Following the publication of ICAEW’s Q2 2025 Business Confidence Monitor (BCM), ongoing challenges and opportunities have been hotly debated through a series of regional panel discussions involving ICAEW members from a broad range of sectors. Despite a fourth consecutive decline in business confidence, ICAEW members remain relatively upbeat and well placed to navigate an increasingly uncertain environment, both domestically and internationally.

The Q2 BCM highlighted significant concern over the tax burden. With a well-publicised and ongoing narrative debating the state of public finances, members appear increasingly concerned over potential tax rises in the Autumn Budget. With a date yet to be announced for this important fiscal event, both the timing and anticipation of policy announcements has stifled appetite for the investment and activity needed to drive growth. 

Economic backdrop and technology adoption

Business is feeling the squeeze, especially in specific sectors highlighted by the BCM. “Continuous improvement is no longer about increasing profit, it’s about generating more profit to cover increased tariffs or taxes,” was the view of a member working in the manufacturing sector in the South West. 

A BCM event in the East of England noted that businesses are facing significant challenges from wage inflation, input and energy costs, as well as ongoing uncertainty around tariffs and global trade. Combined, these factors are negatively impacting profitability and the ability to plan. Companies are increasingly turning to digitalisation and automation to manage costs and adapt to market pressures. 

A practice member noted that “firms are leveraging AI and automation to achieve notable efficiency gains and cost savings, particularly by reducing manual work and addressing staff shortages”. 

Despite the potential benefits to be gained by adopting technology, members also flagged challenges. A technology business in the Midlands cautioned that although replacing junior roles with AI offered the potential for cost savings, “it creates a problem down the road when it comes to recruiting into more senior roles as more junior employees are not there to step up”.

ICAEW’s latest research on the evolution of mid-tier accountancy firms revealed the importance of talent and technology, warning that technology strategy should go hand in hand with HR strategy. 

Members also highlighted that despite the benefits, integration challenges between multiple tools and varying client adoption rates can limit gains. A consistent theme in this month’s discussions was the importance of investment in digital skills and training to maximise economic impact. 

To enhance members’ digital and AI skills, enrolment is now open for the new ICAEW GenAI Accelerator Programme. In addition, the theme of this year’s ICAEW Annual Conference 2025 on 17 October in central London is Thriving in Transformation.

Policy and the upcoming Autumn Budget

“Leave SMEs alone please.” A member in manufacturing raised the onerous nature of policy changes for smaller businesses, many of which don’t have the internal expertise or the time to adapt. One example cited was the forthcoming Employment Rights Bill, especially for businesses without HR departments. 

Members participating in the East of England BCM discussion debated government policy changes and delays, especially in infrastructure and in relation to the Industrial Strategy, citing both as “causing both risks and opportunities, with some sectors benefiting from increased support and others experiencing operational pauses”. One example is defence, a member noting that “interest in defence-related investment had significantly increased” as a result of policy announcements on the sector.

Members across the board appear increasingly worried about potential announcements in the upcoming Autumn Budget, prompting continued calls for more stability and certainty to enable informed business decisions and encourage investment appetite. 

The King’s Awards for Enterprise

ICAEW has regular dialogue with the Department for Business and Trade through its public policy team and the ICAEW Global Trade Community Advisory Group. 

The King’s Awards are the UK’s most prestigious business awards, celebrating outstanding achievements in UK enterprise, with applications set to close at 1pm on Tuesday, 9 September 2025. With four categories – Innovation; International Trade; Sustainable Development; and Promoting Opportunity Through Social Mobility – the Awards are free to enter with the ability to apply in more than one category. ICAEW members are invited to find out more by visiting https://www.gov.uk/kings-awards-for-enterprise

ICAEW member views are invaluable and consistently raised in consultations and discussions with policymakers. We remain extremely grateful to our volunteer network of committees, communities and ICAEW regional teams who provide feedback and gather insights.