The greatest concern for businesses in 2016 is the UK economy, above other external factors. This is according to a survey by The Institute of Chartered Accountants in England and Wales (ICAEW), which asked members in business about the positive or negative impact from politics, the market environment, the economy, and on skills and immigration.
However, 44% of respondents are showing less concern about the negative impact of low Eurozone economic growth compared to 2014 survey results (56%). 60% of exporters anticipate an adverse effect on business, yet firms working with the domestic market are less worried about external political factors.
Also, more than half of businesses (52%) say they'd be hit by any interest rate rise this year – particularly non-exporters.
Stephen Ibbotson, ICAEW Director of Business, commented that this year will bring some changes that businesses are right to be concerned about. He said:
This is more worrying when so much emphasis has been placed on exports and rebalancing the economy. The dependence on domestic and consumer sales could mean a car crash for the UK economy in 2016 if sudden and unexpected hazards appear in the road in 2016. Stephen Ibbotson, ICAEW
Other key survey findings include:
- 41% think the UK's uncertain position in the EU may have a negative effect – 9% fewer that in 2014.
- More than one third of companies (36%) think low UK inflation will have a positive impact.
- 20% expect the national minimum wage rise to impact them.
- Over half (53%) are concerned about an increase in the standard rate of VAT.
- A rise in income tax is cause for concern for 51% of businesses.
- A significant drop in businesses are citing the instability in the Middle East and Ukraine as a concern (from 41% to 29%).