Organisations need to chart a path through the ongoing economic uncertainty and use economic metrics to identify opportunities that allow them to thrive.

Suren Thiru, ICAEW’s Director, Economies, says the only certainty of the year ahead is that uncertainty will prevail. Therefore, a focus on increasing resilience will be ever more important. The economic shocks of the past decade will stand organisations in good stead, he believes.

“Businesses face huge cost pressures from a range of sources, not least higher taxes, including national minimum wage increases and National Insurance rises, on top of rising energy costs. Meanwhile, they’re having to unpack the global picture. Although the direct impact of tariffs on the UK may be more muted compared with other countries, they need to factor in the effect on the global environment and supply chains.

“When we look at this type of environment, it’s nothing new for businesses,” he continues. “Over the past 10 years, we’ve experienced a series of significant once-in-a-generation shocks, including Brexit, Covid, the war in Ukraine, and the impact of inflation – all leading to particularly volatile global trading conditions.”

Identifying opportunities

Thiru says it’s about looking at the challenges but also identifying the opportunities. “There’s going to be a lot of uncertainty, so what are the practical things businesses can do, given all these moving parts, and how can these make your business more resilient to some of these headwinds? 

“You need to look at the resilience of your business plan and your funding options in case you are hit by an external shock. Look at the strength of your supply chains, where there’s risk around staffing levels and, given the big jump in employment costs, you could consider investing in tools such as AI to improve productivity and save costs over the longer term.”

Thiru will present a session at ICAEW’s forthcoming Restructuring and Insolvency Conference 2025 – a virtual event on 24 and 25 June – where he will highlight some of the current economic challenges facing businesses alongside those coming down the line. 

“I’ll be looking to set the scene. There’s lots of noise about the economy and we want to use this session to focus on what’s happening, what you should be looking out for, and a few key takeaways on the path ahead for the economy and for businesses, both domestic and globally.”

Using information to your best advantage

While economic metrics give an indication of what’s going on in the economy, it’s about taking that information as a starting point and using it to your best advantage, Thiru says.

ICAEW's Business Confidence Monitor (BCM) for Q1 2025 showed that business confidence turned negative for the first time since late 2022, having been falling since early 2024. “But when you look beneath the surface, it’s quite a mixed picture. Manufacturing, for example, is at the sharp end of the domestic and global headwinds facing us at the moment. 

“But in other sectors, such as IT, communications and construction, we are seeing an increase in confidence.” Noises by government about planning reform and ambitious house-building targets are helping to buoy the construction sector, Thiru says. 

Nuanced regional picture

Similarly, there are pockets of good news at a regional level. “Areas such as the East of England and Scotland are pretty bullish about the near-term prospects. It’s a nuanced picture, so it’s about trying to understand what’s going on beyond the headline ‘macro’ news, which is pretty gloomy at the moment,” Thiru explains.

“It’s about looking at the challenges and opportunities of the current situation. The sectors that are doing that particularly well are those that have sector-specific boosts or regional boosts to their economic prospects that are upsetting the bigger picture challenges.”

This week’s Spending Review will provide important insights into the government’s investment priorities for the coming years, and – as importantly – where cuts will likely be made.

“That’s going to be important in setting the path, and we hope it will provide certainty over policy. The challenge and opportunity is, will the government be able to set out a clear plan for the next 10 years that businesses can operate in line with?”