Three business insights from 2025 that matter for the year ahead

David Bharier, Head of Research, British Chambers of Commerce

As 2025 draws to a close, the significant evidence collected throughout the year by the BCC Insights Unit shows a UK business community navigating relentless policy shocks, global trade headwinds, and rapid technology adoption. And from our extensive programme of research, three themes stand out as defining how firms experienced the year - and what this might mean for 2026.

1. UK Budgets have hit business confidence

Business confidence has been materially affected by recent UK Budgets. The BCC's Quarterly Economic Survey for Q4 2024, the first full dataset following the October 2024 Budget, showed a significant decline in sentiment, with all major indicators taking a hit.

Only 49% of firms expected turnover to increase, down from 58% earlier in 2024[1]. Concern about tax reached a record high, cited by 63% of firms, driven largely by the rise in employer National Insurance Contributions. Many businesses reported scaling back investment and planning to raise prices as cost pressures mounted. As one small construction firm in Scotland noted, the NICs increase was a "hammer blow to business confidence, [causing a] reversal in plans to increase investment and halting further job creation" - a story echoed across the country.

This trend continued up to the next Budget, where persistent uncertainty and speculation became the main concern. Confidence has been highly sensitive to fiscal policy, with firms reacting sharply to changes in taxation and anticipated costs. This has exacerbated the UK's low-growth environment, with the BCC forecasting only 1.2% GDP growth for 2026[2].

2. Tariffs and trade wars have weighted on exporters

The pattern of uncertainty also played out on the global level, triggered by the Trump Administration's 'Liberation Day' tariff announcement in April. In a snap poll conducted within 48 hours of the announcement 62% of firms with exposure to the USA expected a negative impact, though many favoured a negotiated settlement - a view ultimately taken forward by the UK government into the subsequent trade negotiations[3].

But it wasn't just the one-off announcement that triggered panic, it has also been the wider shift in trade policy towards protectionism and aggression. The removal of the US de minimis tax exemption for small imports, the subsequent EU removal, and the ongoing burdens of the Trade and Cooperation Agreement with the EU (compared with pre-Brexit arrangements) have all particularly affected smaller SME exporters.

These conditions have been particularly harsh for SME exporters, with confidence falling faster than in other sectors and the vast majority reporting no quarter-to-quarter increase in overseas sales. Upcoming trade opportunities, including new deals with India and Korea and the UK-EU reset talks, could provide some much-needed tailwinds.

3. AI adoption is rising steadily among SMEs

Amid policy and trade challenges, technology adoption remains one of the most enduring structural trends of 2025, and may be one of the few levers to address the UK's growth conundrum. BCC research in partnership with Intuit this year showed that 35% of UK SMEs are actively using artificial intelligence technology, up from 25% in 2024, with a further 24% planning to adopt AI in the near future[4]. The proportion of firms with no plans to use AI has fallen sharply year-on-year, signalling growing engagement with digital tools across sectors.

This shift reflects broader strategic adaptation by firms seeking productivity gains, improved decision-making and competitiveness. While the pace and depth of adoption vary by sector - with professional service firms leading the way - the momentum is clear and could cause further major shifts in both business models and the wider employment picture next year.

What this means for 2026

Together, these insights show an economy where sentiment and strategic behaviour are shaped not just by traditional demand conditions, but by policy signals, global trade frictions and structural technology adoption - many questions remain: How are firms adapting to constant trade turbulence? Will they take advantage of new opportunities? What would give them certainty to invest? Will a surge in AI trigger mass unemployment?

Understanding these dynamics will be vital for policymakers and business leaders alike. The BCC Insights Unit will be at the forefront of tackling these questions, working closely with its extensive network of businesses and world-leading experts.

[1] https://www.britishchambers.org.uk/news/2025/01/budget-tax-hike-bursts-business-confidence/

[2] https://www.britishchambers.org.uk/news/2025/12/bcc-economic-forecast-budget-unlikely-to-be-growth-game-changer/

[3] https://www.britishchambers.org.uk/news/2025/04/extent-of-us-tariff-impact-revealed/

[4] https://www.britishchambers.org.uk/news/2025/09/turning-point-as-more-smes-unlock-ai/