Despite the challenging economic climate last year, 76% of senior decision-makers consulted from a range of business sizes and industries were happy with their business’s performance, and around one in six (15%) were very happy.
Nevertheless, this confidence waned in the face of the continued financial and geopolitical uncertainty forecast for 2023. Of the 46% of respondents who felt less positive about performance in the next 12 months, over one in ten (14%) felt much less positive than last January. The results were mixed, however, with over a quarter (27%) of respondents stating they felt more positive than the previous year, with 7% feeling much more positive.
Of those who felt less positive, nearly a third (31%) said the risk of having to potentially turn down new and less certain opportunities due to economic instability was the biggest internal factor impacting positivity.
Three in ten (30%) said both the availability of experienced staff to recruit and the inability to sufficiently invest in their operations/materials were contributing to their lack of positivity. Other factors included overextending the business to make a profit (24%) and needing to train or reskill staff (18%). Interestingly, one in six (16%) felt that no internal factors had contributed to their lack of positivity but that external factors were solely responsible.
Growth: Over a quarter (28%) of senior decision-makers were confident about their growth for 2023 – double the amount (14%) who said they were unconfident. Over half (57%) of the sales, media and marketing sector were confident of their growth, the highest across the industrial sectors, with finance (47%) and the manufacturing and utilities sector following (43%).
Profit: Nearly a third (32%) of senior decision-makers also felt confident about profits for 2023, contrasting with one in ten (10%) who were unconfident. Over half (57%) of the sales, media and marketing sector felt confident of their profits, once again the highest across all sectors, with manufacturing and utilities (54%) and architecture and engineering (47%) following.
Trading: Over a quarter (26%) felt confident about trading for this coming year- contrasting with 6% who were not. Nearly half of the legal (44%) professionals felt confident in trading in 2023, with other optimistic industry sectors being sales, media and marketing (40%) and manufacturing and utilities (37%).
Recruitment: Just over one-fifth (22%) felt confident about recruiting talent – double the number of respondents who are unconfident in this area. Three in five (60%) within the HR sector are confident about recruiting, the highest across industrial sectors, with IT and telecoms (40%) and manufacturing and utilities (34%) following.
Confidence from coverage
UK businesses have faced unprecedented upheaval; directors are understandably cautious about the year ahead and how current economic challenges may hinder their ability to capitalise on new opportunities.
Recruitment and business investment are also both reasonable concerns, yet it is encouraging that 76% of senior decision-makers questioned were happy with their 2022 performance. This result is evidence of UK firms’ resilience and ability to evolve their business models and weather even the most extreme circumstances.
At points, the findings are somewhat contradictory, and this highlights that every business' experience is different. No linear narrative of the current economic circumstances applies to all organisations, and there will always be winners and losers across the commercial spectrum.
As clients embark on what is likely to be a testing year for all, having the correct insurance in place can offer essential protection against the challenges they may face in 2023. Recent Gallagher research found that over 40% of commercial properties were underinsured. We therefore advise all clients who own commercial property to undergo a valuation of their premises prior to renewal this year if they have not done so already.
Beyond property, businesses should consider a range of other insurance products within their program. The UK suffers the third highest number of ransomware attacks globally1, and cyber insurance offers protection against the increasing threat of cyber-attack. Trade credit insurance can offset supplier defaults and ongoing supply chain issues, while directors’ and officers’ (D&O) insurance covers the cost of compensation claims made against business's directors and key managers for alleged wrongful acts.
Your insurance broker is on-hand to ensure you understand how insurance can support and protect your business in 2023. They can advise on what products and level of cover are suitable for your organisation to help protect against financial losses in what continues to be a time of extraordinary economic challenge in the UK.
