Stratford-upon-Avon
13 The Courtyard
Timothy's Bridge Road
Stratford-Upon-Avon
Warwickshire CV37 9NP
The economic outlook for the UK in 2025 presents a mixed picture, with expectations of modest growth tempered by persistent inflationary pressures.
Growth Projections
The Organisation for Economic Co-operation and Development (OECD) has revised its forecast for UK economic growth in 2025 upward to 1.7%, citing increased government spending as a key driver.
This adjustment reflects the UK's resilience amid global economic uncertainties and aligns with its broader strategy to stimulate growth through fiscal policies and structural reforms.
Inflation Concerns
Despite the positive growth outlook, inflation remains a significant concern. The OECD projects that UK inflation will average 2.7% in 2025, the highest among G7 nations. This is attributed to strong wage growth and elevated services inflation, indicating persistent domestic price pressures.
Monetary Policy
In response to these dynamics, the Bank of England (BoE) has begun adjusting its monetary policy. In November 2024, the BoE reduced its interest rate from 5% to 4.75%, marking the second cut since 2020. However, the BoE has signalled that future rate reductions will be gradual, given the rising inflation expectations.
Analysts anticipate that the BoE will continue to lower rates cautiously throughout 2025, potentially reaching 3.75% by year-end.
Fiscal Policy and Public Debt
The UK's fiscal policy is poised to play a pivotal role in shaping the economic landscape. The March 2024 budget introduced measures aimed at stimulating growth, including increased public spending and tax adjustments. However, these initiatives have raised concerns about fiscal sustainability, with public debt projected to rise to 92.8% of GDP in 2025.
The OECD warns that the UK's stretched public finances may limit its capacity to address potential economic shocks in the future.
Labour Market and Business Sentiment
The labour market is expected to experience moderate improvements, with businesses expressing cautious optimism. Surveys indicate that a significant proportion of firms anticipate revenue growth and increased hiring in 2025, supporting the government's efforts to revive economic growth.
However, challenges such as rising national insurance contributions and persistent inflation may temper this optimism.
Conclusion
In summary, the UK's economic outlook for 2025 suggests a period of modest growth accompanied by persistent inflationary pressures. The interplay between fiscal stimulus and monetary policy adjustments will be crucial in navigating these challenges. While increased government spending may bolster economic activity, concerns about inflation and public debt sustainability remain pertinent. Stakeholders, including policymakers and businesses, will need to balance these factors to foster a stable and sustainable economic environment in the coming year.
Grenfell James Technology Adoption Index
How does your business perform against others adopting financial tech? Find out with our interactive diagnostic:
1.
How does your business receive invoices?
A)
Invoices are mainly received in paper form
B)
Invoices are mainly received by email
C)
Invoices are emailed then automatically forwarded to a designated mailbox
2.
How are purchase invoices processed?
A)
Invoices are entered manually
B)
Invoices are attached to manually raised invoices
C)
Automated software (e.g. ReceiptBank, 1Tap, HubDoc etc) collates invoices
3.
How are accounts processed?
A)
Using Excel/paper-based
B)
Using Computer-based, offline software
C)
Using cloud-based accountancy software
4.
How often is business data revised?
A)
Data is updated annually
B)
Data is updated quarterly
C)
Data is updated monthly or more often
5.
How is banking updated for your business?
A)
Banking is updated manually
B)
Banking is updated by imports
C)
Banking is updated via a live feed
6.
How are bank payments made?
A)
Bank payments are manual
B)
Bank payments are made using bulk imports
C)
Bank payments are made directly via accounting software
7.
How are bank receipts reconciled?
A)
Receipts are chased and reconciled manually
B)
Receipts are chased and reconciled automatically
C)
A third-party platform is used to chase debts and collect fees
8.
How often are management reports produced?
A)
No reports are provided
B)
Reports are provided but often too late to be valuable
C)
Reports are automated with real-time information
Score 8-12:
Curious Exploration
Your financial technology phase is Curious Exploration
% of respondent businesses are in this phase too.
Switching accountancy systems may seem like an upheaval, but can be much more straightforward than most businesses imagine. From talking to our clients, they have found moving from paper invoicing and desktop-based accounting software to the cloud and apps quickly makes the transition process a worthwhile investment of time. Digital accounting solutions bring in streamlined processes, up-to-date business data and greater confidence in the accuracy of information when making financial decisions.
Grenfell James works with your team to fully assess the needs of your business and minimise the impact of any transitions for solutions we recommend.
Score 13-19:
Measured Discovery
Your financial technology phase is Measured Discovery
% of respondent businesses are in this phase too.
Once cloud accountancy software is in place, there’s still plenty of scope to improve your accountancy processes and make sure your business is maximising the benefits of adopting a digital accounting solution. Grenfell James assesses each business to understand how any implemented solutions are being used, identify areas for improvement and the needs of the business overall to support your business goals and achieve success.
Our team of experts can discuss a range of time-saving automation and get different apps and cloud-based solutions talking to create and manage a digital accountancy eco-system to help your business grow.
Score 20-24:
Bold Innovation
Your financial technology phase is Bold Innovation
% of respondent businesses are in this phase too.
You know the benefits of accounting technology and the impact it can have on your business goals. If you want to take it a step further, our team can conduct a systematic review of your processes, apps and business goals to ensure your digital accountancy ecosystem is keeping pace with the changing needs of a growing business.