Grant Thornton UK LLP
Grant Thornton UK LLP
12/29/2025 | Press release | Archived content
Rising costs temper UK mid-market optimism, but opportunities in talent and tech offer hope
New research from leading business and financial adviser, Grant Thornton UK, shows that confidence among UK mid-market firms has faltered as 2025 draws to a close, squeezed by cost pressures after the Autumn Budget.
According to the December results from Grant Thornton's Business Outlook Tracker*, a rolling survey of over 600 UK mid-market decision makers, sentiment has dipped compared to the record highs noted in September's findings, with the outlook for the economy falling by -5 percentage points (pp) while revenue growth expectations dipped by -3pp.
Announcements from November's Budget were a clear driver for reduced optimism, with 100% of respondents expecting day-to-day costs operating costs to rise because of policy changes. Over a quarter anticipate significant cost increases of more than 15%. Nearly two-thirds (63%) forecast cost hikes of between 5-15%, with one in ten (12%) expecting a smaller 1-4% uplift.
No single policy dominates as the main driver of cost pressure, however close to half of respondents cite the reform of business rates (44%), the freeze on the National Insurance Contributions threshold (43%) and the National Minimum Wage increase effective on 1 April 2026 (42%) as the most significant factors.
Resilience holds but the margin for error narrows
Despite cost pressures, confidence indicators remain above the rolling average since 2021. Profit expectations for the next six months have increased by +10pp since September. 87% of businesses are optimistic about their company's funding position. Although this is down-3pp since September, this is +9pp above rolling average (since 2021).
Investment priorities signal a focus on people and innovation. The top areas for planned investment include employee rewards and benefits (46%), technology (46%), employee wellbeing (44%), and research and development (42%).
Sarah Bell, Partner and Head of Industries at Grant Thornton UK, said:
"For many mid-sized businesses, 'Happy New Year' may feel more like hope than certainty. A record tax burden and shaky consumer confidence set a tough backdrop for the coming year, which the survey findings reflect.
"However, since we started collecting optimism data in 2021, the mid-market has proven to be a positive-minded and resilient group, with a confidence that often contradicts broader economic sentiment. This remains the case, as optimism on all indicators this year has remained above the rolling average.
"Despite the dip in this December's optimism results, the data also shows a marked confidence in firm's profit expectations, and in their funding positions. Crucially, leaders see improvements where it matters most: investing in technology and developing talent. Those who invest strategically in these areas could turn challenge into competitive advantage."
Tech and talent: the double-edged sword shaping growth opportunities in 2026
When asked about the biggest opportunities and risks businesses face in 2026, most respondents chose technological change (AI and Automation) as both the highest potential opportunity and challenge for their business.
Sarah Bell comments:
"Technological change, particularly AI and automation, is seen as both the greatest risk and the most significant opportunity because it fundamentally reshapes how businesses operate. Mid-market leaders recognise that failing to adapt could leave them behind, yet embracing these technologies can unlock efficiency, innovation, and growth at an unprecedented scale.
"This duality reflects the urgency: those who invest strategically in AI and automation will likely gain a competitive edge, while those who hesitate risk falling behind in a rapidly evolving market."
Skills and talent were similarly high on the agenda as both a risk and an opportunity for mid-market leaders. Despite concerns about increased operating costs, one in five (20%) respondents identified talent acquisition and workforce development to address skills gaps as a top opportunity for 2026.
Sarah Bell added:
"It's clear that mid-market leaders see talent as a critical driver of future success. Investing in people-particularly in areas like digital and technological expertise-will be essential for businesses to remain competitive and resilient in the face of ongoing transformation."
Notes to editors
*Censuswide, on behalf of Grant Thornton UK, surveyed 615 senior decision makers in UK mid-sized businesses (defined as those with revenue between £50million - £1billion) in December 2025.
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Press Release
Rising costs temper UK mid-market optimism, but opportunities in talent and tech offer hope
29 Dec 2025
New research from leading business and financial adviser, Grant Thornton UK, shows that confidence among UK mid-market firms has faltered as 2025 draws to a close, squeezed by cost pressures after the Autumn Budget.
According to the December results from Grant Thornton's Business Outlook Tracker*, a rolling survey of over 600 UK mid-market decision makers, sentiment has dipped compared to the record highs noted in September's findings, with the outlook for the economy falling by -5 percentage points (pp) while revenue growth expectations dipped by -3pp.
Announcements from November's Budget were a clear driver for reduced optimism, with 100% of respondents expecting day-to-day costs operating costs to rise because of policy changes. Over a quarter anticipate significant cost increases of more than 15%. Nearly two-thirds (63%) forecast cost hikes of between 5-15%, with one in ten (12%) expecting a smaller 1-4% uplift.
No single policy dominates as the main driver of cost pressure, however close to half of respondents cite the reform of business rates (44%), the freeze on the National Insurance Contributions threshold (43%) and the National Minimum Wage increase effective on 1 April 2026 (42%) as the most significant factors.
Resilience holds but the margin for error narrows
Despite cost pressures, confidence indicators remain above the rolling average since 2021. Profit expectations for the next six months have increased by +10pp since September. 87% of businesses are optimistic about their company's funding position. Although this is down-3pp since September, this is +9pp above rolling average (since 2021).
Investment priorities signal a focus on people and innovation. The top areas for planned investment include employee rewards and benefits (46%), technology (46%), employee wellbeing (44%), and research and development (42%).
Sarah Bell, Partner and Head of Industries at Grant Thornton UK, said:
"For many mid-sized businesses, 'Happy New Year' may feel more like hope than certainty. A record tax burden and shaky consumer confidence set a tough backdrop for the coming year, which the survey findings reflect.
"However, since we started collecting optimism data in 2021, the mid-market has proven to be a positive-minded and resilient group, with a confidence that often contradicts broader economic sentiment. This remains the case, as optimism on all indicators this year has remained above the rolling average.
"Despite the dip in this December's optimism results, the data also shows a marked confidence in firm's profit expectations, and in their funding positions. Crucially, leaders see improvements where it matters most: investing in technology and developing talent. Those who invest strategically in these areas could turn challenge into competitive advantage."
Tech and talent: the double-edged sword shaping growth opportunities in 2026
When asked about the biggest opportunities and risks businesses face in 2026, most respondents chose technological change (AI and Automation) as both the highest potential opportunity and challenge for their business.
Sarah Bell comments:
"Technological change, particularly AI and automation, is seen as both the greatest risk and the most significant opportunity because it fundamentally reshapes how businesses operate. Mid-market leaders recognise that failing to adapt could leave them behind, yet embracing these technologies can unlock efficiency, innovation, and growth at an unprecedented scale.
"This duality reflects the urgency: those who invest strategically in AI and automation will likely gain a competitive edge, while those who hesitate risk falling behind in a rapidly evolving market."
Skills and talent were similarly high on the agenda as both a risk and an opportunity for mid-market leaders. Despite concerns about increased operating costs, one in five (20%) respondents identified talent acquisition and workforce development to address skills gaps as a top opportunity for 2026.
Sarah Bell added:
"It's clear that mid-market leaders see talent as a critical driver of future success. Investing in people-particularly in areas like digital and technological expertise-will be essential for businesses to remain competitive and resilient in the face of ongoing transformation."
Notes to editors
*Censuswide, on behalf of Grant Thornton UK, surveyed 615 senior decision makers in UK mid-sized businesses (defined as those with revenue between £50million - £1billion) in December 2025.
Grant Thornton UK LLP published this content on December 29, 2025, and is solely responsible for the information contained herein. Distributed via Public Technologies (PUBT), unedited and unaltered, on December 31, 2025 at 10:03 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]