Grant Thornton’s December Business Outlook 2025: Profits in the Bite‑shaped Dip
In the latest round of the Business Outlook Tracker, a pulse‑check on mid‑market firms, the tone has shifted from hopeful to a little uneasy. 90 % of the survey panel is now eye‑rolling in the direction of higher costs and lower profits.
Bottom Line: Profit Anxiety is Real
- Profit expectations have shrunk by 20 points since October. Only 46 % still believe profits will climb.
- One in three (32 %) expects a profit dip. That’s a concrete solving‑mystery level of worry.
- In contrast, investors feel only 58 % confident in economic growth. That’s a 11‑point drop versus the two‑month rolling average of 69 %.
- Revenue growth hopes also sank 12 points below average, hitting 58 %. A faint 18 % of respondents are grim about revenue, the highest since 2022.
- Funding pessimism reached a record 17 %, showing that cash flow is the current party favour.
What’s the Take‑Away?
Mid‑market firms are feeling the pinch: profit expectations have slipped below the typical trend, and growth optimism is steadily losing steam. The consistent decrease across all indicators signals that the former spring‑time optimism is chilling out. While planners must keep an eye on cost‑management, the looming risk is that a more challenging environment could spill into extended periods of lower profitability and tighter financing.
Bottom—Enhance Your Strategy, Not Just Your Numbers
Management should revisit their budget, spell out realistic revenue targets, and secure leaner cash‑outflows. If you’re in the mid‑market arena, consider these insights as your early warning bell, so you don’t rush to cut the wrong light bulb. Better to keep that light on, even if the power use is higher.
Business Outlook: The Tough Ride Through 2024
Every October, investors check over their forecasts and, this year, the numbers came in a bit flatter than expected. Technology, recruitment, and skills development all slipped by a touch— –8pp, –6pp, and –5pp respectively. In addition, international expansion dipped by –5pp, the biggest drop since the last round.
Why Are Companies Feeling the Pinch?
“Back in 2023, firms were still keeping their heads up, even when the world threw them a curveball,” says Schellion Horn, Head of Economics Consulting at Grant Thornton UK LLP. The new data paints a clearer picture now. Businesses are facing a reality blend of:
- Slow GDP growth
- High-interest rates cutting into borrowing power
- Persistent inflation + soaring energy costs
- Political uncertainty that keeps markets on edge
- Lower overall investment expectations
In short, they’re grappling with a storm that feels more like a full-on hurricane.
Investing in the Future Still Matters
There’s a silver lining: “To get back on a high‑growth, low‑inflation track, firms need to invest in productivity, close skill gaps and enhance capabilities,” Horn explains. Unfortunately, investment expectations have dipped across the board, even in these crucial areas.
Government Moves Are Not Enough Yet
The government’s toolbox includes:
- Apprenticeship levy
- Green grants
- R&D tax credits
“These incentives should help, but they’re not stopping the shockwaves businesses are feeling,” Horn notes. Companies are still shying away from big, future‑focused spend because the present demands immediate cost control.
Optimism Still Lingers
Despite the gloom, 58% of respondents still hold onto a hopeful outlook. “It’s a mix of hard reality and the belief that weather will clear soon. The economy might look better from 2026 onward, especially once childcare and pension reforms kick in,” says the economist.
Bottom Line
Business optimism is at its lowest ever, but a clear shot of resilience remains. It’s time for firms to remember that stretching today can soften tomorrow’s storm.
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