Key Findings
- Despite uncertainty in economic conditions, 87.5% of SMEs expect revenue growth while just 13% project a fall in profitability
- 56% plan to increase workforce, signalling continued investment in growth
- Only 25% of SMEs have comprehensive AI governance policies, with nearly half (44%) still having no policy
Vistage, the leading business performance and leadership organisation for small and medium-sized businesses across the UK and Ireland, has released new findings from its latest CEO Confidence Index, showing a continued rise in confidence among SME leaders. The quarterly confidence Index has increased to 96.8, up from 93.6 in Q4 2025, marking a modest but meaningful step up in sentiment.
Economic Outlook Remains Cautious
While the broader economic landscape remains uncertain, SMEs are showing cautious optimism. Just 12.5% of leaders report that conditions have improved over the past year, while most (62.5%) say things have remained the same and a quarter (25%) have experienced a decline. Looking ahead, only 6% expect conditions to improve, with 62.5% anticipating stability and 31.25% preparing for worsening conditions.
Despite these mixed signals, leaders are choosing to focus on what they can control - their own organisations - rather than being constrained by the wider economic uncertainty.
SMEs Bullish About Their Own Growth
Against this cautious backdrop, SME leaders are backing their own businesses. In fact, nearly nine in ten (87.5%) expect sales revenues to increase over the next 12 months, and half (50%) anticipate improved profitability. Another 37.5% expect profits to remain stable, while only 12.5% foresee a decline.
Investment plans reinforce this confidence: half (50%) of SMEs intend to increase fixed expenditures, signalling a focus on strategic growth rather than cost-cutting. For many, this means strengthening capabilities, improving processes, and preparing to capture opportunities even if the wider economy slows.
SMEs Commit to Hiring and Upskilling
The optimism extends to workforce planning. Over the next year, 56.25% of SMEs plan to grow their teams, building on a year in which 62.5% of firms already expanded their workforce. Hiring activity is robust: 87.5% of firms are adding new positions, 50% are upgrading existing talent, and 43.8% are backfilling roles.
While AI skills are not yet a formal requirement for new hires - 87.5% of firms do not include AI competency in job postings - many leaders anticipate that AI will reshape existing roles. Over a third (37.5%) expect positions to become more tech-enabled as AI tools are integrated into everyday workflows, signalling a strategic focus on building a digitally capable workforce for the future.
SMEs Turn to AI to Boost Performance
Generative AI adoption is also accelerating, with SMEs using the technology to improve efficiency, customer engagement, and operational performance. Applications are concentrated in business operations (62.5%), customer engagement (43.8%), and finance (18.8%), while nearly a third (31.25%) have yet to deploy AI.
Governance is gradually emerging as a priority. A quarter of SMEs have comprehensive AI policies, another 25% are actively developing them, and 43.75% have no formal framework yet.
Where policies exist, they focus on data security and privacy protections, approved tools, ethical use standards, and employee training. This approach suggests SMEs are using AI strategically - to enhance capabilities and processes rather than proactively trying to reduce headcount as often suggested.
Rebecca Drew, Managing Director at Vistage UK and Ireland said: “Confidence among SME leaders continues to build, even against a backdrop of ongoing economic and geopolitical instability. This quarter’s rise reflects a growing sense of control and clarity among business leaders, who are choosing to focus on what they can influence within their own organisations – investing in people, growth and technology.
What’s striking this quarter is the surge in AI adoption; more than 60% of firms are now using Generative AI to boost efficiency and operations, while almost half are applying it to customer engagement.
These technologies aren’t just tools; they’re reshaping roles, creating more tech-enabled teams, and prompting the development of governance policies to ensure ethical and secure use. By combining AI with investment in people and innovation, leaders are positioning their businesses to grow faster and compete smarter in 2026.”
As part of Vistage’s ongoing support for business leaders, the quarterly CEO Confidence Index provides a clear view of economic sentiment, helping leaders make more informed decisions in a complex and fast-moving environment.
To learn more about how Vistage support high-performing leaders through insight, mentorship and community visit vistage.co.uk.
