Middle market showing resilience, but risks ahead

The UK economy has shown remarkable resilience in the face of the largest rise in interest rates in a generation and a record-breaking fall in real incomes. The middle market is no exception to this resilience: the MMBI has risen to 131.4 in Q1, a jump of almost 16 points, the largest in the Index’s history.

Middle market business leaders are much less pessimistic about the outlook for the economy than they were at the end of last year. And, encouragingly, they are planning to add labour and increase investment into productivity enhancing equipment.

But, the rest of this year will still prove challenging. Business leaders should plan for another step down in economic growth and inventory management is going to prove key here.


The UK has, so far at least, managed to avoid a recession. Consumer expenditure has been much more resilient than expected with people especially keen to spend on hospitality experiences like dining out. Who can blame them after the last few years!

However, there are two key risks ahead. First, despite the recent resilience, the UK economy is still likely to fall into recession in the first half of this year. Second, there was a large jump in the proportion of middle market firms accumulating stock. This increase in stock levels is particularly concerning because demand, especially for goods, is likely to decrease over the next six months as the real economy falls into recession.

Key takeaways

Q1 /2023

The UK economy has shown resilience in the face of considerable economic challenges, raising the chance the UK economy avoids a technical recession.

Tightness in the labour market is bad news for the fight against inflation. The number of firms planning to increase remuneration suggests that pay growth will remain elevated.

Firms holding excess stock is a concern. Demand is likely to weaken and businesses holding too much stock may have to discount their prices, squeezing margins.

MMBI Q1 2023

RSM UK Middle Market Business Index

We asked our survey panel 20 questions related to their businesses, covering topics such as turnover, profits, capital expenditures, hiring, employee remuneration, prices paid, prices received and stock. We also asked them about the economy and its outlook, and credit availability and borrowing.
For ten of the questions, respondents are asked to report the change from the previous quarter. For the other ten, they are asked to state the likely direction of these same indicators six months ahead.
This graph charts the general mood of our respondents.
MMBI Q1 2023

RSM UK Middle Market Business Index

Continue discovering what makes up the MMBI

Q1 2023 MMBI Report

The report

The Q1 2023 MMBI provides a guide – not just to the current state of the middle market, but to what tactics firms in this key part of the wider economy might use to forge ahead.

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