Tax increases, inflationary pressures and rising costs are key concerns facing family, privately owned and owner-managed businesses in Cumbria, according to new research from accountancy and business advisory firm Armstrong Watson.

Against a backdrop of political change and ongoing policy reform, the firm’s latest survey found businesses remain ambitious and focused on growth, but the majority are also increasingly concerned about the potential impact of inflationary pressures on costs (85%) and tax increases (84%), over the coming 12 months. Added to this, 56% say their main challenge over the next three years is rising costs impacting business viability.

The 2026 Family, Privately Owned and Owner-Managed Business Survey is Armstrong Watson’s sixth to date and one of the largest of its kind, with 840 businesses from across all sectors and regions sharing their views, with the largest regional response from 234 businesses in Cumbria.

People-related challenges continue to feature prominently with the majority of businesses struggling to recruit new talent. While 68% report recruitment difficulties, and 70% cite a lack of skilled or suitable candidates as their biggest recruitment challenge, only 45% have taken action to improve staff retention, which is below the national average of 59%.

Of those who have been proactive, 60% have increased wages above inflation and more than half have introduced flexible working arrangements. Some also operate salary sacrifice schemes, though the uptake in Cumbria is lower than the national average (36% compared to 49% nationally).

The findings also suggest businesses have not lost their appetite for growth, with 67% of respondents having a business plan with actionable goals, though this is 10% lower than the national average.

Technology is an area where business behaviour is evolving, albeit at a slower pace in Cumbria, where 46% don’t see artificial intelligence (AI) as relevant to their business. While nationally, 46% of respondents are now using AI within their business, just under a third of businesses in Cumbria have adopted AI and a further 19% are considering its implementation. This is, however, a 21% increase since our last survey.

The survey also highlights how cyber security is becoming a mainstream business issue rather than a specialist IT concern, with 20% of respondents reporting experiencing a cyber incident and 15% of those occurring during the last three years. The findings also reveal a degree of complacency among some businesses, with 45% not concerned about cyber threats because they either believe their existing protections are sufficient (17%) or do not think they are likely to be targeted (28%).

Paul Dickson, Chief Executive and Managing Partner at Armstrong Watson, said: "It's perhaps unsurprising that concerns around taxation and inflationary pressures have risen to the top of the list of anticipated economic impacts for businesses over the coming 12 months. Businesses have experienced a period of significant political change, alongside continued reforms affecting employment costs and National Insurance contributions, succession and business taxation. Many owners are still assessing what these changes will mean for their businesses, investment plans and future growth. These are not short-term issues, which means businesses are having to think more strategically about how they operate and grow.

“Encouragingly, the findings show many businesses are not standing still but at the same time, they also highlight the importance of avoiding complacency. Recruitment challenges remain widespread, technology adoption is progressing more slowly than in some other parts of the UK, and there are signs that some businesses may be underestimating cyber risks. Taking a proactive approach in these areas will be increasingly important as businesses adapt to a changing environment.

“Thank you once again to all those who shared their views.”