As we approach the end of 2016 most of us are looking back at the events of the year with a somewhat surprised look on our face, taking stock of the impact of Brexit and the election of Donald Trump to the Whitehouse. Will 2017 be just as unpredictable? Here we take a look at some of the wider business trends we expect to see in 2017 and the impact they will have for businesses in the UK.
Although economic growth held up better than expected after the vote for Brexit on 23rd June, growth is expected to slow over 2017 as the uncertainty over a ‘hard’ vs. ‘soft’ Brexit grows. Overseas investment will decrease until our future trading relationship with Europe and access to the single market has been defined.
The Bank of England has predicted a dramatic rise in inflation off the back of the weak pound and the impact on the cost of imports – it now expects it to hit 2.7% in 2017, compared to the current 1%.
Business Trends – Impact of the Autumn statement
Given the economic uncertainty following Brexit most businesses breathed a sigh of relief with the relatively benign Autumn statement and no announcements of major tax changes. The main point to note was the cut in Corporation Tax to 17% from April 2017, however the savings made here will need to be offset against the rise in Insurance Premium Tax from 10% to 12% in June 2017.
Business Trends – What will happen to sterling in 2017?
It’s difficult to predict how the financial markets will react during the UK’s Brexit negotiations, but as markets don’t like uncertainty it’s hard to see the pound bouncing back any time soon. This means more expensive imports and holidays for us, but those in the tourist and leisure trade will continue to benefit from increased visitor numbers.
As witnessed in the recent spat between Tesco and Uniliver, UK manufacturers have faced rising costs for imported goods due to the fall in the value of the pound. In 2017 they face the unpalatable choice of absorbing these costs and reducing their profit margin, or passing them onto consumers and being less competitive on price.
Business Trends – Government review into the gig economy
The ‘blended workforce’ (a mixture of permanent and freelance/contract employees) is set to grow in 2017 as companies look to manage costs by using more flexible workforces, and more people become freelancers or contractors. The Government is worried about this trend for a number of reasons. It fears some companies are avoiding their responsibilities as employers by classing staff as self-employed rather than employees, and it’s also worried about the impact on Government finances – self-employed workers and contractors pay more than £2,000 less a year in tax than employees doing equivalent jobs. Teresa May has appointed a panel of experts to review modern employment practices who will report back in 2017. Changes to employment regulations are expected as a result.
Business Trends – Getting ready for GDPR
The General Data Protection Regulation comes into effect in May 2018, establishing a pan-European law for data protection. If your business collects, manages or handles personal data in any way it’s highly likely that you will have to comply, however large or small your business. Even with Brexit looming on the horizon, businesses will still have to continue with their preparations in 2017 as we will still be EU members when it comes into force. There is also the possibility that we will still have to comply post-Brexit if we want to trade with EU members. The Information Commissioner’s Office has produced a ’12 steps to take now’ guide to help companies with implementation.
Business Trends -Export opportunities
The Government is encouraging more companies to start exporting by relaunching the ‘Exporting is GREAT’ campaign and also announcing the doubling of UK Export Finance’s financial assistance for exporters in a bid to support trade as we exit the EU.
Whilst we still have access to the EU single market, 2017 could be a bumper year for British exports, especially in manufacturing, as companies look to take advantage of the weak pound. For those companies at the start of this journey, Open to Export has a list of key considerations to start selling overseas.
Business Trends – Tech is still king
Overall, 2017 is likely to be a year of uncertainty for UK businesses as the terms of our divorce from the EU continues to be worked out. However, new technology will continue to present massive opportunities for businesses who engage with it and understand how it can help their business thrive. Whether it’s using investing in software to run your business, automating some of your marketing activities, building an online store or accepting new payment methods, it’s not just big businesses who can benefit.