Leadership Briefing: 5 October 2026

What this week’s policy thinking means for leaders

This week’s reports point to a familiar frustration - the UK has innovative organisations with room to grow, employers keen to bring more young people into work, and promising ideas for supporting disabled and neurodivergent people, yet it continues to struggle to turn that potential into consistent progress. Growth remains modest, investment is weak and too many people still find themselves navigating jobs and workplaces that were not designed with them in mind.

These challenges cannot be handed to different teams and dealt with in turn, because investment decisions shape productivity and jobs, employment reform places new demands on managers as well as policies, and the wider use of AI brings sharper questions about judgement and accountability alongside its opportunities. The quality of leadership will be seen in how well organisations connect those choices and in whether they continue to build for the future when the immediate outlook is uncertain.

Reports and publications worth exploring

1. The UK needs to do more to help high-growth businesses scale

A new Re:State report asks why the UK, despite its strength in innovation, struggles to turn successful ideas and businesses into sustained growth. A relatively small group of high-growth firms makes a disproportionate contribution to jobs and productivity. Yet productivity growth has never returned to its pre-2008 trend, and the gap between the most and least productive firms has widened. The report traces many of the obstacles to the UK’s own policy and regulatory environment.

Its case is that policy should do more to help successful businesses scale, rather than concentrating so heavily on start-ups. The same distinction matters inside organisations. What helped a business reach its present size may not carry it through the next phase. Leadership depth, skills, systems and ways of working all have to grow with it.

2. Employment Law update

The latest CIPD employment law round-up covers several changes taking effect this autumn under the Employment Rights Act 2025. From 1 October, the time limit for bringing most employment tribunal claims rises from three to six months. From 30 October, employers will have a stronger duty to take all reasonable steps to prevent sexual harassment, as well as a new duty to prevent harassment by third parties. Trade unions will also gain new rights of workplace access and stronger protections relating to industrial action.

There is more change around these measures, including wider right-to-work checks and tougher enforcement of the National Minimum Wage. Further reforms are due in 2027, among them a reduction in the qualifying period for ordinary unfair dismissal claims from two years to six months. Employers that deal with each measure as an isolated legal update will miss the larger point. Policies, managers and workplace culture will all need to meet a higher standard.

Read more: CIPD employment law round-up

3. UK growth remains resilient, but lags some major economies

The latest House of Commons Library analysis puts UK GDP growth at 0.5% in the second quarter of 2026, ahead of the US at 0.4%, Germany at 0.3% and the eurozone at 0.4%. Seen over a longer period, the comparison is less encouraging. UK GDP was 6.2% above its pre-pandemic level in Q2 2026, against 7.6% for the eurozone and 15.6% for the US.

The OECD expects the UK economy to grow by 1.1% in 2026 and 1.0% in 2027. The IMF forecasts 1.0% and 1.3% respectively. This is an economy that is moving, but slowly and against an uncertain global backdrop. Businesses cannot rely on a strong tide of growth to do the work for them. Productivity, investment and the ability to make better use of existing people and resources become all the more important.

Read more: House of Commons Library Briefing

4. Better support could unlock more neurodivergent talent

A new independent report from the Expert Academic Panel on Neurodiversity finds that neurodivergent people are more likely to thrive at work when support reflects their strengths and needs, rather than depending on a diagnosis. It calls for practical, evidence-based inclusion and wider use of Universal Design, with workplaces, systems and environments made accessible from the start instead of being adjusted only when difficulties appear. In 2024/25, 34% of disabled autistic people were in work, compared with 55% of disabled people overall.

The Government’s response includes Connect to Work, changes to Disability Confident and a new exercise looking at how Universal Design could be used more widely. The report asks employers to move beyond making adjustments case by case. Work designed for a wider range of people can bring in skills and perspectives that organisations are currently missing, while making everyday working life better for many others too.

5. AI emerges as a major financial stability concern

The Bank of England’s latest Systemic Risk Survey finds continued confidence in the stability of the UK financial system, with 95% of respondents very or fairly confident about the next three years. At the same time, more respondents now see a high-impact event as likely. Geopolitical risk and cyberattack remain the two threats mentioned most often. Concern about AI has risen particularly quickly: 63% now identify it as a significant source of risk, an increase of 32 percentage points since the previous survey.

The shift reflects the speed of technological change and growing concern about whether controls are keeping up. AI is now the third most difficult risk for firms to manage, cited by 37% of respondents, and 32% place it among the risks most likely to materialise. The message is not to step back from AI, but to give its risks the same serious attention as its potential. Governance, oversight and resilience need to develop at the same pace as adoption.

6. Employers see opportunities to recruit more young people, but barriers remain

New research from the Learning and Work Institute, based on a survey of more than 1,000 HR decision makers, finds strong employer interest in recruiting young people, although the opportunities are uneven. One in four employers, 24%, expects to recruit more young people, while 12% expects to recruit fewer. Direct recruitment, work experience and apprenticeships are the routes most likely to be used. Expected take-up of the Youth Guarantee remains relatively low.

Money alone will not create those opportunities. Employers also point to workplace preparation, practical guidance and greater confidence, especially among smaller businesses, together with a more stable policy environment. With around one million young people not in education, employment or training, meaningful routes into work will depend on employers, education providers and sector bodies doing more of the work together.

7. UK businesses have been investing less since the financial crisis

New research from the Institute for Fiscal Studies links the UK’s long productivity slowdown with a sustained fall in corporate investment and leverage. Using firm-level data from 2006 to 2023, it finds that the decline in investment became especially marked after 2016. The main reason is not a change in the mix of companies operating in the UK, but that firms are investing less relative to their size.

That matters because the problem is not simply a shortage of high-growth businesses. Established firms are also holding back. Since 2016, much of the productivity weakness has been within incumbent companies, while the distance between the leaders and the rest has grown. Every organisation should be asking whether it is still investing enough in technology, skills, equipment and capability to improve performance over time.

8. £60m fund backs innovation to help more people into work

The Government has opened a £60 million Pathways to Work Innovation Fund for new approaches that help disabled people and those with long-term health conditions prepare for work, enter employment, stay in work and progress. Businesses, charities, social enterprises, public bodies, research organisations and partnerships can apply. The emphasis is on testing genuinely new ideas, including uses of technology and AI, rather than extending services that already exist.

The fund is intended to build a clearer picture of what works, for whom and in what circumstances, so that the strongest approaches can be adopted more widely. Projects must run within 12 months and will be judged on innovation, likely outcomes, learning, scalability and value for money. For organisations, this is a chance to test practical ideas where employment, skills, health and employer support meet. Applications close on 26 October 2026.

Read more: Innovation Fund Guidance

Leadership takeaways

Taken together, these reports suggest that the next phase of growth will depend less on finding a single breakthrough than on strengthening the foundations beneath it. A business may win new customers and still struggle if its managers are stretched, its systems are brittle or its people lack the skills they need, just as the wider economy will find it harder to close the productivity gap while investment remains low and the strongest organisations continue to pull away from the rest.

People are central to this picture, since employment reform will be judged not by the timetable for policy updates but by the behaviour of managers and the everyday experience of employees. The evidence on neurodiversity and long-term health conditions reaches a similar conclusion that inclusion works best when different needs are considered as roles and workplaces are designed, rather than addressed only once a barrier appears. Young people also need visible and practical routes into work, particularly through smaller organisations that may be willing to help but lack the confidence or capacity to get started.

The answer is not to retreat from change, but to approach it with judgement by continuing to invest through a subdued economy, widening access to work and adopting new technology with a clear view of both its value and its risks. AI offers a useful test of that balance, as its potential sits alongside genuine questions about accountability, human oversight and resilience. Leaders may not have certainty before they act, but they should be clear about what they are trying to build, which risks they are prepared to carry and where responsibility will sit if things go wrong.

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