What’s next?

Whenever I write the introduction for Business E+, I have often reflected on the uncertainties facing businesses in the last few years. What strikes me as I write this introduction is not just the uncertainties, but the pace of change in the last year or so and more specifically the last few months (and weeks!).

Internationally, we have the return of the Trump regime and after a term out of office, he has come back all guns blazing. Many years ago when I studied economics, I always remember tariffs not being good for anyone. That textbook has been well and truly shredded in the Oval Office. More specifically, the purpose of tariffs has been reimagined under Trump’s regime. Later in Business E+ you’ll read about Pillar 2, the OECD project for a global minimum tax rate for multi-national companies. An Executive Order has ended the USA’s involvement in Pillar 2 throwing the project into uncertainty.

Nationally the impacts on the first Labour Budget are playing out. As employers, when we look at the cost/benefit decision of employing someone we take cost the mean salary plus ‘on costs’ which include employer’s National Insurance. Arguing that an increase in employer’s NI is not a tax on employment is disingenuous at best. I’m sure we’re not the only business that has done the maths on this and it hurts. I can’t see it being anything other than detrimental to hiring decisions especially when combined with other upward pressures on the cost of employment.

The recent Spring Statement focussed on trimming the welfare bill, but at least it didn’t bring in any new tax rises. However, with the OBR halving its growth forecast for the UK economy for 2025, coupled with the need to fund more defence spending, speculation is rife that this was just a holding statement in advance of the next Budget in the Autumn. Expectation is growing that the Chancellor, applying her current doctrine, will need to increase taxes which will further disincentivise business owners from delivering the growth that the Chancellor is relying on those very same businesses to deliver.

Ultimately, being in business is about many things, but the risk and reward dynamic is fundamental to it. We appear to be in a cycle where there is a lot more risk and a lot less reward and I can only see this challenging environment continuing unless there is a fundamental shift in ideology from the Government on how to support businesses.