Ahead of this week’s Spring Statement, ICAEW members remained concerned about the economic backdrop as they continue to prepare for announcements made in the Autumn Budget still to come into effect.

The need to stimulate growth remains of critical importance, however appetite for investment remains muted amid ongoing uncertainty at both national and international levels. This is evidenced through anecdotal feedback from volunteer advisory groups across sectors including construction, entertainment, sport and media, farming, retail and travel, tourism and hospitality, which support ICAEW communities.

Despite ongoing challenges, there are pockets of optimism, including the opportunities presented by artificial intelligence (AI). 

Sector sentiment

The construction sector saw the largest drop-off in confidence of all sectors in ICAEW’s Business Confidence Monitor (BCM) Q4 results. 

A member advising the sector commented: “Confidence depends on the leverage of clients. The more leveraged are waiting and seeing, while the unleveraged are more confident.”

With the Bank of England holding the base rate at 4.5% and with temporary rates of Stamp Duty Land Tax set to be withdrawn at the end of this month, conditions remain difficult for the sector. 

A member working in a mid-tier practice that advises the construction industry observed: “UK productivity is driven lower by a shortage of housing”, which highlights the importance of the sector to national prosperity. 

Meanwhile, members in sport and media expressed more positive sentiment, referencing record sponsorship in women’s sport and increased interest from the US in UK film and TV production. 

Farming continues to adapt to changes to Agricultural Property Relief announced in the Autumn Budget, a source of significant frustration for those working in the sector, but also keeping advisers increasingly busy, as a member in the South West shared: “I’m doing more work than I’ve ever done.”

Across retail and hospitality, which continues to adapt to rising employment costs (employers’ national insurance and national minimum wage), members are hopeful that warmer weather will act as a catalyst for happier consumers and increased spend. The airline sector is “gearing up for summer with increased capacity”, but as a travel sector member in London cautioned: “There is a huge risk that demand falls short.”

Investment and growth

It is reassuring to note that, despite challenges in travel, tourism and hospitality, members working in the South West spoke of continuing with investment plans, which are seen as “critical to the customer experience and to maintain five-star status”. The return on this investment, like the airline sector, is contingent on adequate demand.

Other sectors, however, appear less inclined to invest. “Investment in rural business is on hold – if you increase the value of your asset, you increase your potential inheritance tax (IHT) liability,” was a concern raised by the farming sector. 

Another member in tourism based in the North West described rising employers’ national insurance as “a hit that will negatively impact investment”.

It’s no secret that growth remains critical, but also difficult to achieve given economic conditions. ICAEW’s scale-up series of webinars has been important in highlighting practical action small businesses can take to achieve further growth. 

The final webinar in the series, on the importance of networking and communication, takes place on 1 April. ICAEW will also host Scale-Up Live 2025, an in-person event at Chartered Accountants’ Hall on 1 July (6-9pm) – you can register your interest in attending here. 

Artificial intelligence

Member discussions have increasingly turned to AI as a potential solution to productivity challenges and to mitigate rising employment costs. 

Despite the opportunities presented by AI, members in the East of England warned: “While AI and automation improve productivity, cyber security remains a key focus, necessitating companies invest in protective measures to safeguard sensitive client data and mitigate risks such as fraud and phishing.” 

Increased interest in AI in the consultancy space is in part driven by demand from clients. “We’ve set up a dedicated team to improve internal processes in response to AI. Our clients expect this and a well-thought-through AI policy,” explained one member from the East of England.

This was echoed by a London-based business advising the property sector: “Clients expect consultancies to be using AI before they do – if not, why not? They see the value of AI in cost reduction and driving revenue.”

ICAEW’s AI hub contains practical resources and important advice on AI adoption and skills development. 

Member views inform policymakers

ICAEW continues to communicate member views in meetings with government. More specifically, we sought feedback on the Employment Rights Bill ahead of its second reading in the House of Lords, and on member priorities ahead of the Spring Statement. 

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