2018 will be another tumultuous year for business, with a reversal in London’s economic dominance over the UK, continued tension linked to the rise of the flexible economy and a skills crunch due to falling immigration, the Institute of Directors is predicting today.
The IoD, which represents over 30,000 directors, expects to see progress continuing in the Brexit talks, with agreement between the UK and the EU on transition deal by March, but says there are other significant trends that business leaders need to be aware of this year:
- Net migration will fall by at least 50,000, reaching 180,000 – the lowest for six years, bringing the Government the closer to reaching their ‘tens of thousands’ target. While the rights of EU citizens in the UK have been made more certain at the last round of Brexit talks in December, EU inward migration will continue to decline. Firms will, therefore, find it more difficult to recruit the people they need.
- The Treasury will try again to tax the self-employed more like employees. The rise of flexible working and self-employment will continue to put pressure on the tax system, making it likely the Chancellor will take a second stab at levelling the tax playing field by launching a consultation on the issue at the Autumn Budget.
- London’s economic growth will be weaker than the UK average in 2018. The city’s important financial services industry is particularly exposed to Brexit uncertainty, while a fall in immigration and weaker consumer spending will disproportionately weigh on the Capital. Meanwhile, manufacturing is expected to remain buoyant, which will favour other regions.
- Several UK companies will appoint employee representatives to their boards. Under the Government’s recent corporate governance reforms, listed companies will be instructed to give workers a voice on their boards by appointing a non-executive director to represent employees, creating an employee advisory or nominating a director from the workforce. Although they will not be compelled to, and it is very unusual in the UK, the IoD predicts several companies will take the step of appointing an employee to their board in 2018.
- The first people will fly from a reusable suborbital space vehicle. Commercial space exploration will take a step forward in 2018, with the IoD expecting Jeff Bezos’s Blue Origin to come good on their promise to put launch astronauts using their New Shepard rocket. This will spur on the UK space industry, which is waiting for the Government to press ahead with a spaceport.
In total, the IoD makes 14 predictions for the year ahead, including that trade unions will bring further cases against gig economy companies, and that global stock markets will come under pressure to relax listing rules to attract flotations.
Read the full list here.
Edwin Morgan, Interim Director of Policy at the Institute of Directors, said:
“2018 will be another big year for business. The ongoing Brexit negotiations will be playing on many business leaders’ minds, but it would be a mistake to think it’s the only show in town.
“The gig economy has produced much beneficial innovation in recent years, but 2017 saw several legal clashes over employment status, and we expect this to continue over the next 12 months. The Government has so far left difficult questions about rights and tax for the self-employed unsolved, but this may well be the year where the pressure to make changes becomes too much to ignore. Listed companies, meanwhile, will be working out how they respond to the new requirement to give workers more of a voice in the boardroom, which could prove to be a game-changer in UK corporate governance.
“This year will also bring exciting developments, including a step forward for the space industry and a continued boom in entrepreneurialism. Business leaders are optimists by nature, and while there are challenges to be faced, they have remained remarkably resilient over the last year. By the end of 2018, if decent progress is made in the Brexit talks, companies will hopefully be able to look forward to the coming years with greater clarity and positivity about where the UK is going.”
These issues and more will be examined as the IoD hosts its Open House Convention between 12th-14th March, where business leaders and influential figures – including Karren Brady and Henry Dimbleby – will gather to chart the future course for British business.