GC SITUATION REPORT AND BUSINESS SURVEY RESULTS
UK Economic Performance
Ongoing geopolitical tensions in the Middle East are continuing to disrupt global energy markets, leading to volatility and keeping interest rates elevated. As a result, UK economic growth is expected to remain modest in 2026, forecast between 0.8% and 1.1%, with persistent inflation limiting both consumer spending and business investment. Although inflation briefly eased to 2.8% in April due to lower energy costs, it is projected to rise again to around 3–4%, meaning the Bank of England is likely to maintain a cautious, restrictive stance with interest rates staying higher for longer. Meanwhile, UK GDP fell slightly by 0.1% in April following strong growth in Q1, indicating a weak start to Q2. This decline was largely driven by a drop in the services sector, particularly in consumer facing areas like retail and recreation, suggesting softer discretionary spending. However, this dip is likely a temporary correction after earlier strong months rather than a sign of deeper economic weakness, with some sectors like construction still showing modest growth.
Survey Summary
Business confidence across Greater Manchester has improved slightly, with the GC Business Confidence Index rising to 7.4, reflecting resilience despite sector variation. Confidence is stronger across DCT, Hospitality, Construction, Logistics, Manufacturing, Health Care and Utilities/LCEGs, while weaker in BFPS, Engineering, Retail, Education and Life Sciences. Sales
performance remains stable (16% growth, 9% decline) and profit expectations are positive, with 60% anticipating increases. Investment intentions have strengthened to 40%, although workforce development investment remains subdued at 25%, indicating
continued reprioritisation.
Cost pressures remain the main challenge, rising to 29%, alongside growing cashflow concerns (16%) and recruitment issues. Financial resilience has eased slightly, with 50% holding over six months of reserves, while demand constraints persist, with 50% struggling to access domestic sales. Recruitment has increased modestly to 22%, mainly among larger SMEs, but skills gaps remain, particularly in technical, sales, leadership and IT areas. Innovation activity is steady, with rising AI adoption (56%) supporting analytics and automation, though digital transformation investment remains limited at 15%, signalling cautious but progressing adoption.
Key Findings
GC Business Confidence Index (GC-BCI): Business confidence for May 2026 stood at 7.4 out of 10, increased compared to previous quarter. Confidence levels are above average for DCT, Hospitality, Construction, Logistics, Health Care, Manufacturing, and Utilities LCEGs and lower in BFPS, Engineering, Retail, Education and Life Sciences.
Investment: 40% (vs 36%) of firms expect to increase capital expenditure in the year ahead. Sectors most optimistic about increasing investment are Utilities / LCEGs, Engineering, Retail, Logistics, Hospitality, DCTs, BFPS and Health Care; and lowest in Other Manufacturing, Education, Construction and Life Sciences.
Cashflow Issues: 16% (vs 14%) of firms reported cashflow problems and higher risk reported in Engineering, Retail, Logistics, DCTs, BFPS, Education and Other Services.
Trade: 21% of firms (vs 19%) export goods/services, with 17% (vs 16%) expanding into new markets, a trend particularly notable in the Manufacturing & Engineering, Life Sciences, and DCTs sectors.
Future Support Needs: Sales & marketing 35% (vs 32%), business planning 34% (vs 37%), innovation 33% (vs 35%), workforce development 28% (vs 26%), and financial advice / guidance 31% (vs 28%).
Recruitment and Skills: 22% of firms recruiting; higher among SMEs; most active in Utilities / LCEGs, Construction, Life Sciences, Education, BFPS, and Other Services. Sectors least likely to be recruiting are DCTs, Retail, Hospitality, and Healthcare
Archived Reports
For more information on this survey, please contact
Sabirah.Chowdhury@growthco.uk