2026 Sector Predictions

General Market Sentiment for Deals 

Ross Wiggins – Partner and Head of Deal AdvisoryWe anticipate a rise in deal activity during 2026 as businesses adapt to greater stability in business taxes and signs that inflation and interest rates will fall, at least in the short term. Shareholders considering an exit within the next 1-3 years may accelerate their plans to leverage the current known economic environment. Buyers, including corporates and private equity firms, are expected to remain active, supported by significant funds ready for deployment. However, the full unknown impact of wage inflation will continue to influence deal values or structures, as acquirers seek to mitigate potential risks to future profitability, which underpins their investments. These dynamics will vary across sectors, with cost-sensitive industries feeling the impact more acutely. With the reduction in the Capital Gains Tax (‘CGT’) relief from 100% to 50% for Employee Ownership Trust (‘EOT’) transactions means that commercial drivers will be in sharper focus when considering succession planning with an increase likely in traditional Management Buyout’s (‘MBO’s). It should still be noted that the upcoming changes in CGT Business Asset Disposal Relief will have an impact on transactions for those shareholders who still have their £1m lifetime allowance. From 6 April 2026, the CGT rate will rise from 14% to 18% for those assets that qualify for Business Asset Disposal Relief. Business owners looking to pass down their companies to the next generation should also revisit their plans in light of the imminent changes to Inheritance Tax rules from April 2026. While some deals are being expedited in anticipation of these various changes, it is crucial to ensure that the wider commercial aspects of the deal remain in focus.

General Market Sentiment for Insolvencies 

Steve Butt – Partner and Head of Restructuring and Insolvency There has been a clear general uptick in the amount of UK restructuring and insolvency work as we approach the end of 2025. Post-budget consumer squeeze and tighter business conditions are all contributing to additional pressures on companies across the board. Following high-profile incidents, such as the breach at Jaguar Land Rover, we anticipate a rise in cybersecurity-related distress among mid-market entities, either as part supply-chain related issues or directly, and firms in the financial services sector.  At the same time, following the introduction of the revised 2025 Practice Statement for schemes of arrangement and restructuring plans (“RPs”), we anticipate that RPs will finally become genuinely accessible to smaller mid-market and SME businesses, particularly those with non-complex proposals and relatively straightforward creditor and shareholder structures. This shift could be the start of a growing number of businesses of these sizes availing themselves of restructuring tools outside of formal insolvency processes, although the impact on the insolvency “contagion effect” may take longer to be visible. Altogether, these factors suggests that 2026 could be a more active year for restructuring and insolvency across London, and key business hubs across the UK, such as Manchester, Birmingham and Cardiff.

Not-for-Profit: Social Housing

Maria Hallows – Partner and Head of Social Housing Sector Social landlords are heading into 2026 with a sharpened regulatory lens and very little margin for error.  The Regulator’s latest Sector Risk Profile highlights the increasing need to spend on existing homes (including damp and mould, decarbonisation and building safety), skilled labour shortages and other cost pressures. On top of this, landlords face refinancing challenges with higher debt costs against a backdrop of falling sector financial performance and tighter headroom.  Good governance, strong internal controls and decision-making grounded in robust data are more crucial than ever. The security and quality of data is key! Alongside these operational pressures, the upcoming FRS 102 changes (including changes to accounting for leases and revenue recognition, effective for periods beginning on or after 1 January 2026) mean finance teams should plan early for balance sheet impacts, covenant considerations and disclosure readiness. Social landlords always face challenges, and 2026 will be no exception, with increasing demand for quality housing also being a constant.

Not-for-Profit: Charities 

Janice Mathews – Partner and Head of Charities Sector The charity sector is moving into a more demanding reporting environment, with the Charities SORP changes designed to reflect the wider FRS 102 amendments and improve transparency while still aiming for proportionality.  Menzies has highlighted proposals including a new income-based tiering approach, bringing most operating leases onto the balance sheet, and introducing a five-step revenue recognition model for exchange contracts, alongside enhanced expectations around narrative reporting (including ESG and impact).  For trustees and finance teams, the opportunity in 2026 is to use this shift to strengthen the story told in the Trustees’ Annual Report, moving away from “meeting requirements” to “demonstrating value”. This will be through linking strategy, risk, reserves, and impact more clearly to the financial statements while putting practical foundations in place now (policy choices, data capture and timetable planning) to reduce year-end stress.

Not-for-Profit: Education

Sue Hutchinson – Partner and Head of Education SectorFor education organisations, 2026 is likely to be defined by the need to do more with less; tight budgets, rising staffing and estate costs, and increasing scrutiny over how resources link to outcomes. At the same time, the FRS 102 amendments coming in from 1 January 2026 will bring additional judgment and visibility to areas that can materially affect the numbers and the narrative, particularly lease accounting and revenue recognition. Institutions that start early, mapping lease commitments, reviewing income streams and preparing an impact assessment will be best placed to avoid last-minute pressure and to keep reporting clear for governors, funders and regulators. A strong “readiness” project now can make adoption smoother later, and free up leadership time to focus on delivering education rather than firefighting compliance.

Financial Services

The financial services landscape in 2026 will be shaped by regulatory consolidation, compliance deadlines, and evolving investment trends, requiring firms across payments, insurance, asset management, and private client sectors to navigate these changes carefully to maintain operational resilience.  In payments and e-money, the 7 May 2026 marks the hard deadline for CASS 15, with mandatory safeguarding audits and CASS-style resolution packs now required, making immediate gap analyses and documentation critical for audit readiness.  In private client and wealth management, the reduction of Venture Capital Trust (VCT) income tax relief from 30% to 20% on 6 April 2026 is expected to drive front-loaded investment activity in Q1, while asset managers and VCT providers must adapt to both regulatory obligations and shifting investor preferences for sustainable, transparent products.  Across the wider market, heightened FCA oversight continues, with insurance brokers facing full Consumer Duty enforcement and asset managers required to meet Sustainability Disclosure Requirements (SDR) by 2 December 2026, extending to medium firms (AUM > £5bn) and necessitating detailed entity-level sustainability disclosures.  Although less immediate, the evolving crypto framework requires firms to monitor the FCA’s roadmap, with final rules anticipated in late 2026 potentially introducing a bespoke CASS-like regime for digital assets.  Overall, 2026 will be a year of intensified compliance and strategic adaptation, with firms that proactively address safeguarding, disclosure, and tax-driven market shifts best positioned to maintain regulatory resilience, build client trust, and capitalise on emerging opportunities across sustainable and digital assets.

Hospitality & Leisure

Laura Madeley – Director and Head of Hospitality & Leisure SectorThe 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

Peter Noyce – Partner and Head of 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

Charlotte Langdon – Partner and Head of Manufacturing SectorThe 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 of 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.

Property & Construction

In 2025 we saw a number of headwinds inhibiting 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 for to 2026 with some optimism across both the residential and commercial markets.

Recruitment

Tim Dunn – Partner and Head of Recruitment SectorThe 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.

Transport & Logistics 

2025 was a turbulent year for the transport and logistics sector, driven by softening global demand, fragile supply chains, rising costs, technological changes, and sustainability pressures that forced companies to rethink long-established operating models. As the sector enters 2026, UK companies face heightened complexities from economic uncertainty, regulatory change, and technological disruption while needing to maintain high service levels.  Global growth is subdued, limiting freight demand and potential growth, while geopolitical risks such as tariffs, shifting trade agreements, and export restrictions create uncertainty for international supply chains, often requiring rerouting, re-sourcing, or holding buffer inventory. These pressures increase unpredictability and costs, making agility essential, and presenting opportunities to expand regional hubs and offer cross-border solutions, positioning logistics providers as end-to-end partners in nearshoring transitions. Talent shortages, particularly among drivers, warehouse staff, and operators, further strain capacity, reliability, and costs, making staff retention, structured career pathways, training, and flexible scheduling critical.  Meanwhile, regulatory and governmental demands for reduced emissions, cleaner fuels, carbon tracking, and greener supply chains require significant investment in vehicles, technologies, or retrofitting, increasing operating costs. Rising e-commerce and delivery expectations add further complexity to last-mile logistics, which must contend with environmental restrictions, traffic, and operational challenges. Customers and companies alike are increasingly focused on environmental impact, with solutions such as electric fleets or incremental ESG measures potentially generating revenue rather than being purely administrative costs. Collaborative approaches—including shared last-mile fleets, co-warehousing, pooled distribution hubs, and collaborative freight networks—offer opportunities to reduce costs, emissions, and capital intensity while opening new markets.

Forensic Accounting and Valuation Services Predictions

Matthew Haddow – Partner and Head of Forensic and Valuation Services and Georgina Davies – Director of Valuation Services 

In the Forensic Accounting and Dispute world, there is likely to be a continuation of the shareholder disputes that have kept the market busy in the past year. Claims of unfair prejudice appear to be increasing, at least where Expert Valuation is being sought, and there is no sign that breach of warranty claims and earn-out disputes, arising from M&A activity, is slowing.  The increased focus on litigation funding and group claims will remain, and there is likely to be more developments in the newsworthy matters in the Courts at the moment. A number of collective claims are due to proceed to trial or judgment in 2026. Of particular interest will be the design and operation of redress schemes. Fraud remains a big topic, with AI tools assisting practitioners but also fraudsters, making it more sophisticated and challenging to detect. The fresh “failure to prevent fraud” offence may also feature in breach of warranty claims. Valuation activity linked to tax and share schemes is expected to increase in early 2026. IHT planning, which includes share valuations will be a focus ahead of the anticipated changes coming into force in April 2026. The increase to EMI thresholds set out in the recent Budget will allow larger businesses to use EMI schemes, potentially driving a rise in demand for EMI valuations that are recommended on adoption. We anticipate a downturn in EOT transactions following the tax relief changes announced in the Budget.