In 2023, businesses across the UK have experienced various complex challenges brought on by economic changes nationally and globally. Most notably, inflation rates continue to rise which has led the UK currently experiencing a cost-of-living crisis. Various industries have reported experiencing struggles which have led to large-scale layoffs across the globe. Despite these challenges, a report by BCG published in February 2023 found that business leaders in the UK are still optimistic about growth.
The published report covered several topics related to the economic state of the UK to gain insights into what is to come. Business leaders were asked to input on economic growth, consumer confidence, innovation, inflation and unemployment.
Findings of the Report – “Squeezed but Still Standing”
The report began with its title, “Squeezed but Still Standing” which effectively illustrates the findings of the report and the current economic state based on UK businesses. The report was based on a survey that they conducted with over 1,500 business leaders in the UK. The main takeaway from this report is that although businesses in the UK are now faced with challenges that restrict them, they are still surviving and optimistic about the future – hence the title.
Most business leaders expect this year to lack economic growth and are preparing for a recession. However, the medium term of this year is expected to show growth – leading to a more optimistic outlook for longer-term economic trends.
In terms of future trends, when asked about economic conditions in 2025, most business leaders believe that things will be better. On both economic growth and consumer confidence, 61% believe it will be better in 2025 than this year. Similarly, 58% believe innovation and inflation will improve in 2025. And as for improvement in unemployment levels in 2025, 42% believe so.
Headcount is expected to grow as well, with the number of businesses planning to increase headcount exceeding businesses that are going to decrease it. Overall, apart from businesses with 50-249 employees, there are more businesses looking to increase talent than to decrease it. Although it should be noted that there is a significant number of businesses that will remain at their current size.
Since the pandemic, the UK has faced many turbulent economic challenges. Various underlying factors continue to complicate the situation, which has increased inflation rates and caused a drop in GDP.
Many have reported that the UK economy will face a downturn this year, including the International Monetary Fund (IMF). Based on their projections, the IMF expects the UK’s GDP in 2023 to change by -0.6%. This decrease has caused the expectation of the UK to become the only G7 member to have its economy shrink this year.
However, the BCG report shows that optimism is still possible – as longer-term trends are expected to look better. Although UK businesses might face stagnation in growth this year, many are still surviving and expanding. Overall, the harsh economic period is not expected to last beyond 2025 and businesses are expected to be able to grow past this challenging period.