Small and medium-sized enterprises (SMEs) in the UK and Ireland are showing renewed optimism about their own prospects, even as broader economic uncertainty persists, according to the latest Vistage CEO Confidence Index.
The quarterly index rose to 96.8 in Q1 2026, up from 93.6 in Q4 2025, marking a modest but meaningful improvement in sentiment among business leaders.
Despite the confidence boost, the broader economic environment remains uncertain. Only 12.5% of SME leaders reported improved conditions over the past year, while 62.5% said conditions were unchanged, and 25% reported deterioration.
Looking ahead, just 6% expect improvement, with the majority (62.5%) anticipating stability and 31.25% preparing for a downturn. Analysts note that SMEs are focusing on controllable internal factors rather than being constrained by macroeconomic headwinds.
Amid cautious expectations, SMEs are optimistic about their own performance. Nearly nine in ten (87.5%) expect sales revenues to rise over the next 12 months, while 50% anticipate increased profitability. Another 37.5% foresee stable profits, with only 12.5% expecting a decline.
Investment plans support this growth focus: half of SMEs intend to increase fixed expenditures, strengthen capabilities, improve processes, and prepare to capture opportunities, even if the wider economy slows.
Workforce planning reflects this confidence. Over the next year, 56.25% of SMEs plan to grow their teams, building on a year in which 62.5% already expanded their workforce. Hiring activity remains robust, with 87.5% adding new roles, 50% upgrading existing talent, and 43.8% backfilling positions.
While AI skills are not yet a formal requirement for most roles (87.5% of job postings exclude AI competency), 37.5% of leaders expect roles to become more tech-enabled as AI tools are integrated, signalling a strategic push to develop digitally capable teams.
Generative AI is increasingly being deployed to boost efficiency, customer engagement, and operational performance. SMEs report using AI primarily in business operations (62.5%), customer engagement (43.8%), and finance (18.8%), though 31.25% have yet to adopt AI.
Governance is gradually emerging as a focus area, with 25% having comprehensive AI policies, another 25% developing frameworks, and 43.75% having no formal policies. Existing policies prioritise data security, approved tools, ethical use, and employee training, reflecting an emphasis on enhancing capabilities rather than workforce reduction.
Overall, the findings highlight a cautious but strategic optimism among SMEs, with leaders investing in growth, workforce development, and technology adoption to strengthen resilience in uncertain economic conditions.
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.”
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