In December, Prime Minister Kier Starmer outlined his government’s aim to have the UK achieve the “highest sustained growth in the G7” in its Plan for Change. Number 10 didn’t, however, anticipate the blunt way in which the Trump administration would approach trade and its global economic repercussions. 

The uncertainty brought about by US import tariffs and the response from other economies is being played out in global markets and, no doubt, discussed in boardrooms across the country. It is the latest in a series of ‘once-in-a-lifetime’ shocks for the UK economy over the past 15 years that has resulted in persistently low investment and low productivity.

“While the impacts of these tariffs are unknowable, the government might still be able to take steps to address pre-existing barriers to growth and help unlock the private-sector growth needed to boost the economy,” says Iain Wright, ICAEW’s Chief Policy and Communications Officer. 

“Drawing on the valuable insight of our members, ICAEW has identified six growth barriers and potential policy actions that could help to open up the path to investment and growth.”

People – costs and skills

ICAEW research confirms that business confidence fell to its lowest point for three years at the start of 2025, with more than half of those surveyed citing increases in taxes. Employers’ National Insurance increases have significantly added to the cost base for many businesses and the Employment Rights Bill is expected to further increase employment costs. 

Some businesses wanting to expand are unable to justify hiring as the cost is too high. To give employers the confidence to hire again, ICAEW urges the government to simplify employment status and make it easier for employers to take a chance on new staff.

Alongside increased costs, employers are struggling to access the skills they need and this has been exacerbated by policy decisions. ICAEW reiterates its call for the government to rethink proposals on funding for Level 7 apprenticeships.

“Regulation deters hiring in the UK and prevents the import of talent, while some apprenticeships are not as effective as they could be in training domestic workers,” says Wright. “The government should be extending the Level 7 apprenticeship scheme, not curtailing it. Boosting the quality and number of high skill apprenticeships will break down a key barrier to growth.”

Technology – adoption and investment

Traditionally, government policies hoping to encourage the adoption of new technologies have put too much of the burden on to firms and owners, according to ICAEW. “Novel technologies go through several stages en route to market,” explains Wright. “Policies must target across the waypoints on the innovation journey, not focus on one firm or stage.”

ICAEW recommends that the government establish a new version of the growth voucher scheme for small businesses, which closed in 2015. The previous scheme helped more than 28,000 small businesses to access strategic advice to help them grow.

The government must also act to incentivise investment. ICAEW believes that businesses are being deterred from investing in research and development (R&D) due to fears about the recovery of R&D tax relief. It calls on the government to improve the application process to enable those claiming the relief to feel confident in its application.

ICAEW is also urging the government to rethink the thresholds for start-up loans, which have not been changed since 2012. The unsecured loans can be made to partners in businesses that have been trading less than three years to develop their organisation. Currently, loans are capped at £25,000 per partner and to a maximum of four partners. ICAEW believes that the government should look to increase the amount on offer to businesses.

Infrastructure – regional parity and mindset

Businesses are formed in all parts of the UK, but the support available to them is not equal. ICAEW urges the government to consider place-based growth policies that will create conditions for new businesses to emerge and thrive, as well as unlocking the economic potential of stagnating businesses.

In particular, the government must target its investment to lower the cost of capital for difficult projects and not simply replace capital on projects that are likely to be invested in anyway. Ahead of the Spring Statement, ICAEW CEO Alan Vallance wrote to the Chancellor citing the offshore wind sector as a successful example of where government investment reduced the risk profile of a project. 

Finally, ICAEW argues that there must be a shift in the risk appetite across government and regulators when it comes to market dynamism. Wright explains: “A higher risk appetite may mean faster market dynamism, but the cost is greater frequency of company failure. Regulators should not take a default risk-averse approach. 

“In times of uncertainty it can be difficult to identify a path ahead. But if the government starts addressing some of the existing barriers to growth, that can only help organisations to find their feet.”