The Q2 2026 Cornwall Quarterly Economic Survey points to a broadly stable trading environment, with signs of resilience in demand, but limited momentum in overall business confidence.
Domestic activity remains steady. One-third of businesses report increased UK sales and bookings (33%), while a further 39% indicate no change, giving a positive balance of +9%. UK orders show a slightly stronger position, with 36% reporting growth against 22% reporting a decline (balance +14%), suggesting a modestly improving short-term pipeline. This aligns with the headline trend data, which shows a gradual improvement in the proportion of firms reporting increased activity compared to earlier in the year.
Export performance, while based on a smaller sub-sample, is more mixed. Among exporting firms, sales are evenly split between growth (38%) and decline (33%), pointing to continued volatility in external markets.
Business sentiment remains cautiously positive, but not strongly so. Half of firms (50%) expect turnover to increase over the next 12 months, although this is more muted than in previous quarters, while 13% anticipate a decline. Profitability expectations are weaker, with nearly three in ten businesses (29%) expecting profits to fall, highlighting the ongoing squeeze on margins. This reflects the persistent gap between top-line growth and bottom-line performance seen in recent surveys.
Cashflow positions reinforce this picture of pressure. While 27% report an improvement, a slightly higher proportion (30%) report deterioration, leaving a marginally negative balance.
Investment intentions remain cautious and selective. Only 13% of firms have increased investment in plant and machinery, while 19% report a decrease. Plans for R&D are similarly subdued, with a net negative balance, although training investment shows more resilience, with 19% reporting increases. This suggests that while businesses continue to invest in skills, they are holding back from larger capital commitments.
Labour market indicators point to stability rather than expansion. One quarter of firms report workforce growth over the past three months, while hiring intentions remain modest, with 22% expecting to increase staff. Recruitment activity is relatively limited (43% of firms hiring), but difficulties remain widespread, affecting 65% of those attempting to recruit. This highlights continued structural challenges in the labour market, particularly for professional and skilled roles.
Capacity utilisation suggests there is still slack in the local economy, with 56% of firms operating below full capacity. This may help explain the cautious approach to investment and hiring, despite stable levels of demand.
Cost pressures remain the dominant feature of the current economic landscape. Four in ten businesses (41%) expect to raise prices in the next three months, and headline indicators show that 81% of firms are under pressure to do so. Labour costs (63%), fuel (54%) and utilities (44%) are the most frequently cited drivers. At the same time, inflation (64%) and taxation (56%) are the leading external concerns, underlining the sustained pressure on operating conditions.
Taken together, the results suggest that Cornwall’s business base is demonstrating resilience, with steady demand and modest growth expectations. However, this is not yet translating into stronger confidence or investment. Instead, firms remain constrained by elevated costs, recruitment challenges and ongoing uncertainty, resulting in a cautious outlook for the months ahead.
Additional Local Insights: Business Support
The survey also highlights the importance of business support in Cornwall, particularly in the context of the Shared Prosperity Fund (SPF) coming to an end. Feedback suggests that while some businesses benefited from training, grants and networking opportunities, a significant proportion either saw limited value or were unable to access support. There is a clear message that future provision should be more inclusive, better targeted, and focused on practical outcomes such as skills development, innovation and access to finance. Demand is strongest for grant funding and training, particularly in areas such as AI and workforce upskilling, alongside calls for more consistent, long-term support rather than short-term or fragmented initiatives.
