UK businesses are coming under increasing strain as global economic pressures intensify, with smaller companies particularly exposed to rising costs and weakening growth, according to Alex Fenton of FBX Capital.

Commenting on findings from the Organisation for Economic Co-operation and Development that conflict in the Middle East could hit the UK economy harder than other industrialised nations, Fenton said firms were facing a worsening financial environment.

“UK companies are being squeezed from all sides, and the situation is deteriorating,” he said. “More businesses are turning to lenders out of necessity rather than choice, seeking capital simply to stay afloat instead of investing or expanding.”

He warned that the combination of slower growth and persistent inflation risked undermining business confidence and investment across the economy. Smaller companies, which make up a large share of UK employment and output, were likely to be hardest hit.

“This is the reality of low growth colliding with higher inflation,” Fenton said. “It is a difficult environment that will weigh on investment and erode confidence, particularly among SMEs.”

Fenton added that without targeted policy intervention, the UK could struggle to keep pace with other advanced economies. “There is a risk the UK falls further behind unless government takes action to ease cost pressures,” he said.

The comments reflect growing concern among investors and business leaders that geopolitical tensions and domestic economic challenges are combining to create a more fragile outlook for the UK economy.