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A year to remember

Author: ICAEW

Published: 07 Dec 2022

Robert Lloyd Griffiths, Director of ICAEW in Wales reflects on 2022 and outlines the priorities for Welsh businesses in 2023
As the year draws to a close, it’s an opportune time to reflect on the last 12 months and prepare for the challenges that 2023 is likely to bring our way.

Who would have thought this time last year that we were soon to mourn the passing of Queen Elizabeth II and see three Prime Ministers in the space of just three months.

It’s certainly not been an easy period. Our tentative post-pandemic recovery was derailed early in 2022 by the barbaric war in Ukraine which has since escalated into a costly humanitarian crisis. Rising energy prices, high interest rates and global economic weakness are driving a cost of living and a cost of doing business crisis that is impacting us all.

The latest economic growth forecast from the Office for Budget Responsibility (OBR) forecasts negative GDP growth in the UK in 2023, a deeper decline that they previously anticipated but, even though it does not feel like it, we are not technically in a recession yet. We won't formally know that we are in a recession until we get the growth figures for the last quarter of this year, which will be sometime in early 2023.

Here in Wales, ICAEW’s Business Confidence Monitor for Q4 found that confidence fell for the fifth consecutive quarter, as companies navigated fresh economic challenges amid a climate of political instability. Sentiment had likely been affected by the impact of recent political events on interest rates, taxes and government spending.

The impact of the economic environment on businesses, and the outlook ahead, was at the top of the agenda of our UK regions and nations economic summit last week. Expert panels of regional business leaders explored the local impact of economic conditions and how their businesses have adapted to recent events and challenges, such as supply chain management, procurement, staffing, transportation, and inflationary pressure. They also explored where they believe the opportunities lie for the regional economy, our industry sectors, infrastructure and businesses as we look to 2023 and beyond.

Huw Pill, Chief Economist at the Bank of England, addressed the plenary session and spoke about how the UK was facing the worst of both worlds – inflation driven by external energy and supply shocks and domestic pressures from the labour market. He also talked about the role that Brexit has played with skills shortages also contributing to the UK’s weak economic performance.

The Wales breakout session was chaired by Ian Price, Director of CBI Wales. He was joined by Senior Executive Phil Morgan, Kellie Beirne, Director of Cardiff Capital Region City Deal and Bethan Cousins, New Business Director at the Development Bank of Wales. All told me how they are working collaboratively to support Welsh businesses through these difficult times.

That’s why we need 2023 to be about generating environmentally-sustainable long-term economic growth, and bringing opportunity and prosperity to our left-behind communities and regions. Let’s put 2022 behind us and make 2023 a year to remember for all the right reasons.