EY’s Economic Forecast Presents Opportunities and Challenges for UK Businesses

“Recently published economic analysis offers a much stronger outlook for the UK’s fluctuating economy than we have seen to date, particularly as businesses look to adjust to slowing consumer spending and rising inflation. A resurgence in the UK’s overseas trading is expected to counterbalance the impact that Brexit and other economic shifts will have on Sterling. Latest forecasts predict that the UK’s GDP will reach 1.8%, with an anticipated surge in exports of 6.7% in 2017 expected to add to the overall figure. It’s no surprise to see the UK building business relationships with countries and continents outside of the EU – Philip Hammond’s latest trade mission in India was an opportunity to build stronger ties between British and Indian businesses. It’s clear that businesses must err on the side of caution amid Brexit negotiations, but stagnating growth will simply lead to fewer business opportunities; the recent EY forecast found that investment by businesses will drop by 2.2% in 2017. Thus, turning to smart data will become even more critical for businesses that want to continue to grow and contribute to the UK’s economy.

“Adhering to global regulation will become even more complicated for UK businesses; the re-negotiation of trade agreements, policies and laws will make it more of a challenge for financial institutions to mitigate risk, with 49% of compliance professionals admitting that it would be harder to comply with regulation over 2017. While a pure trade deal doesn’t take long to execute, trade agreements are usually about much more than simple tariffs and trade. Governments have to take into consideration services, the harmonisation of regulatory risk and dispute settlement procedures — which are much harder to negotiate. In the long term, patterns in global trade and investment flows will change as the UK begins the process of actually exiting the European Union. It will, however, take much longer for the UK to separate from the remaining 27 members of the bloc, and we expect an interim agreement to be put in place, as full independence will not be secured until the 2020s at the very earliest.”

Markus Kuger, Senior Economist, Dun & Bradstreet