UK mid-market turns to AI and productivity to support growth and hiring plans in 2026
UK mid-market turns to AI and productivity to support growth and hiring plans in 2026
- UK mid-market businesses are turning to AI and productivity improvements to drive growth following a challenging 2025
- Growth ambitions are translating into investment plans, as businesses prioritise skills and new sources of capital
- But plans risk being tempered by persistent challenges
UK mid-sized businesses are rebuilding momentum and setting sights on growth after a challenging 2025, according to the latest research from BDO.
In a survey of 500 UK mid-sized business leaders, productivity gains and the adoption of technologies such as AI emerged as a key route to growth for almost half (42%) of firms.
Expansion plans are focused on both UK markets (39%) and overseas (38%). A similar number (38%) are considering mergers or partnerships to boost their growth.
Businesses are making hiring plans but remain cautious
Against a backdrop of weak business confidence and subdued employment expectations across much of the wider economy, the mid-market appears to be taking a more optimistic view, with the majority (88%) of firms looking to build on their investment plans by increasing headcount in 2026.
Financial services and technology are the sectors with the most widespread hiring plans. However, firms remain cautious, with only one in five (21%) expecting headcount growth of more than 10%.
This aligns with separate BDO analysis suggesting that mid-sized businesses could add an additional 1.9 million jobs by 2028, bringing total mid-market employment to 9.9 million and reinforcing the role these businesses play in driving UK employment growth.
Investment in new capabilities, such as technology and AI, is driving headcount increases for more than a third (36%) of businesses. This suggests hiring plans are focused on building the skills needed to support productivity improvements, rather than replacing roles.
Newly secured funding is another factor driving growth in recruitment for 31% of those surveyed.
Funding plans show improving outlook amid persistent challenges
Looking ahead, nearly a third (29%) of mid-market businesses are considering private equity or venture capital to fund their growth plans in 2026.
A further one in three (29%) are looking to existing shareholders for investment, while 27% are considering government grants and incentives. A slightly higher proportion (22%) of firms are exploring private debt or credit funds compared with new bank debt (19%).
Despite the cautious optimism for growth and investment, mid-sized business leaders remain watchful of the challenges ahead.
Cybersecurity incidents or data breaches are the most frequently cited threat to business performance in 2026 (27%).
Over a quarter (26%) of respondents to the BDO survey also cited energy or input costs as a top concern, with the same proportion worried about weakening international demand or geopolitical impact.
Richard Austin, partner at BDO, said: “It is fair to say current economic conditions remain challenging, with reports of businesses slowing down hiring amid high costs and low business and consumer confidence. However, mid-market businesses remain resilient and though still erring on the side of caution, these growth plans offer a glimmer of hope for 2026.
“The mid-market is an engine of the UK’s economy – it is key to unlocking growth, but cost pressures still loom large. Turning ambition into delivery will depend not just on business strategy, but on whether the wider operating and policy environment allows the mid-market to do what it does best: invest, grow and create jobs.”
ENDS
Note to editors
Findings are based on a survey of 500 C-suite executives in UK mid-market businesses (revenue £10m–£300m). Fieldwork took place between 11 and 23 December 2025. Some questions allowed multiple responses. The sample was quota-controlled by region and sector, with maximum targets in specific company types (e.g. PE-backed/AIM-listed) also.
The employment projections referenced in this release draw on separate BDO-commissioned economic analysis published in March 2025, which forecasts that mid-sized UK businesses could create an additional 1.9 million jobs by 2028, taking total mid-market employment to 9.9 million.
The full research, Mid-sized firms to contribute £745 billion to UK economy by 2028, is available here.
BDO LLP operates in 18 offices across the UK, employing 8,000 people. It has UK revenues of £1bn.
It provides Audit, Tax, Deals, and Consulting, Risk & Outsourcing services predominantly to mid-sized, entrepreneurially-spirited, high-growth businesses that are driving growth in the UK economy. BDO calls this segment of the market the UK’s economic engine.
BDO LLP is the UK member firm of the BDO international network.
BDO’s global network
The BDO global network provides business advisory services in 166 countries and territories, with more than 119,000 people working out of 1,800 offices worldwide. It has revenues of US$15bn.
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