Professional Services Sector Confronts 'Polycrisis of Confidence' as Leaders Shift Focus from AI to Financial Pressures
A comprehensive study of C-suite attitudes within professional services firms has uncovered a complex landscape dominated by financial anxieties, growth fears, and shifting priorities away from artificial intelligence. The Managing Partners Forum Winter 2025 Quarterly report, shared exclusively with City AM, indicates that while all surveyed firms have integrated generative AI into daily operations, confidence in its market-share growth potential has plummeted dramatically.
AI Enthusiasm Wanes as Financial Concerns Take Centre Stage
The report, which is provided to the UK government and focuses on chief executive officers and C-suite members at mid-sized law firms (44 per cent), accountancy practices (12 per cent), and consultancy firms (10 per cent), reveals a stark decline in AI optimism. Only 68 per cent of leaders now believe investing in AI will help their firm grow market share, down from 96 per cent in July 2025. This shift underscores a broader realignment of strategic priorities amid economic uncertainty.
For senior leaders, the most pressing issues are finance and cash flow, cited by 64 per cent of respondents, followed closely by marketing and new business generation at 56 per cent. In contrast, people management and the firm's role as an employer have dropped in importance from 56 per cent to 41 per cent. Employee turnover concerns have also receded, standing at 14 per cent compared to 23 per cent previously and over 70 per cent for much of 2022.
Tax Burden and Employee Demotivation Fuel Leadership Anxiety
The report, issued to the government on Wednesday 28 January 2026, highlights a polycrisis of confidence among mid-sized firm leaders, driven by a heavy tax burden and a perceived lack of sector strategy. Leaders warn that recent dividend and business tax hikes are reducing the incentive to grow, with some small business owners reportedly quitting entirely due to financial pressures.
Senior executives expressed concerns that employees are increasingly demotivated by the sheer scale of tax taken from their pay, arguing that reductions are needed to help staff afford domestic costs and enjoy the fruits of their labour. Respondents voiced huge disappointment with Chancellor Rachel Reeves' latest Budget, calling for policies that would improve the economic outlook and support sector resilience.
Growth Projections and Remote Work Trends Offer Mixed Outlook
Despite these challenges, the survey reveals a cautiously optimistic growth trajectory for mid-sized companies, particularly law firms. An impressive 89 per cent of these firms project expansion over the next 12 months, with only 7 per cent expecting contraction. This suggests underlying strength in the sector, even as confidence wavers.
The data also confirms that remote working has become firmly entrenched in professional services. Only 5 per cent of employees now work full-time in the office, while 91 per cent split their time between home and workplace, typically spending between a quarter and half their working hours remotely. This shift reflects lasting changes in work patterns post-pandemic, influencing operational strategies and employee expectations.
Overall, the report paints a picture of a sector at a crossroads, balancing technological adoption with fundamental financial and human resource challenges in an evolving economic landscape.
