – which is based on the Purchasing Managers’ Index and surveyed mid-market businesses operating in the manufacturing and services sectors – posted 53.0 in March, which extended the current period of growth to just over five years. Any reading above 50.0 signals growth.
The index was down from 54.8 in February but remained well above the equivalent reading for the UK as a whole in March (50.3).
Sebastian Burnside, NatWest’s Chief Economist, said: “UK businesses have continued to show resilience against the backdrop of a more challenging operating environment.
"Cost pressures have risen sharply again, especially for fuel and transport expenses, meaning input price inflation is at its highest level in over three years. Nonetheless it is encouraging to see firms are still planning for growth over the year ahead, especially with an eye on longer‑term investment and adaptation.”
Andy Gray, Managing Director of Commercial Mid-Market at NatWest, said: “Despite increased uncertainty and cost pressures, many mid‑market businesses are continuing to adapt and invest where it makes strategic sense. The latest data show firms balancing short‑term caution with longer‑term growth ambitions, particularly in areas such as technology and efficiency. Supporting customers to manage risk, maintain momentum and plan with confidence remains a priority as businesses navigate a more volatile operating environment.”