Vistage, the leading business performance and leadership organisation for small and medium-sized businesses across the UK and Ireland, has released new findings from its latest CEO Confidence survey, revealing a sharp contrast between how leaders see the wider economy and how they feel about their own businesses.

Key findings:

• 54% of leaders say economic conditions in the UK and Ireland have worsened over the past year

• 39% expect the economy to get worse in the next 12 months, while just 12% expect improvement

• Half (50%) of business leaders expect profitability to improve, despite 29% citing rising costs as their biggest challenge

• More than seven in ten leaders (72%) say members of the leadership team are already using Generative AI

  
  

The quarterly confidence index, which is based on responses from business leaders, has increased to 93.6, up from 88 in Q3 2025 and 91.4 in Q4 2024. While overall confidence has edged up, the Autumn Budget appears to have done little to lift sentiment about the wider economy, suggesting that leaders’ growing confidence lies more in their own ability to navigate conditions than in expectations of external support.

Economic Outlook Remains Negative

More than half of respondents (54%) say economic conditions in the UK and Ireland have worsened over the past year, while only 6% say they have improved. Looking ahead, 39% expect the economy to deteriorate over the next 12 months, compared with just 12% who anticipate an improvement, and 45% expect conditions to stay broadly the same.

The findings suggest a cautious outlook, with leaders focusing less on a quick economic recovery and more on what they can control within their own businesses.

Leaders Back Their Own Businesses To Grow

In contrast, SME leaders are far more positive about their own organisations. Nearly two thirds (63%) expect their firm’s sales revenues to increase over the next year, while only 6% expect a decline. Half anticipate an improvement in profitability (50%), with around a third expecting profits to hold steady (32%) and a smaller group expecting them to worsen (18%).

Investment plans reinforce this confidence, as almost 39% of leaders intend to increase fixed investment, and 38% plan to maintain current levels, while only 21% expect to cut back. SMEs appear to be using this period to strengthen their position and prepare for future growth, rather than waiting for conditions to improve.

Rising Costs And Customer Demand Top The List Of Pressures

When asked to name the biggest challenge facing their business, rising costs came first, cited by 29% of leaders, with customer demand close behind at 25%. Other challenges include regulatory change (9%), competition (8%), talent retention (7%), supply chain issues (5%), and access to finance (3%).

The combination of cost pressure and demand uncertainty shows that many SMEs are being squeezed from both sides, facing higher input costs on one hand and questions about future revenue on the other.

Investing For 2026 - Growth, Technology And Talent

Looking to 2026, leaders are planning around growth rather than cutbacks. According to findings, most business leaders are focused on product or service development (41%), technology adoption (38%) and leadership changes (35%), alongside cost cutting (27%), strategic partnerships (28%), investment prioritisation (23%) and hiring (20%).

In line with these plans, leaders’ top investment priority for 2026 is AI (45%), followed closely by market expansion (44%), technology and training and development (both 41%), people and recruitment and customer experience (both 38%) and product development (27%), with infrastructure (18%) and sustainability (6%) also on the agenda.

This focus on technology, skills, people and customers suggests SMEs are positioning themselves to emerge stronger and more competitive, rather than retrenching and waiting for conditions to improve.

AI Moves Into The Mainstream

The survey shows that Generative AI is now firmly embedded in many organisations. More than seven in ten leaders (72%) say members of the leadership team are using Generative AI, 65% say the CEO is using it, and 65% report use by specific teams or functions. Almost half (46%) say employees are also using AI tools independently, while only a small minority (7%) say AI is not being used at all.

Leaders expect this to have a real impact on how work is organised. Almost half (49%) anticipate that AI adoption will lead to roles being reallocated, and 14% expect it to create entirely new roles. By comparison, 15% expect AI to reduce headcount, 1% expect it to increase headcount, 21% foresee no impact, and 13% are unsure. Taken together, this indicates that most SMEs see AI less as a blunt cost cutting lever and more as a way to reshape work and increase capability across the business.

Rebecca Drew, Managing Director, Vistage UK and Ireland, said:

“Our latest survey findings show that CEOs are under no illusions about the economic backdrop. Many see conditions worsening and expect little improvement in the year ahead, yet they continue to back their own businesses by investing in revenue growth, profitability and future capability."

"With rising costs and pressure on customer demand, the quality of leadership decisions matters more than ever. In moments like this, access to trusted peers to pressure test their plans, compare approaches and learn from others’ experience can make the difference between standing still and moving ahead with confidence.”

As part of Vistage’s ongoing support for business leaders, the quarterly CEO Confidence Index offers a clear view of economic sentiment, enabling leaders to make smarter decisions in today’s complex environment.

To learn more about how Vistage supports high-performing leaders through insight, mentorship and community, visit here.