Economic outlook remains fragile

One South West business described the ongoing “sentiment of uncertainty driven by speculation and headlines”, with several sectors reporting a continued focus on efficiency and cost control. In the North West, there were reports of NHS trusts stretching creditor days, creating knock-on cash-flow challenges for private suppliers.

In London’s fast-moving consumer goods (FMCG) sector, one member observed that it’s “all about volume … people seem to feel better off but think the economy is worse”. Manufacturers continue to face tariff pressures, particularly textiles, with one Scottish business warning that US duties remain “a major problem”.

Investment conditions remain mixed. An environmental services business in the South West reported “frozen or delayed capital budgets, albeit some parts of the venture capital market show tentative signs of life”.

Business members working in technology and advertising pointed to investor caution, citing concerns about sector performance and the prospect of an “AI bubble”. While 5G speeds now enable widespread consumption, consumers remain “highly price sensitive”.

Some businesses reported more positive developments. A fishing business in the South West benefited from improved prices due to supply-demand equilibrium. A luxury-furniture manufacturer noted significant productivity gains after investing in automated cutting machinery, freeing skilled labour for higher-value tasks.

On the international front, a member based in Indonesia noted that while growth is “ticking up”, it remains well below long-term expectations, amid rising geopolitical tension.

Spotlight on entertainment, sport and media

AI-driven changes in search behaviour continue to reshape the media sector, with one business reporting a 30%-to-40% fall in search traffic as AI amalgamates results and reduces clickthrough to individual websites. Brand safety concerns are also impacting advertising placement. For example, in football, some content has been avoided when articles contain the word ‘shoot’.

Football remains comparatively resilient despite wider economic pressure, supported by dynamic pricing models, though these remain contentious. In the North East, one practice member reported “tension and lack of alignment” between governing bodies, clubs and members.

Creative industries face ongoing challenges. One London practice noted that business confidence is at an all-time low, even in the creative space. “Films and TV shows that we thought would happen haven’t,” they said. In theatre, competition from immersive entertainment is intensifying, while Theatre Tax Relief remains critical for balancing budgets.

Gaming is being impacted by regulatory changes in the US and the EU, which are expected to reshape revenue models. The sector is embracing AI tools to speed up processes, including the testing of games.

Spotlight on retail

Retail performance remains mixed. One member working in a subscription health business reported strong November trading, while a DIY and homeware retailer in the South West observed customers trading down and prioritising repairs over large purchases.

Luxury retailers in London reported that “boutiques selling high-value items which give good service are doing well”, but noted that while there is optimism, “it’s hard work”. For many, tariffs continue to squeeze margins, with a medical retail business highlighting the complexities of completing international paperwork. In the Midlands, one practice that advises the retail sector is expecting challenging impairment discussions in the coming months, reflecting ongoing pressure on the high street.

Retailers continue to explore AI, albeit “gradually”, with a focus on practical applications. This includes A/B testing, automated content creation and personalisation, though concerns around brand protection remain high. Data quality is reported as a primary barrier to effective adoption.

Echoing concerns noted earlier, members pointed out that AI-led search behaviour is reshaping online shopping, prompting a shift away from traditional SEO models.

Cyber security

Cyber security concerns continue to grow. A practice firm based in the Midlands noted that clients are seeking stronger guidance on internal policies, including backups and customer safeguarding. One member commented that older IT systems have unexpectedly provided higher resilience against certain threats.

Labour market

Recruitment remains uneven. A London-based FMCG business cited strong graduate hiring, while a technology firm in the South West reported “wage creep” and “visa delays”, hampering hiring plans.

Offshoring interest continues to increase, with London hospitality businesses exploring operations in Colombia and the Philippines.

Across the board, members expressed concern about the Employment Rights Bill and specifically its potential impact on start-up activity.

Budget concerns

Expectations for the Budget remained muted in the weeks ahead of the event. One portfolio business in Wales commented that none of the potential announcements suggested growth.

Manufacturers warned that delays to the reform of business rates persistently hinder investment decisions, while one training provider in the East of England said the late November timing of the Budget was “killing activity”.

A wealth management firm in London reported clients “pre-empting the Budget by gifting assets or moving overseas, raising reputational concerns for the UK”. A Scottish textile manufacturer argued that “there is too much tinkering - no one is brave enough to say the tax system just doesn’t work”.