CEO Predictions for 2023
2022 was a unique year for business in many ways, with continuing uncertainty that makes 2023 difficult to predict. However, with factors such as rising energy costs and the cost-of-living crisis looking as if they are here to stay, it is important to consider a wide range of elements within the business landscape as we head further into the year.
What effect will the cost-of-living crisis have on consumer confidence and spending?
This is an incredibly polarised topic that needs to be looked at demographically, as it is true that sadly those with less disposable income will be those most affected in terms of consumer confidence and spending. Overall inflation hit 10.5% in December 2022, with inflation for food items reportedly rising to 16.9% in the same month. These rises, combined with soaring energy bills, will absorb a higher per cent of people’s income and it is likely that budget retail brands will be hit the hardest as a result, as those on lower incomes begin to tighten their belts and reduce their optional spending. With this in mind, as well as the worrying lack of business confidence, the recession may hit harder and last longer than hoped, putting jobs at risk.
Will Big Tech recover from the mass sackings to build back its workforce?
Whilst it is easy to make moral judgements when it comes to Big Tech and hope that platform users will vote on these issues with their feet, it is hard to ignore that user habits are usually far too ingrained. There is a tremendous fear of missing out that may stop consumers from leaving. Urgent regulation is needed in this area to drive responsible leadership and management and ensure that disproportionate power and influence doesn’t sit with a few extremely wealthy unelected individuals. However, with consumers seeming set in their social media habits, Big Tech is not likely to be too adversely affected as we head further into 2023, as there is a distinct lack of alternative mainstream ethical platforms for users to turn to.
Will the government be able to deliver on the promises from the Autumn Budget?
Most of the promises made in the statement won’t come into force until after the next general election, making it difficult to predict which ones will be kept. With the proposed tax increases in April the closest in terms of coming to fruition, many of the promises still feel far off in the future, particularly as the government has not yet announced a roadmap to confirm how they will all be delivered. This has led to a missed opportunity to incentivise businesses to continue to invest in not only manufacturing and research and development, but also in the UK service sector, which will be vital throughout the coming recession to create and protect jobs. This roadmap is absolutely crucial, as is actively working with businesses to cut red tape and allow them to move towards the government’s long-term vision with as little hindrance as possible.
What is next for 2023?
When the future seems uncertain, we can learn a lot from our past. For example, we can compare what is happening now to the downturn after the two world wars and the crisis that happened in the 1970s. Both were supply-side economic issues that led to a period of civil unrest and strike action, as well as the potential rationing of key resources such as energy.
Since the pandemic, predictions have been made that many businesses would fail over the winters. That could be the case this year as many won’t be able to continue trading due to weak balance sheets and a lack of working capital. With the effects of Brexit and the pandemic still reverberating as the cost of doing business crisis begins to bite, the risk and return no longer add up for many, and if the option is viable, business owners may choose to cease trading.
While the short-term prognosis does not look good, past years show that recovery can and will happen, and that with a concerted effort a new era of growth and economic prosperity can be achieved. However, both businesses and the government must not simply wait for this to happen, instead, proactive planning and strong collaboration will be key to ensuring that the recession is kept as shallow as possible, and the benefits of the new era are seen quickly.