Logistics Sector:
The logistics industry is vital to the UK economy but faces growing challenges. Rising employer National Insurance contributions increase pressure, especially on smaller operators. Fuel prices are set to surge due to the Middle East situation; while some companies apply a fuel surcharge, others do not. There is also a broader sense that government lacks business experience.
Driver recruitment has improved slightly since post-COVID but the workforce is aging, with few younger entrants, raising long-term sustainability concerns. Congestion remains a daily issue, worsened by heavy and poorly coordinated roadworks on key routes.
These challenges impact supply chain reliability, efficiency, and investment in greener fleets. The sector needs targeted support—workforce funding, better infrastructure planning, and consistent government consultation—to stay competitive and resilient.
IT Sector:
Positive growth continues with new clients adopting end-to-end managed IT services. Momentum builds for Windows 11 upgrades ahead of the October deadline. Sales cycles remain short, and post-financial year Capex spending hits record highs.
Recruitment is strong, especially in Sales Support and Technical Engineering, with steady monthly hires. Interest grows from candidates, notably ex-Wavenet staff after their offshore move.
No direct tariff impact yet, though stock depletion may change this. Cybersecurity remains a priority after high-profile breaches (M&S, Harrods, MOJ, Co-Op), prompting some customers to reconsider practices despite general apathy. A Knights of Old director’s LinkedIn interview highlights real cyber risks and business impact.
Construction & Property Sector:
Despite ongoing challenges, our business maintains a strong order book with several major projects underway. Bank funding appetite remains limited, often undervaluing completed commercial properties—typically around 70% of development cost. While understandable for bespoke builds, this undervaluation is less justified for standard warehouses, which continue performing well. The BP Pulse facility, sold above build cost, shows ongoing demand for quality assets. The sector faces a shortage of skilled subcontractors and reliable labour. Recruitment is difficult, and training often lacks value due to unqualified providers, resulting in high costs and poor outcomes.
Rising taxes add strain, and many feel enterprise is undervalued under the current Labour Government, seen as prioritising revenue over commercial understanding—threatening investment, innovation, and growth.
Manufacturing Sector:
The British manufacturing sector faces significant challenges. Rising employment taxes and business costs have led many to halt recruitment and investment. Domestic and export orders have declined, reducing output.
This contraction is the first in a decade, underscoring the tough economic climate. Yet, the sector remains resilient, focusing on financial stability and streamlining operations to manage high raw material, energy, and labour costs. Innovation and adaptability remain crucial to navigate these times.
Heating Industry:
The UK heating industry is shifting as government pushes for Net Zero by 2050. With 22 million fossil fuel boilers in homes and 1.4 million sold annually, change is urgent. In contrast, only 98,000 heat pumps are sold yearly.
Government plans target 600,000 heat pump installs annually by 2028, banning new fossil fuel boilers by 2035, and introducing penalties for manufacturers missing heat pump sales targets. However, heat pumps require home upgrades like better insulation and radiator changes.
A multi-technology approach, including hybrid heat pumps, is more practical. Trials show hybrids achieve 80% heat pump use, enabling faster, broader decarbonisation than full replacements alone.
Travel and Hospitality:
The 2025 outlook for business travel, events, and hospitality is challenging, with stagnation or slight decline likely. Maintaining current levels may be success, while real growth depends on government support and investment. Profit margins are tight, labour costs are set to rise 7–10%, and conference revenues grew only 1.6%. Energy costs remain high despite easing.
Overseas bookings show modest gains but momentum is weak. Worcester MP Tom Collins offers promising regional support. Coordinated action across government, industry, and local leaders is essential for future resilience.
Education Sector:
University offers for September 2025 rise across all institution types, especially high-tariff universities. Despite a 1.2% national applicant increase, UCAS warns mid- and low-tariff universities may struggle to fill places. West Midlands applications fell 1.4%, but Worcester saw a 14% rise, with all schools except the Medical School up on last year.
International student numbers remain low due to visa changes; Worcester received 7,000+ applications, with 25% leading to offers. Congrats to HOW College and RGS Worcester on HW Chamber Business Awards. The High Court dismissed a challenge against VAT on private school fees. The Help to Grow Management course is running summer 2025 cohort, with October applications open, alongside Worcester Executive MBA registrations. TDM partners with Worcester Business School to validate digital degree apprenticeships from September 2025.
Finance Sector:
UK businesses face major regulatory and fiscal changes affecting accounting, audit, tax, and financial planning in 2026. A key revision to FRS 102 from 1 January 2026 introduces new revenue recognition and requires operating leases on balance sheets, affecting tax liabilities, audit thresholds, and tax-advantaged schemes like EMI.
Audit thresholds rise from 6 April 2025, cutting compliance costs but possibly reducing oversight. Increased National Insurance and tighter employment regulations push businesses toward AI and automation investments. A possible Capital Gains Tax hike from 24% to 30%+ in October 2025 may trigger early asset disposals. The Cash ISA allowance could drop from £20,000 to £4,000, limiting tax-free savings. Careful planning and expert guidance are crucial.
Food Sector:
Vertical farming grows crops in stacked indoor layers using controlled environments like warehouses or urban buildings. Technologies such as LED lighting and hydroponics enable year-round, soil-free cultivation, producing much more per square metre while using up to 95% less water and cutting transport emissions.
This benefits the UK by boosting local leafy vegetable supply, reducing imports, and lowering pesticide use. Challenges include high energy costs, costly infrastructure, limited crop variety, and technical complexity. Sustainable scaling requires renewable energy, skilled workers, and supportive policies.
Visitor Attraction/Tourism Sector:
The RHS Malvern Spring Festival (May) and Royal Three Counties Show (June) saw significant visitor increases in 2024, building on 2023’s growth. Trade stand bookings were oversubscribed, allowing rejection of lower-quality stands. Venue Hire attendances were strong, notably Tractor World in February. New conference/event bookings remain robust.
The main challenge is securing medium to large sponsors (£10k+), as budgets remain tight.
Agriculture/Horticulture Industry:
Livestock movements are disrupted by Blue Tongue. A North-South line in England requires animals east of it to have tests and licenses to enter the west. England becomes fully restricted from 1 July. Wales and Scotland ban entry of animals from restricted zones, effectively blocking English livestock and severely impacting Royal Welsh Show entries. Skepticism exists about the decision’s logic and effectiveness.
Sporadic poultry flu outbreaks limit poultry displays to birds from single suppliers/farms.
Defence:
Global instability creates opportunities in Defence. The ongoing Ukraine war remains the primary focus and is expected to continue for decades with no imminent ceasefire. Many non-Defence firms seek to enter the sector, seeing it as lucrative.
The Government’s Strategic Defence Review (June) is vague, lacks funding clarity, and has met scepticism. MOD spending is restricted and preparations for the Defence Industrial Strategy (delayed since last April, expected July) stall progress. A 3-Star-led Defence Reform initiative is underway, with unclear outcomes ranging from no change to radical reform.
Industry hopes it will address procurement inefficiencies, increase agility, improve communication, and balance spending between large multinationals and UK SMEs. The Government aims to boost exports and innovation investment.
Insurance Sector:
After premium rises, the insurance market is easing, with many seeing stable or reduced premiums and wider insurer appetites. Liability, commercial combined, and professional indemnity premiums show most movement; home insurance premiums remain high.
Recent cyber attacks on major retailers highlight cyber insurance’s importance. M&S had £100m cyber cover but faced £300m profit losses; Co-Op and Harrods reportedly lacked cyber insurance. The National Cyber Security Centre urges businesses to strengthen resilience and recommends Cyber Essentials certification.
The FCA reviews regulatory burdens, which account for about 8% of broker costs and impact premiums.
Retail (Equestrian):
The UK equestrian trade is stable, with satisfactory turnover despite economic conditions. Traditionally trade-focused, the business has expanded into direct-to-consumer retail via a new website, selling at full recommended prices. Initial feedback is positive with no concerns from retail partners, indicating direct buyers are loyal.
In the US, operations face challenges from tariff reintroductions under the Trump administration. A 145% tariff on Chinese goods caused shipment delays; resulting price increases (~30% on Chinese goods, 10% on others) are passed to US consumers. This affects the entire industry but maintains parity among competitors. The situation reflects ongoing trade volatility.
Property Sector:
The commercial market is slowing due to geopolitical uncertainty, though demand for high-quality industrial and warehouse assets remains strong amid limited supply. Office demand is mixed, with urban ESG-compliant spaces performing better than provincial areas. Retail is rebounding, attracting investment due to relatively high returns, and there’s growing activity in data centres and life sciences. In the housing market, signs of improvement are emerging, though demand is uneven and pricing sensitive. A potential base rate cut from 4.25% to 4% could boost affordability, with mortgage advances already rising. Housebuilding is supported by national policies, despite local resistance, and recent government funding is set to enhance affordable housing delivery.
Recruitment/Labour Market:
The UK labour market remains mixed, with national uncertainty contrasting with a more buoyant picture locally. Nationally, employer confidence is subdued, with economic sentiment and hiring confidence remaining pessimistic according to the latest Jobs Outlook from the REC. While unemployment sits at 4.6% and vacancy numbers have declined year-on-year, workforce participation has been growing, and pay is still rising—albeit more modestly.
Locally, however, the Midlands stands out for its resilience. According to the latest Midlands Report on Jobs, it was the only English region to record growth in both permanent placements and temporary billings in May 2025. Temp vacancies rose for the first time in nine months, and pay for both permanent and temporary roles increased, indicating healthy demand. Staff availability continues to rise due to redundancies and shifting job seeker behaviour (more the latter), giving employers more hiring options.
The REC’s Jobs Outlook reinforces this positive local sentiment, with mid-sized firms in the Midlands showing strong short- and medium-term hiring intentions—particularly in temp recruitment. Whilst UK employers are cautious, regions like ours are quietly powering forward, proving that confidence and opportunity still exist amid wider economic noise.