BANKING SECTOR UPDATE
Lloyds Bank has announced its next three year strategy, Accelerate 2030, focusing on growth, innovation and simplification. Key commitments include over £45bn of new lending to SMEs, increasing face to face relationship managers to 1,000 and enhancing digital services to support international trade. SME Banking will now support businesses with turnover of up to £50m.
The Lloyds Bank Business Barometer for August 2026 showed business confidence rising to 53%, up 4 percentage points on July and 6 points above the 12 month average. Manufacturing and services were the leading sectors, while economic optimism increased to 49%. Price setting intentions are at their lowest level for four years.
EDUCATION SECTOR UPDATE
HLNSC has seen a significant increase in learner recruitment for the 2026 to 27 academic year, particularly in Construction, with further growth in Business and Early Years.
Skills Bootcamps continue to provide sector specific training, with provision expected to extend across the wider Marches area from the next financial year. The new Employer Patron Scheme is also recognising organisations that support education through placements, work experience, curriculum development and careers activities.
HLNSC is supporting graduates and industry professionals to transition into teaching and is exploring recruitment events for those interested in careers in education. Turing Scheme funding has also been secured for another year, supporting international opportunities in Thailand and India.
RETAIL SECTOR UPDATE
The UK India trade agreement has resulted in the removal of import duties on goods from India from 15 July. With imports valued at around £7.3m last year and previous duties of between 3% and 12%, this represents a significant saving and will help offset increases in business rates, wages, salaries and travel costs.
UK demand remains steady, with sales currently 4% ahead. The business continues to operate in a relatively resilient niche, although there is some caution about the wider retail market and the potential for a downturn.
Internationally, demand remains mixed. Orders are being fulfilled for customers in Qatar and Dubai, although shipping restrictions continue to create challenges. Freight costs from India and China to the UK have recently reduced to around $4,400 per 40 foot container, while shipping costs to the US remain significantly higher.
US turnover is currently 15% ahead despite increased tariffs and freight costs. The business is preparing for its annual trade show at the NEC, which will provide an opportunity to gain further insight into customer confidence and the direction of the market.
DEFENCE SECTOR UPDATE
The Government’s Defence Investment Plan has created mixed sentiment across the sector, with concerns around how commitments will be funded. There is increasing focus on rebuilding the UK’s defence position within NATO and the EU and strengthening domestic defence supply chains.
Greater investment in UK defence SMEs and the onshoring of manufacturing could support supply chain resilience and job creation. Concerns around Chinese components in sensitive defence technologies have also highlighted the importance of secure domestic supply chains.
The key issue remains the affordability of defence spending alongside competing Government priorities.
BUSINESS SERVICES SECTOR UPDATE
The Business Services sector remains resilient, although economic and geopolitical uncertainty continues to make businesses cautious. ICAEW’s latest Business Confidence Monitor recorded a significant fall in West Midlands business confidence, from 2.9 in Q1 to 14.7 in Q2 2026.
Businesses are focused on improving efficiency, productivity, customer retention and value for money. There is also growing demand to improve data quality so it can be used effectively by AI enabled systems. Rising operating costs, including carrier fuel surcharges, continue to put pressure on margins.
Businesses remain willing to invest, but increasingly expect clear and measurable returns.
ENERGY SECTOR UPDATE
Renewables generated 53.1% of the UK’s electricity in Q1 2026, predominantly through wind. The hot summer and increasing demand have highlighted challenges around renewable generation and pressure on the UK’s electricity grid.
There has been increased interest in solar PV, battery storage and air conditioning as businesses and households look to reduce costs and improve resilience. The Warm Homes Grant remains unclear, while the OZEV grant continues until March 2027. VAT on solar PV and battery storage is expected to increase from 0% to 5% from April 2027.
New Dawn Energy has seen a significant increase in enquiries, with customers increasingly focused on both financial savings and environmental considerations. This has supported workforce growth, although rising employment costs and recruitment challenges remain concerns.
FOOD & DRINK SECTOR UPDATE
Food security is becoming an increasing concern due to climate change, supply chain disruption, geopolitical uncertainty, energy costs, fertiliser prices and rising labour costs. Weather conditions have affected crops including wheat and barley, with yields reportedly reducing by around 20% to 25% in some areas.
Lower domestic production increases the UK’s exposure to global commodity prices and imports. The UK currently produces around 53% of the food it consumes and imports around 40% of its fruit.
Businesses are looking to improve resilience, including through water storage and other measures, although planning requirements can create challenges. Overall, the sector continues to face uncertainty around climate, supply chains and Government policy.
LAW SECTOR UPDATE
The legal sector remains generally busy, although workloads continue to fluctuate across service areas. Employment law is particularly active as a result of significant changes coming into force with the Employment Rights Act 2025 – most notably changes to qualifying periods for unfair dismissal claims and the removal of the statutory cap on compensation with experienced employment lawyers in high demand as a result. AI is also impacting upon the number of claims being brought, as AI changes the behaviour of litigants, particularly in employment but also across litigation more widely. Corporate and M&A are also continuing to see consistent workloads, as is commercial and insurance/regulatory/risk work. On the other hand, property work is more challenging, with real pressure being felt in residential property work as a result of uncertainly in the market, along with private client..
Commercial legal services generally remain busy, particularly across technology and manufacturing, as businesses respond to policy changes and increased activity in these sectors.
Rising costs, regulatory changes and pressures within the justice system continue to affect firms, particularly smaller practices – with changes to compliance requirements and recently announced upcoming changes to interest on client funds likely to have a significant impact on smaller legal firms Clients, particularly smaller businesses are also becoming more cautious about investment in proactive legal support owing to their own cost pressures and competing priorities
LOGISTICS SECTOR UPDATE
Fuel costs remain a significant concern, with a fuel tanker costing around £56,000 in September and continued pressure expected across the wider economy.
The shortage of HGV drivers remains an ongoing issue. A new driver scheme attracted around 130 applicants, although training times remain a challenge. Attracting younger workers into the sector is also an ongoing concern.
Demand has increased, with network activity around 20% higher this month, although the reasons for the increase are unclear. Progress towards Net Zero remains relatively limited across the industry.
TOURISM SECTOR UPDATE
Fuel costs are a primary concern from both an operating side for leisure/sporting facilities to function, but also a concern for the impact on those attending events, anecdotally we know of customers who are reducing their frequency of visits to sites from typically three times a year to just once. We are also impacted by key participants choosing to reduce their travel distance and attend venues more local to them, a challenge when we rely on a nationwide pool for our sport. The costs of goods and services have also significantly increased with the knock-on affect in fuel costs.
We have seen steady growth again for premium experiences and packages for marquee events, but a harder sell for run of the mill events. Recent campaigning by national visitor attractions regarding improvements to weather applications (ie Met Office, BBC Weather) is very welcome and one we should support as a sector, as we find this a key influencer in decision making in the final 5 days before an event (especially family events) but is often an inaccurate representation of the day.