One of the most important reports over the last month has been the Ernst and Young Item Club report, which was published on 20th January. It is influential, and worth listening to, because it uses the same model as the Treasury to predict how the economy will develop.
The good news is that their predictions are, in general, positive:
GDP will continue to grow up 2.7% in 2014 up from 1.9% in 2013
Consumers will continue to drive growth in 2014
Business investment will rise by 5% this year and 9.3% in 2015 – which is fairly modest
Wages will lag behind growth as government cuts, immigration and delayed retirement add 1 million workers to the labour force.
On the flip side the report does highlight the recovery to date has been somewhat lopsided with a heavy reliance on consumer spending, and that business investment and exports will be crucial for a sustainable recovery.
But what does this mean for businesses?
Whilst all the recent evidence points to a positive forecast for the year ahead the economy still faces some tough challenges as it moves out of recession.
Whilst consumer spending has had a large part to play so far, as businesses have focused on preserving cash, now is the time for businesses to put their investment plans into action. Growth also presents its own set of challenges, businesses for example could face issues on the labour front in retaining their best employees and keeping employees engaged at a time when prices are increasing but wages cannot.
The Forum is all too aware of the ongoing challenges facing the small business community as it looks to maximise on the opportunities for growth in 2014 and is focused on providing the support needed. Advice is on hand to help you make the most of what 2014 may offer on everything from export
. To ensure that our members can focus on the investment the UK economy needs, we will continue to lobby for further measures to tackle key threats to a sustainable business recovery, including the rising cost of business and key issues such as late payment. Our help line advisors are also on hand to provide practical advice in to help you avoid potentially costly workplace and compliance issues, so you can concentrate on growing your business.
The future is a lot brighter but challenges remain but we are committed to providing you with the support you need to see sustainable growth in 2014. Let us know how you're feeling about business in 2014 in the comments below.