Press Release
Resilient UK businesses remain positive about economic outlook, but brace for further tax increases
07 Jul 2025
Data from Grant Thornton UK’s latest Business Outlook Tracker*, which has tracked optimism across UK business decision makers since 2021, shows that business leaders' confidence in the strength of the economy, and in the growth expectations for their own business have remained steady, at levels above the tracker’s rolling average. However, the data also shows that high operating and people costs continue to cause challenges, and business leaders expect further pressure later this year from additional taxes.
The key indicators from the survey of 800 UK business decision makers* show:
Business leaders are optimistic about the UK economy
All 800 respondents remain optimistic about the strength of the UK economy, with mid-market (MM) businesses optimism at 81% - 11 percentage points (pp) above the average net optimism levels since 2021.
Though UK labour statistics in June reported falling vacancies and increased unemployment – recruitment investment intentions remain strong, with 43% of businesses expecting to increase investment in recruitment over the next six months – 8pp higher than the rolling average.
High operating and people costs continue to challenge businesses
MM businesses with between 10 – 100 employees are more likely to see this as a bigger challenge than the average, for which a contributing factor may be the introduction of increased costs in April for employer NI and National Minimum Wage contributions. Of the 600 mid-market businesses that responded, 67% said these changes had caused them to reduce or freeze hiring, and 62% said they’d had to cut jobs.
Businesses feel supported by government strategy but expect further tax increases before the end of the year
- 71% of respondents agree government policy promotes economic stability.
- 75% agree government policy support business growth.
- 74% agree that the Industrial Strategy will support the growth of their business.
- 75% agree that the Chancellor is likely to raise business taxes again this year.
Revenue and profit growth expectations are positive and steady
- Mid-market revenue growth expectations for the next six months remain steady at 10pp above the rolling average (since 2021), 8pp higher than the same time last year.
- 79% of large corporate (LC) organisations expect revenue growth in the next six months, though this has fallen from 92% in December 2024.
- 66% of MM companies expect profits to increase in next six months, up 7pp since April and 10pp above average (65% for LC).
The Trump administration is still viewed as a positive force for UK business, though larger business confidence has dipped since April
74% of MM respondents agreed that the Trump administration is good for business, up 4pp since April, whilst larger businesses, who have been feeling the shocks to global supply chains from tariff and trade disputes, are less certain at 68%, down 7pp since April.
Tom Middleton, Managing Director for Economic Consulting at Grant Thornton UK, commented:
“If there’s one thing businesses have learned over the past few years, it’s the need to treat uncertainty as normality. Despite the volume of change and unknowns – from geopolitical and trade policy shocks in markets abroad to policy changes at home – UK businesses are adopting strategies to remain resilient, and this is reflected through their ongoing positivity, despite the headwinds.
“That’s not to say that everything is smooth sailing. Businesses continue to grapple with high operating and people costs, largely resulting from the National Insurance and National Minimum Wage increases which came into force in April. Though businesses are broadly positive about government policy and strategy, there is a clear expectation that further pressure will come in the form of tax increases later this year.
“Intentions for recruitment over the next six months remains well above average levels, suggesting businesses are managing costs and preparing for future growth. Businesses have become adept at pivoting to manage cost pressures which is demonstrated by two thirds of respondents saying they have changed their recruitment and remuneration strategies, increased prices or reduced capital investment in an effort to protect margins.
“Adaptability and agility are essential in a climate of uncertainty and change. Businesses have had to traverse a range of shocks in recent years, and this resilience and strategic dexterity will be called upon again given the current level of geopolitical and macroeconomic uncertainty.”
*Censuswide on behalf of Grant Thornton UK LLP surveyed 600 senior decision makers in mid-sized businesses (revenue between £50mn - £1bn) and 200 Large Corporate businesses (over £1 billion) between 19 June – 30 June 2025
