What now? What 2026 holds for mid-market businesses

In summary

• 2026 will remain unpredictable for mid-market businesses, but key trends are likely to persist
• Despite troubles, economic gloom may be overdone, and an increase in funding could help those looking to buy, sell or expand
• Supply chain challenges will remain in a volatile international environment
• AI, meanwhile, is making innovation easier than ever, but companies must put in place appropriate guardrails
• Quick wins and small, but concrete operational improvements could come to define the year for many businesses

“The best way to predict the future is to invent it,” the American computer scientist Alan Kay once said. But even innovators need to know the trends that are likely to shape it.  

For mid-market businesses in the UK, it’s been a tough – and unpredictable – few years, but there are reasons for optimism as well as worry looking forward. While no one knows what 2026 will bring, some trends look likely to come to the fore.  

Three stand out. 

It was a "dismal end" to 2025 for the economy, according to ICAEW, but the PM has promised that Britain will turn a corner in 2026. Businesses will be hoping this is not just wishful thinking, and that the wheels don’t come off.  

There are, though, some reasons for optimism. First, as some commentators have pointed out, the UK economy is stronger than some suggest. Bank of England forecasts in the past have proved too pessimistic, and the same could be true again. The FT’s annual poll has Britain outgrowing France and Germany this year. As the paper puts it, “Britain’s economic gloom is overdone.” 

There were hints of that in 2025 in the IPO market. After a dearth in recent years, 2025 ended with 22 new London listings, with nine on the main market and 13 on AIM, raising £2.1 billion. That’s up from just 16, raising £766 million, the year before, according to the LSE. It’s a far cry from the record year of 2021, but it’s prompted hopes of a more substantial revival.  

Few mid-market businesses are looking to list, but the increased activity is likely to be felt further down the market, improving funding and boosting M&A. The increasing use of continuation vehicles by private equity, despite some misgivings, will also help – releasing capital by enabling general partners to sell assets from old funds into new vehicles. Schroders forecasts that the continuation market will quadruple in size within the next ten years.  

For businesses looking to buy, sell or expand, 2026 could be when things start moving. For those looking longer-term, whether going for growth, M&A or exit, business leaders who prepare now will be best placed to take advantage of the opportunities when they do come.  

This year has already seen early reminders that political risk hasn’t gone away. The US government’s action in Venezuela and public statements regarding Greenland, if nothing else, reinforce the fact that President Trump continues to make the world a little less predictable. As Time magazine puts it, “[T]he US is unwinding its own global order.” 

Even before these recent episodes, political risks were moving up boardroom agendas, following frequent international upheavals in recent years: from Covid to Russia’s invasion of Ukraine to last year’s Liberation Day and Trump’s tariffs. In December, Coface, a trade credit insurer that produces a global political risk index, rated the risk at its highest ever level.  

It is possible to overplay this. Much depends on each business’s international exposure. The logistical issues following Covid, including the 2021 Suez Canal blockage, for example, crippled some of our clients, but for others it just meant slightly higher shipping costs. Comparative advantages can also temper the impacts. The UK, with a relatively small manufacturing base and large service sectors (as well as lower tariff rates), is potentially less exposed to recent changes in US trade policy than some others, for example.  

But it’s possible to underplay the risks, too. Even businesses not directly affected by overseas events will usually end up paying a price somewhere in their energy bills or supply chains. Moreover, those who have yet to be touched by trouble should not assume their luck will hold.  

Recent years have taught us the futility of trying to guess where disaster will strike next. But businesses can examine their critical dependencies, single source suppliers and values at risk – and work to mitigate those vulnerabilities and build more resilient supply chains.  

The last big trend is both the most obvious and the least predictable: The increasing role of technology, automation and AI. That’s not new, but there are reasons to expect the momentum in 2026 will be unprecedented.  

The UK’s pro‑innovation reforms to data regulation through the Data (Use and Access) Act (DUAA), passed last year, should encourage that. These relax rules around automated decision-making in relation to individuals and increases opportunities to use personal information for commercial scientific research, for example. It also simplifies and clarifies the rules around legitimate interests for using personal information and subject access requests.  

The proposed EU Digital Omnibus, meanwhile, trends the same way, aiming to simplify and harmonise the digital regulatory framework at the European level. 

At the same time as these regulatory reforms, AI is making innovation easier than ever and democratising it across organisations: enabling individuals without programming skills to build apps, automate routines and develop other digital solutions to solve their problems and gain new insights.

This is not without risks. DUAA, for instance, is not really deregulatory; in some cases, it extends access rights beyond personal data, for example, and it introduces new identity management responsibilities. The new Information Commission may bring stricter oversight, too. Guardrails and governance to keep oversight of activity and protect against risks, such as data leaks and breaches, are also essential.  

But the opportunity remains and, in part, it explains a final shift we are seeing and expect to continue in 2026: A preference for fast, focused, problem solving projects over grand designs; quick wins rather than organisational overhauls.  

After years of talking about the digital revolution, businesses may take a more evolutionary approach in 2026. But the changes it brings will be no less profound.