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News Release

Business growth expectations plummet as winter approaches and interest rate decision due

The latest research from Grant Thornton UK LLP’s Business Outlook Tracker* finds that, as we head towards winter and another interest rate decision today, optimism has plummeted across the mid-market.

The latest survey of 600 UK mid-sized businesses finds that, despite a slowing down of inflation, businesses’ confidence in their revenue growth over the next six months has fallen to its lowest level since October last year. The number of businesses pessimistic about their growth has also more than doubled, from 5% (August) to 11% of respondents.

This faltering confidence in growth expectations may be due to a lack of confidence in the outlook of the UK economy, which fell -21 percentage points from August, to 58%. This is considerably below (-11pp) the average optimism level recorded by the Tracker since January 2021.

With interest rates high and likely to remain so for the near future, businesses’ confidence in their funding position has decreased -24pp since August, reaching the second lowest level recorded by the Tracker. The number of those pessimistic in their position more than doubled, from 5% to 12%.

As confidence falters across the market, investment expectations have also stalled, with fewer businesses planning to increase investment across all areas monitored by the Tracker, including technology, growing internationally, skills development and ESG.


Schellion Horn, Head of Economic Consulting, Grant Thornton UK LLP, said: 

“While optimism has remained relatively high in our Tracker for the past 18 months, despite the economic challenges faced, this was likely due to many businesses having their funding locked in but it’s likely that high interest rates are now really biting. Funding costs are rising and covenants are tightening and so businesses are finally feeling the squeeze. And while another interest rate decision is due today, with inflation stalling unexpectedly in September, it’s unlikely that they will reduce anytime soon.


“The drop in optimism may also be exacerbated by fears around rising energy prices as we head towards winter, amid growing international conflict, and the potential impact this could have on inflation and their cost base. While winter is often the busiest quarter for many businesses, the potential rise in energy costs for both businesses and consumers, may be making many nervous about the knock-on impact on sales.


“But businesses should refrain from pausing or reducing investment too much. While it may save costs in the immediate term, decreased investment in core areas means it’s unlikely they will be in a position to come out strongly the other side – resulting in some winners and losers.


“The Autumn Statement is due later this month and, while most of our respondents believe the government is currently doing enough to support business through the economic challenges, businesses’ priorities to support future growth remain the same – infrastructure, skills and R&D. These are always among the top choices for mid-sized businesses so hopefully we will see an announcement that answers some of these priorities.”



Planning for success in 2024

Our latest Business Outlook Tracker indicates that the number of businesses feeling pessimistic about the economic outlook of the UK has almost tripled since August.

To help you navigate these challenges, on 29 November our experts will be sharing their insight on the current economic outlook and discussing what actions businesses need to take to succeed moving into 2024. 

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