The ICAEW confidence survey reports:

Business confidence falling to 11.1 for the final three months of 2025, with speculation surrounding a late Budget, weak sales and inflationary pressures to blame.

64% of businesses say the tax burden is their primary worry, with the growing regulatory burden, namely the Employment Rights Bill, following closely behind.

Domestic sales and export growth remained subdued, lagging the ICAEW survey’s historical norms

Employment growth dips further, with several sectors predicting further decline.

Capital investment has increased slightly in the final quarter of 2025, but the R&D outlooks continues to look weak.

The retail and property sectors are the least optimistic industry sectors, with IT and communications the most optimistic.

Alan Vallance, the Chief Executive at the ICAEW, called for new optimism in 2026 to encourage confidence and growth. He said: “It is incumbent on government to deliver the conditions businesses need for growth. There are amazing businesses across the UK with huge potential to grow if complexity, cost and uncertainty are reduced.

“As long as these burdens remain, achieving the government’s growth mission will remain out of reach.”

The news is not, however, all gloomy. Businesses in 2025 did see domestic sales growth exceed expectation, reporting average growth of 4.2% against the historic norm of 3.1%. Export sales too increased by 2.4%. Businesses expect domestic sales and export sales to significantly improve in 2026.

London and the South East

Businesses in the South East are the least confident, with sentiment declining from the previous quarter. However, performance tells a different story: businesses in London reported relatively strong domestic sales and exports growth, outpacing all other UK regions. Businesses in London and the South East expect stronger growth over the next 12 months than the UK average, demonstrating that low confidence does not always translate to poor performance in our economically diverse region.

How should business respond?

Businesses continue to demonstrate extraordinary resilience. Faced with global disruption, economic uncertainty and rapid technological change, leaders have adapted, innovated and, in many cases, emerged stronger. Adaptability will be a defining characteristic of successful businesses in the year ahead.

In 2026, growth will belong to the organisations that ask: what can we improve? Improve for clients and customers, for people, for the planet and our communities, and the top and bottom line.

These questions are not tactical. They go to the heart of purpose – the reason your business exists, the impact you want to make, and the legacy you want to build. When purpose is clear, decision-making becomes faster, teams stay motivated and growth becomes more sustainable.

Throughout 2026, our experts at Kreston Reeves will explore how sustainable growth can be unlocked through:

Talent — incentivising growth and improving productivity

Reducing waste — time, resources and cash

Customer and client service — building loyalty and advocacy

Growing internationally

Staff resourcing – employees, subcontractors or offshoring

Technology – how it can be used to support growth

Personal and team development

Improving the top and bottom line

We will highlight the ways we can support businesses on their growth journeys, challenge your thinking and celebrate your successes. If you would like personalised advice for your situation, please do not hesitate to get in touch.