Four trends in children’s day nurseries in 2026

AI brings efficiencies

The UK nursery market is highly fragmented, comprising a few large groups, but predominantly a mix of small businesses, independents and charities. This presents challenges for scaling technology, but adopting digital tools is key to improving education standards and operational efficiency. AI-driven analytics can support staff performance reviews, professional development, and best practice guidance, helping raise the quality of childcare and secure the long-term sustainability of settings, while also streamlining operations, freeing staff to focus on children’s learning and care.

AI-powered educational apps also enable personalised learning, offering targeted interventions and development tracking. As technology evolves, nurseries which invest may gain a competitive edge.  

Decreasing fertility rates

The UK’s Total Fertility Rate (TFR) decreased to 1.41 in 2024. According to the Education Policy Institute, the North East is projected to see the greatest decline in primary pupil numbers, down 13% by 2028–29. This directly links to day nurseries and feeds into a cycle: A lack of children attending local nurseries results in decreased demand for school places, and without the provision of schools, young families are less likely to settle in an area. Long-term, the fall in birth rate is likely to see less demand for day nurseries in some locations.  

More consolidation

Acquisition and investment activity over 2025 suggests good liquidity in the day nursery market, so we’re anticipating further growth and consolidation in 2026. This is especially likely among providers who take settings on a leasehold basis, as this allows them to grow without having to lock too much capital away within property assets – especially in parts of the country where land and property values are high. Our 2025 analysis showed that 71% of settings occupied by the 30 largest nursery groups in the country are now held on a leasehold basis, with nine groups operating entirely leasehold estates – this proportion may well increase over 2026.

Ofsted changes

2024 saw big changes in how Ofsted inspects schools and early years settings, with the introduction of a new inspection framework to improve standards and reduce anxieties for providers undergoing inspection. Amongst other changes, Ofsted has replaced single-word overall effectiveness grades with a detailed five-point scale card. Additionally, inspectors will include contextual data to provide further insight, including SEND and other disadvantaged pupil characteristics, attendance trends and local deprivation

Ofsted is also streamlining the registration process for early years providers. This will enable more facilities to open their doors and meet the needs of families. Ofsted will also review how it registers, inspects and regulates multiple providers to ensure the sector continues to meet increasing demand and supports the long-term growth of early years settings, ensuring high standards are maintained.

While the impact is yet to be seen, many early years providers welcome the changes, particularly the removal of single-word judgements and the introduction of a more balanced inspection criteria.

Further information

Contact Jennifer Gill and Jenny Nicol

Read more: Children’s Day Nursery Market Update – 2025