Corporate Sector

National Institute of Economic and Social Research ()

National Institute Economic Outlook, 2026, issue Spring, 56-64

Abstract: The corporate sector is entering a more challenging phase in which several adverse forces are beginning to converge. Domestically, firms face rising labour costs, higher property-related taxes and increasing network energy charges. Externally, renewed tensions in the Middle East have added upward pressure to global energy prices and heightened concerns over supply-chain disruption. At the same time, softer demand growth and tighter financial conditions are likely to constrain firms' ability to offset higher costs through stronger revenues. The result is a squeeze on profitability that is likely to encourage more cautious decisions on hiring and capital spending. We outline these issues in turn, before considering the implications for profit margins, labour demand and business investment.

Date: 2026
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