Photo credit: www.theguardian.com
Positive Outlook for UK Businesses in 2025 Amid Economic Challenges
A significant number of businesses across the UK foresee a bright start to 2025, as evidenced by two recent economic confidence surveys. These studies indicate that managers are setting growth objectives following a tumultuous economic period.
Approximately 70% of UK businesses anticipate an increase in turnover over the next year, showing a notable rise from 62% reported in December 2023. Additionally, 73% of these businesses express optimism about enhanced profitability, according to findings from Lloyds Bank.
Hann-Ju Ho, a senior economist at Lloyds, remarked, “It is exciting to see that businesses have ambitious plans for next year and are confident of growth. Overall, businesses have responded well to the changing external environment. While the economic outlook has been challenging, the steps firms are taking to grow should put them in a strong position for success in 2025.”
Lloyds Bank conducts a monthly survey of 1,200 businesses, providing early insights into trends shaping the UK economy. This optimism is also mirrored in the financial sector, which plays a crucial role in the national economy.
According to research by KPMG, 70% of leaders within financial services express confidence that government initiatives will foster growth and enhance competitiveness in 2025. This sentiment comes from a quarterly poll that gauges the perspectives of over 160 senior executives in the sector.
The survey revealed that 68% of these executives believe the chancellor’s plans to “regulate for growth” and promote a new strategy for financial services competitiveness in the spring will attract foreign investments.
Rachel Reeves, in her recent Mansion House address, highlighted the need for reform in the UK’s financial services sector, stating that the country has been “regulating for risk, but not regulating for growth”. She emphasized the importance of revisiting the regulatory framework established after the global financial crisis.
“While it was right that successive governments made regulatory changes after the global financial crisis, to ensure that regulation kept pace with the global economy of the time, it is important that we learn the lessons of the past,” the chancellor noted. She further remarked that the system had inadvertently stifled risk-taking and had unintended consequences needing rectification.
Karim Haji, leading the financial services division at KPMG, expressed optimism about the sector’s outlook, stating, “Financial services is the backbone of the UK economy, so it’s encouraging to see leaders go into the new year with optimism about the government’s growth plans for the sector.”
Yet, he also highlighted lingering apprehensions regarding the impact of the budget on the financial services landscape. As 2025 approaches, there is an expectation for more clarity on the government’s competitiveness strategy, which is essential for bolstering the UK’s global financial standing .”
Despite these surveys indicating a possible upswing in business confidence, they contrast sharply with findings from other recent polls. The Confederation of British Industry (CBI) reported a significant downturn in business activity expectations, revealing that many firms plan to slow hiring and cut back on production in the coming months.
Moreover, the British Retail Consortium indicated that retailers might encounter additional challenges, as consumer spending predictions have dropped, potentially leading to a challenging start to the year for retailers as they prepare for January sales. BRC chief executive Helen Dickinson noted, “If these expectations are realized, retailers could find themselves facing a new year spending squeeze just as they unveil their January sales.”
The Bank of England recently suggested that UK growth might remain stagnant in the last quarter of 2024, coupled with an inflation increase to an eight-month high of 2.6%.
Source
www.theguardian.com