Business Review January 2024

Firm up foundations for growth 

The Confederation of British Industry (CBI) has urged the government to ‘firm up foundations for growth’ after releasing its latest economic projections, which suggest UK firms face another tough year in 2024. 

Although the CBI’s updated forecast does assume the Bank of England has now reached the end of its rate-hiking cycle, growth in consumer spending is expected to remain weak as high interest rates continue to bite hard on household incomes. Overall, the CBI is predicting the economy will grow by 0.8% across the whole of 2024. 

The forecast does point to a recovery in 2025 – with the economy predicted to expand by 1.6% – however, this still leaves growth languishing below the long-run average rate witnessed since the 2008/09 financial crisis. The CBI is therefore urging the government to introduce more measures designed to boost growth. 

CBI Chief Economist Louise Hellem said, “Businesses are gearing up for another tough year ahead, with our forecast expecting weak growth to persist over 2024. It’s clear that more needs to be done to unlock the UK’s true growth potential. That includes building a long-term strategy that boosts competitiveness, honours our climate commitments, addresses labour shortages and renews the partnership between business and government.” 

IoD calls for early rate cut 

A leading business group believes a cut in interest rates would now be justified in order to kick-start business confidence following a drop in sentiment at the end of last year. 

Research conducted by the Institute of Directors (IoD) suggests business leader optimism ended 2023 in a relatively depressed state. Having been gradually improving since falling to a recent nadir of -30 last summer, the IoD Directors’ Economic Confidence Index dropped to -28 in December from -21 in November. 

Despite this decline in the headline indicator, business leaders’ confidence in their own businesses actually rose from +30 in November to +36 in December. However, the IoD argues that, with such low levels of confidence in the wider economic outlook, action is required in order to exert a meaningful impact on business decision making. 

IoD Director of Policy Dr Roger Barker said, “In the coming months, the Bank of England will be considering its next step in terms of interest rates. Based on the evidence of this survey, an early cut in interest rates would be justified in terms of helping to kick-start business confidence. With inflationary pressures abating, business is in dire need of a boost if it is to help drive meaningful economic growth in 2024.”  

Hybrid working here to stay 

New research undertaken by the British Chambers of Commerce (BCC) and technology firm Cisco shows that only a minority of firms expect all of their staff to fully return to the workplace. 

According to the survey of over 1,000 businesses, just 27% of employers said they believe their workforce will be fully in-person over the next five years. The most common response, cited by 47% of respondents, was that employees will be mostly in-person, while 16% of businesses said they expect workers to be mostly remote and 8% fully remote. 

Perhaps unsurprisingly, the research found a clear divide between different industry sectors, with B2B services firms (such as the finance and legal sectors) more likely to expect remote working. Indeed, just 17% of B2B services organisations predicted fully in-person working, while the comparable figure for manufacturers was 38% and B2C services 37%.  

The BCC said the findings showed that hybrid working is now ‘part of the fabric of the modern workplace’ with the flexibility it affords valued by both employers and their teams. The business group also noted that flexible working makes good business sense, allowing employers to boost recruitment and retention, and unlock new and diverse talent pools.   

Research shows UK is hub for innovation 

Analysis conducted by YFM Equity Partners shows the UK is a ‘hub for innovation,’ although it also suggests entrepreneurs often struggle to access the funding they need to grow. 

The report highlighted the fact that UK entrepreneurs collectively generate around £950bn in revenue each year and stated that the sheer number of patents being granted by the UK Intellectual Property Office shows the scale of innovation across the country. The East of England was singled out as the most innovative region, with 15.4 patents granted per 100,000 adults in 2022. 

Research conducted for the report also found that many UK entrepreneurs are already adopting breaking edge technologies, such as Artificial Intelligence (AI). In total, just over a third of survey respondents said their firm was utilising AI, while a further four in ten were considering doing so. 

However, the report did reveal that funding can be a critical roadblock that prevents firms from scaling up, with a fifth of entrepreneurs citing a lack of funding as a top barrier to growth. The authors of the report therefore urged the government to offer more support, particularly in relation to accessing finance, in order to create an environment where innovative businesses can thrive.  

Red tape holding back exports 

Research undertaken by the BCC shows that red tape, rising costs and increasing regulation are commonly perceived as the key factors currently holding back UK exports. 

According to the survey of around 650 businesses, almost half of UK firms view current customs checks and declarations as a barrier to exporting. The next two biggest stumbling blocks, each cited by around four in ten businesses, were taxes and duties due to tariffs and regulations such as product certification. 

The research also identified a number of other obstructions, including transportation costs, volatile exchange rates, political and economic uncertainty, and rules of origin requirements. The BCC believes that, with the UK government currently involved in trade negotiations with a number of countries, the survey’s findings provide a timely reminder of key export-related issues. 

BCC Head of Trade Policy William Bain said, “Our findings highlight the key priorities for business that could make a difference, when it comes to UK trade negotiations and other related policy developments. What they want to see are faster customs processes, removal of non-tariff regulatory barriers, tariff reductions where these could make a difference, fewer hoops to jump through and greater certainty.”  

Other News 

Spring Budget date confirmed 

Chancellor Jeremy Hunt has announced that this year’s Spring Budget, which could be the last fiscal event before the next general election, will take place on Wednesday 6 March. The Chancellor also confirmed that the Office for Budget Responsibility has been commissioned to prepare an economic forecast to accompany his Budget statement. 

Job vacancies back below a million 

Data from the latest UK Job Market Report published by job search engine Adzuna shows that the number of vacancies in the UK has dropped below one million for the first time in over a year. Advertised job vacancies in November fell to 998,562, a 2.7% decline compared to October’s figure. This represents the lowest recorded level of postings since May 2021 and suggests a stalling in the UK jobs market.   

Apprenticeships key to social mobility 

A new report published by workplace training provider Corndel has highlighted the important role of apprenticeships when it comes to improving social mobility. A survey conducted for the report found that 85% of UK-based HR/Learning and Development decision makers believe apprenticeships provide a key route for social mobility. However, although the research found that most firms are keen to improve social mobility within their organisations, many seem to lack the means or knowledge to achieve such an aim.  

Quirky Quotes 

“What the new year brings to you will depend a great deal on what you bring to the new year” – Vern McLellan 

Are remote workers more sedentary? 

A new survey conducted by ergonomic home office experts Posturite has revealed the impact changing work patterns are having on employees’ movement and activity levels. It found that a majority of people feel they are more sedentary when working at home than in the office. 

In total, the research found that almost six out of ten homeworkers and hybrid employees believe they are more sedentary when working at home. In contrast, less than a fifth felt they were more sedentary in the office than at home, while a quarter said it varies too much to know either way.  

The survey also sought to ascertain what homeworkers do to encourage a greater amount of movement and activity while working. Responses to this question were:  

  • 37% wear a fitness tracker to monitor activity levels 
  • 35% exercise in their lunch break 
  • 26% try to complete tasks in different places around the home 
  • 18% use a sit-stand desk 
  • 18% have an office chair with a movement mechanism 
  • 14% try to arrange their diary to encourage more frequent movement 
  • 11% put items they need further away, for example in a different room 
  • 9% use an alarm to remind them to move. 

Small changes to working routines and the home office environment can undoubtedly boost remote workers’ activity levels. Experts recommend regularly changing tasks and posture, and moving away from desks frequently. Charlotte Edwardson, Professor in Physical Activity, Sedentary Behaviour and Health at the University of Leicester, for instance, suggests people take “short but frequent breaks” around every 30-60 minutes while they are working. 

Wellbeing: a core focus for 2024 

Employers are being urged to make wellbeing a core focus this year in order to address a worrying increase in the number of employee sick days. 

According to the latest statistics, employees took an average of 7.8 sick days during the past year, a notable rise from 5.8 pre-pandemic. This has led StaySafe, a leading provider of lone worker safety solutions, to encourage firms to ensure wellbeing is firmly embedded within their culture and aligned with their health and safety processes. 

In order for this to be the case, Staysafe suggests business owners consider a number of issues including: flexible hours, mental health support, management training, communication and feedback channels, and wellbeing initiatives. 

StaySafe Sales Director Richard Bedworth commented,“By prioritising employee wellbeing, companies can create a positive and supportive workplace culture that not only improves overall job satisfaction but also contributes to a reduction in sick leave. But these policies and procedures must be communicated clearly throughout the business, specifically with remote and hybrid workers, who can be left unaware of changes and developments.”  

All details are correct at the time of writing (12 January 2024) 

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