UK & Irish SME chiefs back growth despite economic gloom

Small and medium-sized business leaders across the UK and Ireland remain pessimistic about the wider economy but are pressing ahead with investment and growth plans for their own companies, according to new research from leadership organisation Vistage.

The latest quarterly CEO Confidence Index shows headline sentiment has risen to 93.6. This is up from 88 in the third quarter of 2025 and 91.4 in the final quarter of 2024. The index is based on responses from business leaders in the UK and Ireland.

Views on the macroeconomic backdrop remain negative. More than half of respondents, 54%, say economic conditions in the UK and Ireland have worsened over the past year. Only 6% say conditions have improved.

Looking ahead over the next 12 months, 39% of SME leaders expect the economy to deteriorate further. Just 12% expect an improvement. A further 45% expect conditions to remain broadly unchanged.

This gap between economic sentiment and company-level plans runs through the survey. Many leaders signal low expectations for policy-driven support or a swift recovery. They are instead placing more emphasis on operational decisions within their own businesses.

Business outlook diverges

Confidence about individual firms is significantly stronger. Nearly two-thirds of leaders, 63%, expect their company's sales revenues to increase over the next year. Only 6% expect revenues to decline.

Half of respondents, 50%, anticipate an improvement in profitability. Around a third, 32%, expect profits to remain stable. A smaller group, 18%, foresee a deterioration in profits.

Investment intentions align with this more optimistic stance on corporate performance. Almost 39% of leaders plan to increase fixed investment. A further 38% intend to maintain current investment levels. Only 21% expect to reduce investment.

Vistage says many SMEs are using the current period to strengthen balance sheets, operations and market positions rather than hold back for clearer economic signals.

Rebecca Drew, Managing Director, Vistage UK and Ireland, said:

"Our latest survey findings show that CEOs are under no illusions about the economic backdrop. Many see conditions worsening and expect little improvement in the year ahead, yet they continue to back their own businesses by investing in revenue growth, profitability and future capability.

With rising costs and pressure on customer demand, the quality of leadership decisions matters more than ever. In moments like this, access to trusted peers to pressure-test their plans, compare approaches and learn from others' experience can make the difference between standing still and moving ahead with confidence."

Cost and demand pressures

Inflation and weaker demand remain the most pressing operational concerns. When asked to identify their single biggest challenge, 29% of leaders cite rising costs. Customer demand ranks second, mentioned by 25% of respondents.

Other pressures appear less acute but still present. Regulatory change is the main concern for 9% of leaders. Competition is the top issue for 8%. Talent retention is primary for 7%. Supply chain disruption is cited by 5%. Access to finance is the leading challenge for 3%.

These responses indicate that many SMEs face tighter margins. Input costs are rising while demand uncertainty weighs on revenue forecasts.

Planning for 2026

Despite these headwinds, most leaders say they are structuring 2026 plans around growth initiatives rather than retrenchment. Product and service development is the leading strategic focus, cited by 41% of respondents. Technology adoption follows at 38%. Leadership changes are a priority for 35%.

Other areas of focus include strategic partnerships, cited by 28%, and cost-cutting, mentioned by 27%. Investment prioritisation features for 23% of leaders. Hiring is a focus for 20%.

When asked about specific investment priorities for 2026, respondents place artificial intelligence at the top of the list. Some 45% name AI as their leading investment area. Market expansion comes a close second at 44%.

Technology more broadly, and training and development, are each cited by 41% of leaders. People and recruitment and customer experience are each selected by 38%. Product development features for 27% of respondents. Infrastructure is named by 18%, and sustainability by 6%.

AI in the mainstream

The survey suggests that Generative AI has moved into regular use within many SMEs. More than seven in ten leaders, 72%, say members of their leadership team already use Generative AI tools. Some 65% say the CEO uses such tools.

Use is spreading across functions and teams. Another 65% report usage by specific teams or departments. Almost half, 46%, say employees use AI tools independently. Only 7% say AI is not used at all in their organisation.

Leaders expect AI to reshape roles and structures. Almost half of respondents, 49%, anticipate that AI adoption will lead to the reallocation of roles. A further 14% expect AI to create entirely new roles.

By comparison, 15% expect AI to reduce headcount. Only 1% expect it to increase headcount. Some 21% foresee no impact on staffing levels and 13% remain unsure.

Vistage plans to continue tracking sentiment and investment priorities through its quarterly CEO Confidence Index. The organisation says this will offer an ongoing view of how SME leaders adapt their strategies in a weak but shifting economic environment.