As we move toward 2026, individuals and businesses across all sectors are preparing for a year shaped by regulatory change, tax reforms, shifting economic pressures and new reporting expectations. From M&A activity and insolvency trends to sector-specific challenges, businesses will need to balance rising costs with opportunities created by greater stability and emerging innovation.
This is the second of three prediction pieces, Part 1 is here.
Our experts share their key predictions for the year ahead, helping you plan with confidence and adapt to an increasingly complex landscape.
Hospitality & Leisure
The Hospitality & Leisure industry heads into 2026 with a cautious mindset, reflecting the mixed sentiment following the recent budget ranging from guarded optimism to notable concern. Inflationary pressures, particularly rising labour costs driven by increases in the National Minimum Wage and National Insurance, will continue to challenge margins.
However, opportunities remain strong, demand for experiential and premium offerings is expected to grow, with consumers prioritising selective but memorable spending, including competitive socialising trends. International travel is also set to strengthen, offering further upside for operators. Sustainability and digital transformation will be critical differentiators, as customers increasingly expect seamless, personalised, and responsible experiences.
To navigate the year effectively, businesses should stay agile by reviewing pricing strategies, investing in technology to elevate the guest journey, and exploring strategic partnerships to diversify revenue streams and build resilience.
Legal Services
The SRA has paused its major consultation on restructuring client accounts and capping or restricting interest until at least late 2026, so little is expected in the first half of the year, with consultation likely in Q3/Q4; nevertheless, firms may see early-2026 guidance reminding them that retaining significant interest requires explicit written client agreements, and “fair interest” policies—along with residual balances—will be key audit focuses.
Firms should track management information excluding interest received to ensure profitability is driven by core legal work rather than interest income. The profession is also undergoing significant management change, with cash-is-king giving way to data-driven decision-making, rolling forecasts replacing static budgets, and increasing use of AI to predict WIP lockup and cash-flow gaps before they arise.
Private equity interest in regional firms is set to grow further in 2026 due to strong margins and stable client bases, likely resulting in more unsolicited approaches. Finally, while premiums should remain flat or slightly reduced for well-run firms, insurers are now probing AI governance, making clear and well-documented AI-use policies essential.
Manufacturing
The outlook for UK manufacturers for 2026 will be cautiously optimistic, but remain under pressure. After a difficult 2025 marked by rising costs, recruitment freezes, delayed investment and supply chain challenges, there is some evidence ofa rebound in order volumes and export demand in late 2025.
However, high energy, raw material, and labour costs, amplified by inflation and regulatory burdens, continue to squeeze margins and limit investment capacity. On the upside, adoption of digital technologies and advanced manufacturing practices is rising, offering opportunities to improve efficiency, reduce waste, and compete globally, especially in sectors like aerospace, defence and high-value manufacturing, where growth remains strongest.
For many businesses, 2026 is likely to be a year of consolidation, cautious growth and selective investment: success will favour those who can innovate, manage costs, and adapt to shifting energy and trade landscapes.
Recruitment
The recruitment sector is expected to see steady growth in 2026 following a challenging 2025, though performance will continue to vary significantly by specialism. Stronger activity is anticipated in technology, healthcare, life sciences, finance, and ESG-driven roles, where demand remains resilient, and investment is set to increase. Alongside market forces, regulatory changes will play a major role in shaping the landscape.
Ongoing reforms to umbrella company regulation, aimed at improving transparency and compliance, are likely to place additional scrutiny on supply chains and increase administrative demands on agencies. Meanwhile, evolving employment law, particularly around worker status, holiday pay, and flexible working, will require firms to adapt their processes and advisory capabilities.
At the same time, AI-driven recruitment tools will continue to mature, improving efficiency in sourcing and screening while also challenging firms to maintain high-quality, relationship-led service. AI and technology will undoubtedly impact demand in many sectors as businesses assess ongoing recruitment requirements against the impact of AI on the nature of future roles and job specs.
Firms that navigate regulatory shifts effectively and specialise in sectors with robust demand will be well positioned to outperform in 2026, whilst also remaining agile and aware of the evolving nature of future roles working alongside AI, ensuring recruitment solutions remain relevant for client demand.
Property & Construction
In 2025, we faced several headwinds that inhibited growth in the Property and Construction sector. Those headwinds came in the form of continued high interest rates, construction materials inflation, labour shortages, planning delays, delays caused by the Building Safety Act and general economic uncertainty delaying investment.
We anticipate that 2026 should see growth accelerate as these headwinds start to subside with interest rates falling, construction material inflation easing, together with the impact of Government policy to reform the planning system, increase housing supply and public investment in energy infrastructure, schools and hospitals taking hold.
In summary, we can look forward to 2026 with some optimism across both the residential and commercial markets.
Looking ahead to 2026
Looking ahead to 2026, it is clear that businesses will face a mix of challenges and opportunities driven by tax changes, regulatory shifts, technological developments and wider market uncertainty. Preparation and informed decision-making will be essential to navigating this landscape.
Whether you are managing financial pressures, planning a transaction, seeking growth or strengthening long-term resilience, our team is ready to support you and help you achieve your strategic goals in the year ahead.
Get in touch with our specialists:
Laura Madeley Partner and Head of Hospitality & Leisure Sector
Peter Noyce Partner and Head of Legal Services
Charlotte Langdon Partner and Head of Manufacturing Sector
Ralph Mitchinson Partner and Head of Property & Construction Sector
Tim Dunn Partner and Head of Recruitment Sector
Menzies is a leading UK business advisory and accountancy firm with international reach. We help accelerate your ambition, with a proven track record supporting both businesses and individuals to successfully reach their goals.
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