Policy announcements made in the Autumn Budget continue to weigh heavily on business, against a backdrop of an increasingly uncertain global environment driven by US tariffs. Meanwhile concern about the tax burden has reached unprecedented levels across all sectors, and is likely a key factor in a weakening employment growth picture. 

Members have consistently called for an environment of stability, with more certainty to make informed decisions for the future, including those regarding investment and employment. Current conditions present the opposite scenario and make for a very challenging environment.

Perhaps not surprisingly, business confidence has continued to fall and has turned negative for the first time since late 2022, according to ICAEW’s most recent Business Confidence Monitor (BCM) Q1 2025.

Tariffs

Following a government request for input on UK measures in response to UK tariffs, ICAEW recently convened members working across a broad range of sectors in both business and practice. A summary of insights gathered will be shared with the Department for Business and Trade and the UK Trade Minister to help policymakers better understand the impact of US tariffs on the ground. 

Members in attendance agreed that the economic uncertainty caused by tariffs “makes it harder to commit to expansion – for example launching or sustaining a product or opening in a new location”. In areas where profitability is marginal, decisions about expansion are even harder to make as, in the words of one member, “tariffs already add cost – combining that with continuing uncertainty is a chilling mix”.

The consensus is that UK retaliation, for the moment at least, should not be a course of action. “Retaliation risks an upward spiral, likely to yield undesirable results. The US tariffs already introduce additional costs across supply chains – UK tariffs would add more cost into the equation and escalatory tariffs yet more,” another member said.

The difficulty and costs associated with adjusting complex and integrated supply chains were raised by attendees working in manufacturing. For some businesses, there are no substitutes for specific parts or components, meaning there is little option for supply chain flexibility. 

Members also raised urgent concerns over the dumping of Chinese goods, previously destined for the USA, into the UK market. Low-cost imports could seriously damage many UK businesses, a prospect of particular and very real concern to manufacturers and retailers. Any cost benefits of cheaper imports from Chinese overcapacity could be of advantage to consumers in the short-term, but would likely be to the detriment of employment and business growth.

Employment

Changes to employers’ national insurance and the national minimum wage announced in the Autumn Budget come into force from this month. Since the announcements were made at the end of last year, businesses have done their best to adapt. 

Members report postponing recruitment decisions unless absolutely necessary. The knock- on effect of increased scrutiny over hiring decisions is reduced opportunities for entry-level workers, and reduced budgets for training and development for those already in employment. At a time when investment in skills is needed to drive the growth agenda, members raised concerns that rising employment costs are encouraging the opposite response. Skills remain a “massive challenge” according to a member working in the not-for-profit sector in Scotland. 

A member in the North East on the frontline of businesses’ staffing decisions who runs a recruitment business reported more cautious demand and delayed decision-making. Businesses have also raised concerns over the Employment Rights Bill (ERB) and what this might mean for them in practice. 

With the ERB proceeding through the House of Lords, ICAEW has sought to highlight members’ concerns about the Bill’s impact on employment costs, labour flexibility and business dynamism. In particular, ICAEW is concerned that the legislation as currently drafted risks undermining the growth and viability of the UK business environment and unintentionally makes high-quality employment less accessible to jobseekers.

Prior to the Bill’s second reading, ICAEW distributed a briefing to approximately 50 parliamentary stakeholders recommending improvements. As a result, Shadow Business and Trade Minister Lord Sharpe of Epsom quoted ICAEW directly, referencing a named member; the concerns he expressed on cumulative business costs, unfair dismissal protections and SME impacts were well aligned with ICAEW’s briefing. 

Ahead of the Bill reaching committee stage, ICAEW shared further briefings recommending that peers support specific amendments that would secure exemptions for small and microbusinesses, ensure a clear and fair approach to probation and reduce the administrative burden of flexible working arrangements.

Growth

Growth remains a top priority for the UK government. ICAEW’s scale-up series of webinars has covered a broad range of topics businesses need to consider as they plan the move from start-up to scale-up and ultimate exit. 

Building on the series, Scale-Up Live 2025 on 1 July at Chartered Accountants’ Hall will bring together industry experts with advice on how to take your business to the next stage of growth. This in-person event brings together learning from the series for an evening of discussion, inspiration and networking. 

As always, we are extremely grateful to our volunteer network of committees, communities and ICAEW regional teams who provide feedback and gather insights that help to support our policy decisions.