Business News Round Up (05/01/2026)
Demand for UK manufacturing finally outweighs rising costs
The final manufacturing PMI for December on the back of an increase in November confirmed that at long last the UK manufacturing sector can look forward to 2026 with modest, albeit patchy, confidence. Although the financial pressures remain namely on rising wage bills and fuel costs this has finally been outweighed by a significant uptick in demand particularly from the UK. It’s not all sweetness and light though with our clients reporting expecting little or new hiring in the sector in 2026 and instead looking to find ways to work more efficiently, often by automating or improving their processes. Government measures, such as the confirmed increase to the minimum wage, alongside the impact of the salary sacrifice cap, are making businesses cautious about hiring new staff.
UK unemployment could hit 11-year high in 2026 as growth stalls, economists warn
UK unemployment is expected to climb to its highest level in more than a decade in 2026, as economists warn that weak growth, rising employment costs and subdued private sector confidence continue to weigh on the labour market. According to The Times’ annual Economists Survey of 48 leading economists, more than two-thirds believe the unemployment rate will end 2026 between 5% and 5.5%, up from its current level of 5.1%. If the upper end of that range is reached, it would mark the highest jobless rate since 2015. The survey paints a downbeat picture of an economy increasingly reliant on government spending, with private sector hiring constrained by higher taxes, rising wages and ongoing uncertainty following the Chancellor’s autumn Budget. Economists point to Rachel Reeves’s £25bn increase in employer National Insurance contributions, alongside higher minimum wages and forthcoming changes under the Employment Rights Bill, as key drags on hiring intentions.
https://bmmagazine.co.uk/news/uk-unemployment-forecast-2026-economists-warn
Scottish manufacturers prepare for new wave of M&A in 2026
Scottish manufacturers are preparing for a wave of M&A and fresh investment in supply chain resilience in 2026, according FRP Advisory. Of the Scottish manufacturing senior decision makers polled for FRP’s new report The Manufacturing Agenda, 31% said they expect their boards to be leading buy-side or sell-side M&A over the next 12 months. Boards will also be prioritising enhancements to their firms’ digital and automation capabilities (30%), focussing on skills and talent (28%), succession planning (27%) and preparing to navigate new geopolitical risk (27%). This follows a year where they have been focused on managing ongoing structural challenges, such as the sudden loss of key orders or customers (24%), geopolitical or trade change (20%) and ESG regulation (20%). Reflecting their operational priorities, Scottish manufacturers are planning fresh investments, prioritising those that will boost supply chain resilience (43%), support sell-side M&A (41%) and deliver robust succession planning (41%).
Companies to raise prices as confidence weakens
More businesses expect to raise prices and are scaling back their investment plans as confidence continues to weaken, according to the UK’s largest business sentiment survey. The British Chambers of Commerce (BCC) Quarterly Economic Survey found less than half of responding firms (46%) are expecting increased turnover over the next 12 months – the lowest level in three years. 52% of firms say they will raise their prices in the next three months, up significantly from Q3(44%). 27% say they have cut back on investment plans, while just 19% of firms increased their plans. Plans to cut back are more acute among hospitality firms (37%), retail businesses (36%) and manufacturers (32%). The survey was carried out by the BCC Insights Unit and the UK-wide Chamber network, before and after the Budget, conducted between 10 November and 8 December. Over 4,600 businesses across the UK (91% of whom are SMEs) responded online.