The latest Business Confidence Monitor Report (BCM) shows confidence in the South East remaining well below historic levels. Businesses continue to face a combination of weaker demand, rising costs, regulatory pressures, and wider economic uncertainty.
South East members consistently cited rising employment and operating costs, increasing regulatory and compliance requirements, and as well as wider economic uncertainty as factors affecting confidence and decision-making. In some sectors, businesses also highlighted the impact of rising energy costs, adding further pressure to margins and contributed to a continued focus on cash flow management, cost control and resilience in a challenging operating environment.
Challenges highlighted by small accountancy practices and SMEs included: regulatory burden, Making Tax Digital readiness and rising employment costs, which created additional pressure. Hospitality, travel and tourism businesses reported ongoing cost and workforce challenges, with tightening margins driven by rising wage and energy costs, which resulted in more cautious hiring decisions. Despite these pressures, members identified opportunities through technology adoption, AI and operational efficiencies, with many organisations focusing on adapting their business models and improving productivity rather than pursuing rapid growth.
What we're hearing from South East businesses
1. Growth is becoming harder work
The BCM suggests businesses across the South East are facing weaker demand and slower growth than many other regions.
What is striking is how that is changing business behaviour. Business leaders described:
- spending longer converting opportunities into revenue;
- experiencing more cautious customer decision-making;
- facing greater pressure on pricing;
- working harder to maintain margins; and
- focusing more closely on customer retention and repeat business.
Several members spoke about growth remaining achievable, but requiring greater effort, stronger relationships, and clearer value propositions than in previous years.
Growth has not disappeared. The difference is that businesses are having to work harder to achieve it.
2. Cost pressures are driving operational change.
The BCM highlights continued pressure from labour costs, regulation, taxation, and operating expenses.
Businesses are responding by reviewing how they operate. Examples included:
- improving operational efficiency;
- reviewing pricing structures;
- automating administrative processes;
- focusing on productivity improvements;
- scrutinising discretionary spending more closely; and
- investing in technology where the benefits can be clearly demonstrated.
For many businesses, the focus is shifting from short-term cost reduction towards longer-term efficiency.
The objective is not simply spending less, instead it is improving how resources are used.
3. Businesses are focusing on resilience and adaptability
Businesses cannot control inflation, regulatory changes, or wider economic uncertainty. However, they can control how prepared they are to respond to changes.
Across different sectors, businesses were making the following preparations:
- strengthening succession planning;
- investing in workforce capability;
- reviewing operating models;
- improving cashflow management;
- strengthening governance and risk management processes; and
- building greater operational flexibility.
Many businesses are also linking technology, ESG and capability development more closely to long-term business performance rather than treating them as standalone initiatives.
None of these actions remove uncertainty. They do, however, help organisations become more adaptable in a less predictable environment.
What does this tell us about the South East?
Confidence remains subdued and businesses continue to face significant challenges. Yet the conversations taking place across the South East suggest organisations are responding with practical action rather than standing still.
They are working harder to generate growth, improving efficiency, reviewing how resources are allocated and investing in the capabilities that will help them navigate future uncertainty.
The challenge is not simply managing today's pressures. It is building organisations that can continue to perform despite them.
BCM report
Read the full South East Business Confidence Monitor report for the detailed survey findings and regional economic analysis
