Grant Thornton Tracker shows optimism in UK businesses

Grant Thornton UK’s latest Business Outlook Tracker indicates high operating and people costs are presenting ongoing challenges. Credit: T. Schneider / Shutterstock.

Grant Thornton UK’s latest Business Outlook Tracker has revealed that optimism among UK business leaders regarding the economy’s strength and their own growth expectations has remained “steady”.

This is said to surpass the tracker’s rolling average.

However, high operating and people costs are presenting ongoing challenges, with expectations of additional tax pressures later in the year.

All 800 respondents in the survey of UK business decision-makers have expressed optimism about the UK economy, with mid-market businesses showing 81% optimism, 11 percentage points above the average since 2021.

Despite UK labour statistics indicating falling vacancies and a rise in unemployment in June, 43% of businesses plan to increase recruitment investment over the next six months, which is 8 percentage points higher than the average.

Mid-market businesses, those with a workforce size of ten to 100, are feeling the strain of high operating and people costs more acutely, which may be exacerbated by increased costs from employer National Insurance and National Minimum Wage contributions introduced in April.

GlobalData Strategic Intelligence

Don’t let policy changes catch you off guard. Stay proactive with real-time data and expert analysis.

By GlobalData

Of the 600 mid-market businesses surveyed, 67% have reduced or frozen hiring, and 62% have had to cut jobs due to these changes.

While businesses generally feel supported by government strategy, 71% of respondents believe government policy promotes economic stability, and similar majorities agree on its support for business growth and the potential of the Industrial Strategy.

However, there is a widespread expectation, with 75% agreeing that the Chancellor is likely to raise business taxes again before the end of the year.

Revenue and profit growth expectations remain positive and steady among mid-market businesses, with revenue growth expectations for the next six months holding at 10 percentage points above the rolling average, and 8 points higher than last year.

Large corporate organisations have a 79% expectation of revenue growth in the next six months, although this has decreased from 92% in December 2024.

Profit growth is anticipated by 66% of mid-market companies, which is an increase of 7 points since April and 10 points above the average for large corporates.

The data has also indicated that the Trump administration continues to be seen as a positive influence on UK business by mid-market respondents, with 74% agreeing, up 4 points since April.

However, larger businesses, impacted by global supply chain disruptions from tariff and trade disputes, have shown reduced confidence at 68%, down 7 points since April.

Grant Thornton UK managing director for Economic Consulting Tom Middleton said: “If there’s one thing businesses have learned over the past few years, it’s the need to treat uncertainty as normality. Despite the volume of change and unknowns – from geopolitical and trade policy shocks in markets abroad to policy changes at home – UK businesses are adopting strategies to remain resilient, and this is reflected through their ongoing positivity, despite the headwinds.

“That’s not to say that everything is smooth sailing. Businesses continue to grapple with high operating and people costs, largely resulting from the National Insurance and National Minimum Wage increases which came into force in April. Though businesses are broadly positive about government policy and strategy, there is a clear expectation that further pressure will come in the form of tax increases later this year.”