Tom Middleton, Managing Director for Economic Consulting at Grant Thornton UK, commented:
“If there’s one thing businesses have learned over the past few years, it’s the need to treat uncertainty as an absolute certainty. Despite the volume of change and unknowns – from geopolitical shocks in markets abroad to policy tinkering at home – UK businesses are adopting strategies to remain resilient, and this is reflected through their ongoing positivity, whatever the headwinds.
“That’s not to say that everything is smooth sailing. Businesses continue to grapple with high operating and people costs, largely resulting from the National Insurance and National Minimum Wage increases which came into force in April. Though businesses are broadly positive about government policy and strategy, there is a clear expectation that further pressure will come in the form of tax increases later this year.
“Continually increasing costs are one of the main contributing factors to the dampening of the labour market, which the Bank of England recently expressed concerns about. However, intention for recruitment over the next six months remains well above average levels, suggesting businesses are managing costs and preparing for future growth. Businesses have become adept at pivoting to manage cost pressures which is demonstrated by two thirds of respondents saying they have changed their recruitment and remuneration strategies, increased prices or reduced capital investment in an effort to protect margins.
“Adaptable strategies and nimble mindsets adopted as survival mechanisms throughout the pandemic are now embedded as best practices for many successful businesses and this has helped position them to thrive in the modern economy, despite the barrage of curveballs still coming their way. There is however, a difference between surviving and thriving in these challenging times and so faster progress on reducing red tape and reforming the tax landscape will be vital for future.”
