Two sets of official business survey data published in early October 2026 point the same way: UK companies are increasingly worried about energy and fuel costs, and most expect those costs to squeeze profit margins rather than be passed on in full. This article sets out what the Bank of England and the Office for National Statistics found, and what it implies for London businesses.
What do the latest surveys actually measure?
The two sources look at business conditions from different angles, which is why they are useful together.
The Bank of England’s Decision Maker Panel (DMP) is a monthly survey of senior finance leaders at small, medium and large UK firms. The September 2026 round ran from 4 to 18 September 2026, drew 1,993 responses and was published on 2 October 2026. It focuses on firms’ own prices, wages, employment and expectations, and in recent months has asked how firms expect to respond to an energy price shock.
The ONS Business Insights and Conditions Survey (BICS) is a fortnightly survey that asks firms about turnover, prices, trading status, challenges and concerns. Wave 164 ran from 7 to 20 September 2026 and was published on 24 September. Wave 165 ran from 21 September to 4 October and was published on 8 October. The ONS labels these as official statistics in development and advises caution when using them.
Neither release breaks its headline figures down for London, so any London reading below is an inference from the national picture and from the sectors that dominate the capital’s economy.
Why are firms so concerned about energy and fuel?
The ONS reported that 72% of businesses were concerned to some degree about energy prices in late September 2026, the highest share since the question was first asked in March 2026. Earlier, in early September, the figure had been 64%, up 5 percentage points from late August, with businesses citing the conflict in the Middle East. On the ONS figures, that is an eight-point rise in a matter of weeks (72% less 64%).
Fuel is, if anything, a bigger worry. In late September 2026, 73% of businesses were concerned to some degree about fuel prices, the highest since that question was introduced in May 2026. Within transportation and storage, 60% said they were “very concerned”.
Concern is not the same as cost. These are measures of sentiment, not invoices. But they matter because sentiment shapes decisions on hiring, stock levels and pricing before the bills arrive.
Which sectors feel it most?
Accommodation and food services stand out in both ONS releases. In early September, 90% of firms in the sector expressed concern about energy prices, the highest since the question began. By late September the figure was 91%.
That has particular relevance for London. Restaurants, bars, hotels and cafés are a defining feature of the capital’s high streets and visitor economy, and they run energy-intensive kitchens, cellars and premises on narrow margins. The surveys do not give a London number, so it would be wrong to claim the capital is more exposed than elsewhere in the data. But a city with a large hospitality sector has a reason to watch these sector figures closely, as earlier coverage of what the 2026 business rates changes mean for London shops, pubs and restaurants also indicated.
Construction is another flag. The ONS found 32% of construction firms expecting to raise their selling prices in October 2026, the highest for the industry since February 2023, when the figure was 35%.
Are firms passing costs on to customers?
Partly, but not in full. The ONS data shows a gap between what firms pay and what they charge.
| ONS measure (August 2026 unless stated) | Share of trading businesses |
|---|---|
| Reported higher prices paid for goods and services | 29% |
| Reported higher prices charged for goods and services | 11% |
| Expect to raise selling prices in October 2026 | 17% |
The share reporting higher prices paid was up 6 percentage points on August 2025, while the share reporting higher prices charged was broadly stable over the year. The share expecting to raise prices in October 2026 was up 3 percentage points on September 2026 and up 7 percentage points on October 2025.
The simple reading is that cost increases are reaching far more firms than are price increases. Put another way, 29% of firms are paying more but only 11% are charging more, a gap of 18 percentage points on the published figures. Some firms will be absorbing the difference, some will be waiting for contracts to renew, and some operate in markets where customers resist increases.
What does the Bank of England say about margins?
The DMP asked firms how they expect to respond to the energy shock over the next 12 months. According to the Bank of England’s September 2026 release:
- 57% of firms expect to increase prices. That is 7 percentage points lower than in April and 2 points lower than in August.
- 7% expect to lower prices.
- 70% expect lower profit margins, 2 percentage points higher than in April.
The pattern is notable. Fewer firms now say they will raise prices than did in April, while more say margins will be lower. The two answers are not mutually exclusive, since a firm can raise prices and still see a thinner margin, but the direction suggests that the scope for pass-through is narrowing.
The DMP’s headline numbers are steadier. Realised annual own-price growth was 3.7% in the three months to September, unchanged from August. Firms’ year-ahead own-price inflation expectation was 3.7%, 0.1 percentage points lower than in August. The Bank’s commentary says businesses “therefore expect output price inflation to be unchanged over the next year, based on three-month averages.”
How do wages and hiring fit in?
Labour is the other large cost line, and the DMP shows it moving broadly in step with prices.
- Realised annual wage growth was 4.0%, unchanged from August.
- Expected year-ahead wage growth was 3.4%, also unchanged.
- Realised annual employment growth was -0.2%, unchanged.
- Expected year-ahead employment growth was 0.2%, up 0.1 percentage points.
Firms are therefore not planning major job cuts or hiring sprees; the DMP points to roughly flat headcount. The ONS adds that, among firms with 10 or more employees, 37% cited the cost of labour as the most reported challenge affecting turnover in September 2026, broadly stable on August 2026 and September 2025. Readers following the capital’s labour market can set this against the latest ONS figures on London’s cooling job market.
A worked example of the squeeze
The following is illustrative arithmetic, not a forecast for any real firm. Imagine a London service business with £1,000,000 of annual turnover and a £500,000 payroll, with everything else held constant.
- If prices rise by the DMP’s 3.7% own-price figure, turnover rises by £37,000 (£1,000,000 × 0.037).
- If pay rises by the DMP’s 4.0% realised wage growth, payroll rises by £20,000 (£500,000 × 0.04).
- That leaves £17,000 (£37,000 less £20,000) before any other cost increase.
Now add a hypothetical 10% rise in an £80,000 annual energy and fuel bill, which is £8,000. The headroom falls to £9,000. If the firm could only raise prices on half its sales, the extra revenue would be £18,500 and the whole cushion would be gone (£18,500 less £20,000 less £8,000 is negative £9,500). The numbers are invented to show the mechanism: modest cost rises can wipe out headroom quickly if price rises are only partial.
Is economic uncertainty also weighing on decisions?
Yes. The ONS reported that economic uncertainty was the most reported challenge for trading businesses in September 2026, at 29%, broadly stable on August 2026 and September 2025.
The same survey found that 28% of trading businesses reported lower turnover in August 2026, up 6 percentage points from July 2026 and broadly stable on August 2025. Among firms with 10 or more employees the share was 31%, up 7 points from July. Looking ahead to October 2026, 17% expected turnover to fall and 15% expected it to rise, both broadly stable.
Supply chains add to the pressure. In September 2026, 48% of businesses with 10 or more employees were concerned about at least one supply chain factor over the next year. That was broadly stable on August but up 17 percentage points on September 2025. International conflict (32%) and shipping disruption (21%) were the most cited concerns.
Trading status is steady, though: in late September 2026, 95% of businesses were trading.
What are the risks of reading too much into these numbers?
Three cautions apply.
First, the ONS says its BICS figures are official statistics in development. Single-wave movements of a few percentage points can reflect sampling variation, and the ONS often describes changes as “broadly stable” for that reason.
Second, the DMP respondents are mainly finance leaders at established firms. Very small businesses and new start-ups, which are numerous in London, may be less well represented in a sample of 1,993.
Third, expectations are not outcomes. The 70% of firms expecting lower margins describes what they anticipate over the coming year, not what will happen. Energy prices and the geopolitical backdrop could change the picture quickly.
For smaller firms, the earlier look at the financial pressures London’s small businesses are navigating remains a useful background, and the basics of cash flow become more important when margins thin.
What the autumn data suggests for London business owners
The October 2026 releases describe a business community that is cautious rather than alarmed. Most firms are still trading, wage and price growth are steady, and headcount is roughly flat. The deterioration is in sentiment about energy and fuel, in the gap between costs paid and prices charged, and in the share of firms that expect their margins to shrink.
For London operators, the sectors to watch are hospitality, transport and construction, where the surveys show the sharpest concern or price intentions. Businesses in those areas can reasonably expect continued pressure on margins into 2027 if energy and fuel prices stay elevated. The next BICS release is due on 22 October 2026, according to the ONS, and the next monthly DMP round will show whether the late-September spike in concern was a peak or the start of a trend.
This article is general information, not financial, legal or tax advice. Survey results are estimates and can be revised, so check the latest official releases.
Sources: Bank of England; Office for National Statistics
