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LOOKING AHEAD 2025 IN ASSOCIATION WITH:
The new year is with us and to start 2025 we’ve asked business leaders from across Lancashire to look into the future and share their thoughts on what the next 12 months will bring
NEW YEAR BRINGS NEW HOPE
By Steve Bell, Pierce corporate finance director
As we look forward with cautious optimism for the UK economy in 2025, we leave behind a year of turmoil, uncertainty and transition.
Underlying growth in 2025 is expected to be modest, with forecasts suggesting a GDP increase of around 1.5 per cent to 1.7 per cent, supported by stabilising inflation, which is anticipated to fall closer to the Bank of England’s two per cent target by the end of the year.
These factors, along with interest rates expected to soften, will provide some relief to the UK economy.
The economic outlook for Lancashire over the next 12 months presents a mixed picture. Many businesses in Lancashire, and in particular those in manufacturing, are expected to face tough conditions, with a recent survey indicating an expected dip in domestic sales and exports.
In addition, inflation and the cost of raw
materials will continue to put pressure on company cash-flows, leading to cautious investment plans.
While the changes to Capital Gains Tax set out in the Budget were not as draconian as had been predicted, the changes to the taxation of business assets under Inheritance Tax means that many entrepreneurs could suffer significant tax on these assets.
The major challenge we see in 2025 will be to raise awareness of these changes and we continue to work closely with our clients to ensure that the significant opportunities to mitigate tax that are presented by these changes are seized.
Recruitment remains challenging, with many companies finding it difficult to find and retain suitable candidates.
The increased costs incurred as a result of the changes to National Insurance and the National Minimum Wage continue to create
barriers to employment and investment.
Despite these challenges, Lancashire has substantial potential for growth. An independent economic review highlights the county’s strengths in manufacturing and education and if Lancashire can match the national average output per head, it could significantly boost its contribution to the UK economy.
In terms of overall hopes for the government it is essential we have a period of stability which would allow companies to look at long term investment plans.
While the public infrastructure has struggled as a result of decades of underfunding, the solution will not be found in a simplistic tax and spend philosophy.
The government has to look at innovation in working methods and investment in new technologies and should look to reward those companies that seek to invest and innovate in the UK.
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