Why we must supercharge our firms on global stage: Beckie Hart of CBI

Even our financial services sector, a vital asset that underpins our economy and provides the stable framework firms need to invest and grow, was marked by a record-fast decline in spreads and the quickest increase in non-performing loans in over three years.

That weaker trajectory partly reflects the impact of measures announced in the Autumn Budget.

Employment costs are set to rise sharply, forcing businesses to adjust their operations in response – whether holding off on hiring, cutting investment, raising prices or limiting pay awards. The Budget measures are also feeding through to higher inflation, with forecasts set to remain above the Bank of England target rate of 2% over the next couple of years – resulting in a more gradual pace of interest rate cuts.

In short, the measures have exacerbated an already tepid business environment. Unfortunately, those aren’t the only economic warning signs we’ve seen in recent days.

Jitters across financial markets have signalled a weakening of investor confidence at a time when capital is desperately needed to kickstart long term, sustainable growth.

UK government bond yields have surged to levels not seen since the 2008 financial crisis and, for longer-dated debt – the late 1990s, and there are live concerns about the UK’s overall fiscal position.

While we welcomed the government’s commitment to drawing the curtain on a decade of uncertainty, we must remember that economic stability is only a precondition, not a blueprint, for growth.

Government should now look to boost economic certainty and support business confidence by taking catalytic actions to increase headroom for investment.

We also need to reform the business rates system, implement immediate flexibility in the Apprenticeship Levy, and support people to stay in work through expanding employer occupational health provision.

Finally, there is a pressing need to build for the long-term with an effective industrial strategy that supports our whole economy. If we want to reset our economic trajectory and really chart a path to prosperity, the time to act decisively is now. 2025 has the potential to further complicate the business environment wit mounting geo-political tensions.

Many anticipate significant shifts in US policy, particularly around trade and climate action, with the upcoming inauguration of President Elect Donald Trump. Combined with ongoing conflicts in the Middle East and Ukraine, it underscores the critical need for business and government to collaborate in preparing to weather these potential storms and co-design policies that will supercharge UK competitiveness on the global stage.

Beckie Hart is Regional Director, Yorkshire & Humber, CBI