85% of Firms in London, Birmingham and Manchester Facing ‘Agility Crisis’ Amid Economic Turbulence

Business leaders across London, Birmingham and Manchester are warning that an “agility crisis” is threatening growth, as firms struggle to keep pace with rising costs, policy instability and rapid technological change, according to new research from UK advisory and accountancy firm Menzies.

The Agile Advantage report, based on a Censuswide survey of more than 500 senior decision-makers, including 237 in London, 55 in Birmingham and 49 in Manchester – finds widespread concern across all three city economies:

• 90% of Manchester firms say they are stuck in an agility crisis
• 87% in Birmingham say the same
• 78% in London report being unable to adapt quickly enough

Across the three cities, an average of 85% of mid-sized and larger firms say they are struggling to respond effectively to today’s volatile business environment.

The consequences are tangible. One in five Manchester firms (20%) say they missed a major opportunity in the past year because they couldn’t move quickly enough, compared with 19% in London and 15% in Birmingham.

Meanwhile, nearly a quarter of firms in London (23%) and Birmingham (22%) say they are stuck firefighting rather than focusing on growth, compared with 16% in Manchester.

A question of capital:

Financial pressures are the single biggest drag on agility across London, Birmingham and Manchester. Cashflow and budgeting difficulties are cited by two in five (40%) London firms, 33% in Birmingham and 28% in Manchester, making day-to-day financial management the most immediate constraint on faster decision-making.

Looking ahead, concerns about wider economic conditions are also weighing heavily. UK economic stagnation is seen as the biggest threat over the next 18 months by a third (33%) of Birmingham firms and 32% in London, compared with 24% in Manchester. Energy costs remain another persistent pressure point, particularly in Birmingham, where 22% of firms highlight them as a key issue, versus 20% in both London and Manchester.

Access to capital is tightening at the same time. In London, a third (35%) of firms say restricted access to government grants has slowed them down, compared with 29% in Birmingham and 18% in Manchester. Meanwhile, a further third (30%) of London businesses cite limited availability of private equity and bank lending as a constraint, versus 20% in Birmingham and 29% in Manchester.

Fig 1: Top issues hampering agility across London, Birmingham and Manchester’s mid-large sized businesses:

And this “Agility Crisis” is now reshaping spending decisions. Over the past 12 months, over a quarter (27%) of London firms have reduced investment in international expansion, compared with 25% in Birmingham and 22% in Manchester. M&A and partnership activity has also slowed for 22% of London firms and 20% in both Birmingham and Manchester.

London is also seeing the sharpest reduction in office footprints, with 20% of firms downsizing, followed by Birmingham at 18% and Manchester at 12%. Investment in AI and digital transformation has been scaled back by 23% of London firms and 22% in both Birmingham and Manchester. Cybersecurity spending has seen the steepest pullback in Manchester, where 31% of firms report cutting investment, compared with 22% in London and 20% in Birmingham.

Regulation adding drag

Beyond financial pressures, regulatory uncertainty is emerging as another barrier to agility.

In Manchester, two fifths (41%) of firms say clearer rules from regulators would help them respond more effectively in times of crisis, compared with 36% in London and 18% in Birmingham. Rising regulation more broadly is identified as a constraint by over a quarter (29%) of firms in Manchester, 24% in London and 18% in Birmingham, while the rise of trade protectionism is flagged by 24% in Manchester and 19% in London as constraining new growth opportunities.

Management inertia:

But it’s not just about the money, as Menzies’ research shows that people related challenges account for eight of the top ten barriers to agility identified in the report.

Skills shortages are most acute in London, where a third (32%) of firms say they are undermining agility, compared with 20% in Birmingham and 16% in Manchester. In the capital, a quarter (26%) of firms report delaying senior strategic hires and 27% say wider recruitment has stalled – significantly higher than in Birmingham and Manchester, where the figures range between 15% and 18%

Manchester stands out for scaling back investment in talent development, with a third (31%) of firms reducing training budgets, compared with 22% in London and 16% in Birmingham.

Leadership and internal alignment are also under pressure. Almost half of firms in London (47%) and Manchester (45%) say faster internal decision-making would improve agility, compared with 27% in Birmingham. Short-term thinking is cited as a constraint by 31% of firms in both London and Birmingham, versus 22% in Manchester. In Birmingham, 45% say their internal systems and analytics lack the sophistication needed to support faster, better-informed decisions, compared with 35% in London and Manchester.

Simon Massey, Managing Partner at Menzies, said: “Right now, too many UK businesses are stuck in ‘wait and see’ mode – waiting for the Budget, waiting for the economy, waiting for international politics to settle. But as our research shows, the result is that too many are missing the opportunity to innovate and grow.”

Massey continued, “Businesses can’t control policy, but they can control how resilient, agile and prepared they are for whatever may be around the corner. There’s no secret to business agility, but it’s near impossible if a business doesn’t have a clear destination and a direction of travel understood by every level in the organisation.”

About the Agile Advantage Report

In today’s fast-changing business landscape, Menzies has launched The Agile Advantage report to help ambitious mid-sized businesses embed agility as a core growth strategy rather than a short-term fix. The report explores the key challenges holding businesses back and sets out practical ways to overcome barriers in financial management, systems and processes, leadership alignment and other blockers, ensuring organisations are better equipped to adapt and seize opportunities that change can bring.

Download the full report, including further data and research insights outlined in this press release, here.