More than nine in 10 (91%) private business owners surveyed in London are confident about growth in 2026, according to KPMG’s annual Private Enterprise Barometer, up 4 percentage points on the UK average of 87%.
The annual survey captured the perspectives of 1,500 privately owned businesses, including 164 in London, from across various industries including professional services, finance, technology, industrial manufacturing and retail.
Plans for bolstered marketing and strategic growth initiatives were the main reason for this positive outlook, cited by almost half (47%) of London businesses, with a further 46% highlighting increased demand for products and services as another reason for optimism in the year ahead.
Heading into 2026, technology is also expected to be a significant investment priority for private firms in the capital. Investment in digital transformation was cited as a focus by 42% of respondents, while appetite for AI investment, cited as a priority by 44%, sat above the UK average of 38%, underlining a commitment to innovation and staying competitive in an increasingly digital economy.
Diversification is also high on the agenda, with 69% of London businesses planning to introduce new service lines and broaden their client offerings.
Internationalisation is also a focus, with 80% of respondents confirming a growth of appetite over the last twelve months. 77% of private businesses are also targeting new markets to diversify in the next five years. Western Europe and Eastern Europe were also the most favoured destinations for expansion and trade amongst London businesses, with the almost half of respondents (48%) citing both of these regions as a priority.
Alternative funding is a key focus for the capital’s businesses, with 53% now open to private equity investment, above the UK average of 46%, reflecting willingness to explore new sources of capital to support innovation and accelerate growth.
When it comes to M&A activity more broadly, the majority of businesses (43%) are open to opportunities but aren’t actively pursuing them, while 37% are considering external equity investment. 35% of businesses are also actively exploring acquisitions.
Anna Purchas, London Office Senior Partner at KPMG UK, said: “Privately owned businesses in London are heading into 2026 amongst some of the UK’s most confident when it comes to growth. That optimism is translating into real action, with many firms putting investment into technology front and centre as AI tops the business agenda.
“London is alive with AI innovation to drive business performance which is a strength but to truly unlock the benefits of AI, there also needs to be a strong focus on people – whether that’s supporting school leavers taking their first steps into work or helping experienced professionals retrain and develop new skills.
“Coupled with strong ambitions to diversify and a growing openness to alternative financing routes – plentiful in our capital city – London’s business community is clearly focused on long-term growth and ready to go overseas to get it.”
Seven in 10 of UK private business owners are looking to international trade to support growth plans and boost revenue over the next 12 months.
Western Europe was the most favoured destination for trade (46%), followed by Eastern Europe (40%). Over a third (34%) cited North America as a preferred trade destination, suggesting that UK firms managed the introduction of tariffs well in 2025.
Asia has become a greater focus for executives, with 27% now considering it for trade opportunities, up from 21% last year. The trade deal between the UK and India may have contributed to this increased interest.
The survey also found 87% of executives are confident about their growth prospects for this year. The main drivers for this optimism include increased demand for services, plans to introduce new technology and strategic growth initiatives. This figure is slightly lower than last year’s 92%, but it still presents an optimistic and ambitious outlook. Notably, the findings reveal that more than six in 10 businesses intend to enter new markets and launch new products and services.
When looking at challenges, businesses highlighted cost pressures and potential tax policy changes as barriers for growth. This year’s survey also found that 30% of private business owners had a positive outlook for the UK economy, compared to 42% last year. However, despite this, more than half thought revenues would rise by up to 5% , with 46% predicting a rise of the same amount in rofits.
When it comes to planned investment areas over the next 12 months, AI emerged as the priority, overtaking technology as a whole, which led in the first survey last year.
Euan West, Head of Regions at KPMG UK, said: “Confidence among business leaders remains strong, but there is an undercurrent of caution amid a subdued economic outlook for the UK and most other developed economies.
“While international expansion is on the agenda, the geopolitical environment remains volatile and unpredictable, which means the UK’s private enterprise and family business leaders and owners are having to take a pragmatic and adaptable approach.
“Against this backdrop the search for growth is one that requires strategic clarity, determination and agility and it’s encouraging to see business leaders making AI an investment priority.
“As ever, I am heartened and inspired by the can-do spirit of the private enterprise community.”
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