Vistage, the 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.
While the broader economic landscape remains uncertain, SMEs are showing cautious optimism. Just 12.5 per cent of leaders report that conditions have improved over the past year, while most (62.5 per cent) say things have remained the same and a quarter (25 per cent) have experienced a decline. Looking ahead, only 6 per cent expect conditions to improve, with 62.5 per cent anticipating stability and 31.25 per cent 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.
Against this cautious backdrop, SME leaders are backing their own businesses. In fact, nearly nine in ten (87.5 per cent) expect sales revenues to increase over the next 12 months, and half (50 per cent) anticipate improved profitability. Another 37.5 per cent expect profits to remain stable, while only 12.5 per cent foresee a decline.
Investment plans reinforce this confidence: half (50 per cent) 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.
The optimism extends to workforce planning. Over the next year, 56.25 per cent of SMEs plan to grow their teams, building on a year in which 62.5 per cent of firms already expanded their workforce. Hiring activity is robust: 87.5 per cent of firms are adding new positions, 50 per cent are upgrading existing talent, and 43.8 per cent are backfilling roles.
While AI skills are not yet a formal requirement for new hires – 87.5 per cent of firms do not include AI competency in job postings – many leaders anticipate that AI will reshape existing roles. Over a third (37.5 per cent) 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.
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 per cent), customer engagement (43.8 per cent), and finance (18.8 per cent), while nearly a third (31.25 per cent) have yet to deploy AI.
Governance is gradually emerging as a priority. A quarter of SMEs have comprehensive AI policies, another 25 per cent are actively developing them, and 43.75 per cent 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.”
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.
