Greater Manchester has established itself as the UK’s leading tech hub outside London. The city’s digital economy is valued at £6.1 billion, encompassing thousands of agencies and technology businesses across disciplines such as web design, branding, e‑commerce, gaming, cyber security, and artificial intelligence. In 2022, Manchester‑based tech companies raised a record £532 million in funding, cementing its reputation as the best‑funded northern hub.

This strong foundation has attracted global names including IBM, Booking.com, Virgin Media O2, BAE Systems, and Hewlett‑Packard Enterprise. Alongside these giants, Manchester’s independent digital and design agencies have thrived by offering creative services, branding, and web development to local and national clients. Yet, the current economic climate is testing resilience across the sector.

The Economic Climate in 2025

The UK economy continues to face headwinds: inflationary pressures, cautious consumer spending, and fluctuating interest rates. For agencies, this translates into clients scrutinising marketing budgets more closely and delaying investment in large‑scale campaigns.

According to the Manchester Digital Sector Insights Report 2025, 64% of tech leaders remain optimistic about growth despite economic uncertainty, but funding constraints and regulatory hurdles are cited as major challenges. This optimism reflects the sector’s long‑term confidence, yet the short‑term reality is that agencies are working harder to secure contracts in a competitive environment.

Are Agencies Finding It Difficult to Win New Business?

Yes—many agencies report that winning new business has become more competitive. With marketing budgets under pressure, clients are inviting more agencies to pitch for the same projects. This has led to:

Longer pitch processes: Agencies are investing more time and resources into proposals, often with no guarantee of success.
Increased competition: Smaller agencies are pitching against larger, established firms, while national agencies are also targeting Manchester’s thriving market.
Price sensitivity: Clients are more likely to prioritise cost‑effective solutions, forcing agencies to balance creativity with affordability.

The Sector Insights Report highlights that funding constraints remain a top challenge for scaling businesses, which directly impacts agencies reliant on client investment.

Marketing Budgets: Are They Being Slashed?

Evidence suggests that marketing budgets are being reduced or reallocated. Businesses are cautious, focusing spend on channels that deliver measurable ROI. For design and digital agencies, this means:

Performance marketing over brand building: Clients are prioritising SEO, PPC, and conversion‑driven campaigns rather than large creative projects.
Short‑term contracts: Instead of committing to long retainers, businesses are opting for project‑based work.
Demand for efficiency: Agencies are expected to deliver more with less, leveraging automation and AI to cut costs.

While budgets are tighter, the demand for digital transformation remains strong. Manchester’s Digital Strategy emphasises the city’s ambition to become a world‑class digital hub, with investment in infrastructure and skills. This creates opportunities for agencies that can align with government priorities and demonstrate value.

Statistics and Trends

Key statistics from Manchester Digital’s 2025 report illustrate the current climate:

64% of tech leaders are optimistic about growth, despite wider economic uncertainty.
80% say AI skills are now essential, reflecting how agencies are expected to integrate AI into design, marketing, and recruitment.
Funding constraints and regulatory hurdles are the top challenges for scaling businesses.
Diversity at leadership levels remains low, highlighting ongoing structural issues.

These figures show a sector that is confident in its long‑term trajectory but grappling with short‑term pressures.

The Pitching Landscape

Agencies in Manchester are experiencing a surge in competitive pitching. With more firms chasing fewer budgets, the pitch process has become a critical battleground. Trends include:

Collaborative pitches: Agencies are partnering with specialists to offer integrated solutions.
Data‑driven proposals: Clients expect evidence of ROI, with agencies presenting case studies and analytics.
Creative differentiation: Standing out requires bold ideas, but these must be balanced with cost‑effectiveness.

For smaller agencies, this environment is both a challenge and an opportunity. While resources may be stretched, agility and niche expertise can help them win contracts against larger competitors.

Impact on Design Agencies

Design agencies, in particular, face pressure as branding and creative projects are often the first to be cut when budgets tighten. However, design remains essential for businesses seeking to differentiate themselves in crowded markets. Agencies that combine design with digital performance metrics—for example, branding tied to conversion optimisation—are better positioned to justify spend.

Opportunities Amidst Challenges

Despite the difficulties, Manchester’s agencies are finding ways to adapt:

AI adoption: With 80% of leaders citing AI skills as essential, agencies are integrating AI into workflows, from automated design tools to predictive analytics.
Sector specialisation: Agencies focusing on industries such as property, healthcare, or e‑commerce can tailor services to specific client needs.
Local collaboration: Manchester’s ecosystem encourages partnerships between agencies, tech firms, and universities, fostering innovation.
Government support: The Manchester Digital Strategy aims to strengthen infrastructure and skills, providing a supportive backdrop for growth.

Looking Ahead

Manchester’s digital and design agencies are resilient, but the current climate demands adaptability. Budgets are tighter, pitches are more competitive, and clients are cautious, yet the city’s strong ecosystem and long‑term growth prospects provide a foundation for optimism.

Agencies that embrace AI, demonstrate measurable ROI, and position themselves as strategic partners rather than service providers will be best placed to thrive. The challenge is significant, but Manchester’s reputation as a creative and digital powerhouse suggests that its agencies will continue to play a central role in shaping the UK’s digital economy.

In summary: Manchester’s digital and design agencies face increased competition and tighter budgets in 2025, but with innovation, collaboration, and a focus on measurable outcomes, they remain confident in long‑term growth.