LOGISTICS SECTOR UPDATE:
Fuel from a national average low of £1.03 in January bulk fuel peaked at £1.54 in April and has slowly dropped and is now at £1.29 and there is less volatility and supply is more assured. ABE uses about 1m litres a year so every penny increase costs us £10,000. Cashflow is affected by the increase in fuel costs. Whilst this is generally passed on to customers, fuel is usually on shorter payment terms than is received from customers.
People. Recruitment is still a challenge which is a concern with over 50% of the HGV Driver population being over 50. An increasing focus is encouraged by the Traffic Commissioners on driver wellbeing, monitoring fatigue and pressure as well as technology overload. Bridge strikes has not improved and 1666 hits were recorded in the twelve months until March 2025. Decarbonisation – 99% of HGVs on the road in the UK still run on diesel. Not looking great for the 2035 & 2040 deadline. Technology – AI is becoming more easily available for route optimisation and forecasting. The logistics sector, however is also becoming more vulnerable to Cyber Security issues. Infrastructure – the Hereford bypass is looking more likely now, but a functioning A-road between Ledbury and Malvern would be good, if not asking for too much.
FINANCIAL SECTOR UPDATE:
Business confidence continues to improve, with the Lloyds Bank Business Barometer showing a rise to 47% in May, and the West Midlands seeing the strongest regional uplift at 62%, driven by stronger trading expectations. Sector performance is mixed, with Construction and Retail showing improved momentum, while Manufacturing and Services remain broadly stable. Ongoing geopolitical uncertainty, particularly the Middle East conflict, continues to impact Energy, Transport and supply-chain exposed businesses, alongside sustained pressure from higher interest rates affecting borrowing and investment decisions. Technology remains a key growth area, with increasing client engagement around AI adoption and productivity benefits. Looking ahead, major sporting events such as the upcoming FIFA World Cup are expected to provide a modest boost to consumer spending, particularly across Retail, Hospitality and Leisure.
LEGAL SECTOR UPDATE:
The market remains steady with good underlying demand, particularly in property, private client and corporate work, but like much of the professional services sector, firms are seeing margin pressure as costs continue to rise. Higher salaries, insurance and premises costs are squeezing profitability, meaning even where turnover is growing there is a sharper focus on conversion, pricing and prompt billing. From our perspective, the emphasis remains on cash management, WIP and billing discipline to ensure effective conversion of activity.
Regulation is also increasing, with mandatory HMRC registration for tax advisers due in May 2026, introducing minimum standards and ongoing compliance requirements, reflecting a wider trend of tighter oversight across the sector.
From an MFG perspective, we remain in a strong position, targeting 15% fee income growth this year with a healthy and diverse pipeline across the firm, providing resilience compared to more specialist practices. We are continuing to invest in people, IT and our office footprint, focusing on recruiting quality fee earners, improving systems and efficiency, and expanding premises, including the new Black Country office opening in September. Overall, it remains a steady but more disciplined market with solid demand but tighter margins.
ELECTRICS/RENEWABLES SECTOR UPDATE:
The solar and renewables sector is seeing increased momentum, supported by government pressure on lenders to incentivise domestic installations, with several banks already introducing green mortgage add-ons and cash incentives for heat pumps, solar and energy efficiency measures. Rising energy costs are also driving demand, particularly with gas prices increasing more sharply than electricity.
However, the market is also experiencing disruption, including the collapse of a major solar brand and ongoing debate around installation safety standards, particularly the removal of mandatory DC isolators. Construction remains under pressure from labour shortages, rising material costs and slowing new-build activity, with concerns around upcoming steel tariffs adding further uncertainty.
In electrical, regulatory changes are tightening around data infrastructure and battery storage, while growing AI adoption is increasing demand on the grid and accelerating interest in storage solutions. Across the wider sector, a persistent skills shortage continues, with falling apprenticeship numbers and ongoing difficulty recruiting qualified electricians.
DEFENCE SECTOR UPDATE:
The biggest issue facing the UK Defence Industrial sector remains the ongoing delay of the Defence Investment Plan. It was due to be released last summer, it has been sat with No.10 for months…and there is still no known release date. The sector is therefore operating ‘blind’ – with no plan and no money allocated. The Army, Navy and Air Force don’t have a budget or a set of prioritised tasks, and there exists a multi-billion pound hole in the UK MOD finances. This situation led to the public resignation of Healey and Cairns earlier this month.
So What? Those small companies that are reliant on UK MOD as their prime customer, have received little or no new business since this Government came to power; some have closed, many are preparing for the worst, and some are looking to sell out. There is no light at the end of the tunnel yet.
Those companies that export are less affected, as parts of Europe are re-equipping and re-training their militaries, alive to the reality that NATO may not be able to rely on US support in Europe. The issue that is becoming more significant with exports is the implementation of Offset Agreements between NATO nations and UK (as European countries are becoming increasingly alive to, and irritated by, UKs lack of investment in Defence).
Any PM leadership challenge is unlikely to be helpful to the sector, and in summary, nobody knows what the immediate future holds. We survive in uncertain times.
INSURANCE SECTOR UPDATE:
The insurance market is generally softening, with many policyholders seeing stable or reduced premiums as insurers show greater appetite for broader cover and previously higher-risk business. However, fraud risks are increasing, particularly “ghost broking” via social media and AI, most commonly affecting motor insurance customers.
Geopolitical tensions in the Middle East continue to impact the insurance market, restricting cover in areas such as aviation and shipping, and contributing to higher costs and disruption in travel and goods movement. At the same time, rising cyber threats from hostile states, criminals and terrorists are increasingly being treated as a form of economic warfare, with Government encouraging wider uptake of cyber insurance and stronger supply chain standards such as Cyber Essentials. High-profile incidents, including the JLR cyber event, have highlighted the tangible economic impact of these risks.
TECHNOLOGY SECTOR UPDATE:
Still seeing strong growth in Managed IT and Security services, with several major corporate wins in the last quarter, although wider tech demand is more mixed with some vendors reporting flat performance and growth largely driven by new logo acquisition. Security and AI readiness are becoming central themes, with businesses increasingly focused on the safe adoption of tools such as Microsoft Copilot and alignment with published baseline security standards.
Demand remains strong for networking and Wi-Fi solutions, supporting ongoing hybrid working trends. Recruitment activity is healthy, with recent additions across sales, programme management and engineering roles, and no significant candidate shortages. However, supply chain constraints remain a key risk, driven by global demand for AI-related silicon and memory, impacting delivery timescales.
Pricing competition in mobile and telecoms is also creating opportunities for cost optimisation, with operators offering increasingly competitive bundled deals. Overall, growth remains ahead of expectations, with security, AI readiness and consolidation pressures shaping the main industry discussions.
TOURISM SECTOR UPDATE:
Worcester’s hospitality and tourism sector continues to perform strongly, with Worcestershire’s visitor economy now exceeding £1 billion, supported by growth in visitor spending, overnight stays, and tourism-related employment. Demand remains robust across hotels, guesthouses, self-catering accommodation, and experiential tourism, driven by heritage attractions, food and drink experiences, cultural events, and short-break visitors from across the Midlands and wider UK. While the outlook for 2026–2027 remains positive, particularly for premium accommodation, events, and longer-stay tourism, operators continue to face significant labour, energy, and operating cost pressures. Industry feedback following a recent visit to the House of Commons highlighted concerns over a perceived lack of government support, with limited appetite for additional sector funding and no broader VAT reductions under consideration. The targeted VAT relief for children’s attractions and meals has also been criticised as administratively burdensome and unlikely to deliver meaningful benefits, with many businesses expressing frustration at the lack of industry consultation.
Three Counties fundraising shows continue to outperform the wider sector, with paid visitor numbers rising for the fourth consecutive year. The combination of holding ticket prices low (with under 16s attending free) against ongoing inflationary pressures effectively makes entry more affordable in real terms each year. For example, a family of two adults and two children could attend the Royal Three Counties Show for £50. The Royal Three Counties Show is now firmly established as the largest livestock show in England, with entries increasing to around 1,100 this year.
More broadly, the performance reflects a positive trend in regional tourism and outdoor events, with continued strong demand for value-led, family-friendly experiences despite wider cost-of-living pressures.
AGRICULTURE SECTOR UPDATE:
Sector fears over rising costs caused by the issues in the Middle east, are the primary concern – notably the costs of red diesel (up from c68ppl at the start of the year to c£1.20 now) and fertilizer. As the UK no longer has any domestic fertilizer production, it’s very difficult to plan – so even if the war resolves itself the issues could be longer term – particularly after harvest. A lot of arable farmers buy fertilizer in the summer, which comes into store over the 2027 season, so if they don’t know the price and availability, alongside the cost of fuel that’s likely to cause real issues, with some farmers saying they may not plant at all. Which will clearly have an effect on future food inflation.
HORTICULTURE SECTOR UPDATE:
RHS no peat rules come fully into force at the end of this year across their Shows (inc RHS Malvern Spring) and retail. It’s a very divisive policy with long standing nurseries and growers of certain plants (notably carnivorous plants) now excluded from attending / retailing. An independent trade association has formed called the National Exhibitors Organisation – which has said that it has no position on peat or non-peat growing – just to represent all nurseries and support them exhibiting at shows. Sue Biggs – former RHS DG, Alan Titchmarsh and other well-known personalities are supporters, so it will be interesting to see if it takes a more political / activist stance as the ban comes into force.
BUSINESS SERVICES SECTOR UPDATE:
SME business services firms continue to demonstrate agility and a strong growth focus, with many actively pursuing expansion opportunities and investing in digital capability. In the e-commerce space, there is a clear emphasis on enhancing the customer journey, improving conversion and optimising user experience to drive performance.
In contrast, larger corporates are adopting a more cautious stance, with decision-making increasingly influenced by geopolitical uncertainty, regulatory change and a more complex legal environment. This is resulting in slower transformation activity, with a stronger emphasis on operational resilience, risk management and protecting existing market share rather than pursuing more ambitious change initiatives.
RECRUITMENT SECTOR UPDATE:
Unemployment has fallen slightly to 4.9%, but the number of vacancies has continued to decrease, with the drop in unemployment likely a result of people moving in to self-employed status or leaving the labour market…with well over 20% classed as economically inactive, highlighting ongoing challenges around labour market participation. Despite relatively stable headline employment figures, underlying inactivity remains a key issue for the labour market.
Ongoing global uncertainty continues to weigh on business confidence, with many employers reluctant to expand permanent headcount and instead taking a more cautious approach to growth. This is driving continued demand for temporary, contract and flexible staffing solutions, as organisations seek to manage risk and maintain agility in workforce planning.
Against this backdrop, there is a growing focus on early careers and the importance of strengthening the talent pipeline. Greater engagement from businesses is increasingly important to ensure young people are supported into work and develop the skills required by employers, helping to address longer-term workforce shortages and improve future labour market resilience.
CONSTRUCTION SECTOR UPDATE:
The construction sector remains under pressure despite ongoing government efforts to stimulate growth, with a number of structural and operational barriers continuing to delay projects and limit momentum across the industry. Planning challenges, supply chain constraints and wider economic uncertainty are all contributing to slower delivery timelines and reduced confidence in new developments.
Inflation continues to be a key issue, with particularly sharp pressure from rising steel prices adding significant cost inflation across both residential and commercial projects. This is tightening margins and forcing greater scrutiny on project viability and pricing, with many firms becoming more selective in their pipelines. Overall, the sector remains cautious, with growth ambitions tempered by persistent cost pressures and delivery challenges.
RETAIL SECTOR UPDATE:
The retail sector is showing a more positive outlook compared to previous quarters, with customer demand improving and increased willingness to pre-order across Autumn/Winter ranges and into Spring 2027. Export turnover remains strong, supporting overall performance across the sector.
However, rising shipping costs are creating pressure on margins, with freight rates increasing significantly due to ongoing geopolitical conflict, which may ultimately lead to upward pressure on retail prices. The situation around US tariffs has also stabilised, providing some relief for exporters and reducing a key area of uncertainty for international trade.
EDUCATION SECTOR UPDATE:
In the annual university UCAS application cycle we have now passed what is called the ‘Decline by default’ deadline which means that most universities across the UK will have a reasonably clear picture of the likely offer-making position for their Sept 26 arrivals.
Currently national data shows that mor than 3.1 million applications have been made by UK applicants for UK Sept 26 starting university places, a rise of 4.6%. More offers were made this year and more student ‘firm replies were made – there are currently just over 560,000 student places that have been accepted. In Worcester, the University has received more than 2000 firm replies (a slight increase on last year). By contrast, there has been a 2.8% reduction in firm places accepted in other universities across the West Midlands.
The UK-funded Herefordshire and Worcestershire Help to Grow programme has launched a new cohort for SME leaders and managers, with funding from the Dept of Business and Trade, commencing 1st October 2026. More than 120 SME organisations across the two counties have already benefited from participation in this programme, along with more than 10,000 SME’s across the UK.
HOSPITALITY SECTOR UPDATE:
Premium hospitality experience appetite remains strong, leading to us as a racecourse needing to explore additional facilities across multiple event days. Family deals and packaged experiences, where consumers can have their day already planned with tickets, food and drink, continue to rise in popularity, and helps keep this a value driven product. Whilst on the other hand, general standard ticket purchases are being made much closer to event dates, often not making use of earlybird discounts, and can make planning of events more difficult with balancing costs and experience. These challenges are often compounded by the more extreme weather events that we face.
We have seen continued growth in requests for event spaces both catered and dry site hires, and the variety of the types of events continues to grow and diversify, organisers of events seem to be more tuned in than ever to overdelivering an experience whilst remaining value for money, which benefits not just theirs and the hosts business and reputation but that of the locality in extended stays and spend in accommodation, food and beverage. That said, the recent closure of some entertainment and leisure facilities in the centre of Hereford would suggest people are spreading their spend out into the county, no doubt the increased efforts required to access the city by car and to then find affordable parking affects this.