The much-publicised increase to employer’s National Insurance contributions is expected to leave around 940,000 employers with an increased liability for the 2025/26 tax year while variations to the National Minimum Wage, statutory pay, and Capital Gains Tax are just some of the changes that are causing some business owners to feel overwhelmed when considering the year ahead.

ICAEW members are right at the coalface of our economy. They are either running or advising businesses the length and breadth of the country; helping to navigate the different phases of economic growth.

That’s why the insights of our members are so important when shaping policy positions and recommendations. Indeed, their views and feedback on the challenges and opportunities that businesses are facing are invaluable.

Given the start of the new tax year, it was particularly timely that I was able to share member sentiment with Rebecca Evans MS as Cabinet Secretary for Economy, Energy and Planning last week. I hope this feedback will play an important role in aiding her understanding of the business landscape in Wales.

There is no doubt that businesses and organisations across all sectors are facing challenges as they deal with the impact of increases to National Insurance contributions. For example, we heard from members that charities and the not-for-profit sector are particularly worried and in some cases struggling to absorb the additional costs. In fact, some charities are considering redundancies as a result of the increased financial burden.

Meanwhile, some in manufacturing, social care and professional services are passing on costs to their customers and also implementing cost reduction programmes. This includes some redundancies in central support functions, and it is a similar picture in the public sector where we know some in public financial institutions and education are looking to find efficiency savings to offset rising costs.

Cost management is essential for budgeting and forecasting. It can also fuel growth, not least of all because strong cost management helps business leaders to make informed decisions and strategy and investment.

The current geo-political environment is having a very real impact on investment decisions. We asked members about the types of capital investments that businesses are planning to make this year, and the driving factors behind these decisions. Some businesses are taking a very cautious approach to capital investment due to economic uncertainties.

While some charities and not-for-profit organisations are considering investment in IT and property, others are hesitant to make significant investments due to low confidence and high capital costs. The pressure is on to improve efficiency and generate income.

It is encouraging that in industry and practice, some members are investing in IT infrastructure and cybersecurity to protect their operations and support business growth. Others are also considering investment in property rather than renting to reduce long-term costs.

Navigating the current economic climate can be a balancing act for our members. They are hesitant to make substantial investments but recognise that standing still is not an option. For example, there is much debate about the adoption of AI technologies in Wales. While it is recognised that there are significant benefits in terms of efficiency, productivity, and cost management, equally there are concerns about data security, accuracy, and job displacement. There is a need for increased knowledge and understanding of AI to fully harness its potential.