The UK business landscape enters the new year with significant challenges, including rising costs, subdued consumer confidence, and geopolitical uncertainties.
UK business goes into the new year in a surly mood. New Chancellor Rachel Reeves's hike in employer's National Insurance contributions (NICs) in her autumn budget will raise the cost of employing people and that is likely to have an impact on both hiring and investment. For individual sectors, there are specific challenges: the car industry, for example, is still grappling with the threat of penalties where electric vehicles are too low a proportion of their overall sales.
Consumer-facing businesses are also under considerable pressure, not only from the rise in employer's NICs but also the forthcoming rise in the national living wage, something which particularly hurts the hospitality sector. That sector, along with retail, also faces a challenge in that consumer confidence remains subdued. The plight of retailers was underlined by a spate of profit warnings just before Christmas, since when there has been evidence of weak footfall in the sales period. It is not all doom and gloom though with, for example, conditions in the house building sector expected to gradually improve during 2025. The new year will also pose other challenges. Businesses of all shapes and sizes will spend an increasing amount of time trying to figure out how to incorporate generative artificial intelligence into their operations. And, for some big multinationals and exporters, there may be a further headwind in the form of tariffs imposed by the incoming Trump administration in the US. Multinationals doing business in or with France and Germany may also see their earnings hit by the tepid economic conditions in both countries - with activity in the latter put on hold until after the snap election in February. Flatlining economy The UK economy is flatlining, at best, as it enters the new year
UK Economy Business Challenges National Insurance Artificial Intelligence Trade Tariffs
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