Six months ago, we set ourselves the difficult task to try and predict major trends that would bear importance for businesses for the remainder of 2022. As we prepare to turn the page on another eventful year packed with unexpected politics, turbulent economic times, and a continuing cost of living crisis, we look back on some of our predictions and see how things panned out.
Politics to dominate the summer
Politics did indeed commandeer the headlines in the summer – and then some! When we came up with our predictions, we were yet to know who the next leader of the Conservatives, and therefore the next Prime Minister, would be. After a much talked about leadership contest ended with Liz Truss taking on the role, and despite promises to reduce taxes, tackle inflation head on and protect individuals and businesses from the rising energy costs, it would only be a short few weeks before then Chancellor Kwasy Kwarteng’s mini budget would result in their undoing, leading to his dismissal closely followed by Truss’s own resignation.
The next leadership contest was less dramatic, with expedited measures to ensure a swift transition to a new leader so that the economic fallout of the mini budget could be turned around quickly. Eventually unchallenged, finalist of the summer leadership Rishi Sunak became the new leader and quickly set out to try and protect the British economy with policy amendments and revisions of the budget plans. Shortly after the announcement, the stocks recovered slightly and the interest rate on British debt started to fall, suggesting a cautious bout of confidence that a new government wouldn’t default on debts.
Promising to support businesses through the still-trialling times, Sunak’s policies included support for energy bills until a review scheduled in April 2023, and to protect from rising inflation the multiplier on business rates will be frozen next year so that they are 6% lower than they would have been. In addition, relief for businesses in the retail, hospitality and leisure sectors is also set to increase from 50% to 75% next year, up to £110,000 per business.
Inflation to peak in October
It looks like this may have been the case, with figures from November showing a slight reduced inflation rate at 10.7%, providing a glimmer of hope for economists. This means that so far, October’s 11.1% rate seems to have indeed been the peak that we had predicted.
For individuals, it does not spell the end of difficult times yet, with the Bank of England still choosing to raise interest rates a further 0.5 percentage point in December to bring inflation to its targeted 2% as quickly as possible.
Optimistic lookouts still expect inflation to continue to fall throughout 2023, although the upside of the continuing Russian invasion of Ukraine and the continuing cost of living pressures may lead to rates going up again before they go down.
Interest rates to keep rising
Here again we got it right, with rates going up twice since the summer, currently standing at 3.5% – actually higher than the 3% peak we had predicted for H1 2023, with the latest poll of Reuters economists suggesting a now expected peak at 4.25% by the end of the first half of next year.
The Bank of England hopes that increased rates will accelerate the speed at which inflation comes down, but in the meantime further increases may prolong the cost of living crisis experienced by businesses and consumers, which could lead to further costs increases.
Mortgage rates are expected to settle sometime next year, with a slight fall in rates already spotted recently and with economists predicting an average rate between 3.5% to 4.5%.
Insolvency levels to keep increasing
In the summer it had been reported that company insolvencies had increased by 92% in the first half of the year compared to the same period in 2021, and the latest figures show an additional 40% year in England and Wales year on year in Q3.
The Insolvency Service said the figures comprised of 4,800 creditors’ voluntary liquidations (the most common form of insolvency process), 492 compulsory liquidations, 274 administrations and 29 company voluntary arrangements, bringing compulsory liquidations to their highest levels since the start of the pandemic.
Continued support for businesses
Throughout all of the challenges of 2022, both the expected and unexpected ones, businesses have been able to rely on our unwavering support as we help them keep moving on the road to recovery, growth and success.
In 2022 we supported more introducers and businesses with our asset-based funding solutions, providing guaranteed access to liquidity, a pivotal requirement that sees businesses survive and thrive in turbulent economic times.
Turning the page on 2022
2022 was yet another year that couldn’t be fully predicted on both a national and international scale. In turbulent times, it is vital that business owners have access to reliable funding lines that they know will help protect their business, employees, suppliers and clients. That’s why we are proud to be the funding partner of choice for so many businesses across the country and we remain committed to continuing to support more introducers and businesses in 2023.