Is Growth Around The Corner? A Business Review of 2024 and Look Ahead to 2025

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2024 saw a huge change for the UK with a new Labour government taking office promising to create growth and instigate a “decade of national renewal”. Following years of low growth and high interest rates, this is potentially exciting news for businesses, but only if the promised growth actually materialises.

In this article, we look back at some of the key economic indicators from 2024 and what experts predict for 2025. We also cover some key issues businesses should consider and plan for over the next year.

Need help with company or commercial law in 2025? Please get in touch and we will be happy to advise.

Key facts and figures for 2024

Key facts and figures for 2025

  • The UK economy is expected to grow by 1.0% in 2025, according to the BCC’s Quarterly Economic Forecast (QEF)
  • However, PwC has predicted an increase in national output of 1.7% for 2025
  • The Bank of England base rate is predicted to hit 4.3% by the end of 2025, according to the BBC’s QEF

What businesses should think about in 2025

New opportunities created by government policies (and some that may require caution)

The new Labour government remains committed to achieving net zero carbon emissions by 2050 and a 68% reduction in emissions by 2030. The government has announced that it will pursue policies related to home insulation, land management, nature and biodiversity that could represent new business opportunities.

Conversely, the new government has cut £1.3bn of funding for AI projects that was pledged by the previous Conservative government. While growth in AI technology and related business opportunities is widely expected to continue, others are questioning whether we are in an ‘AI bubble’ that could be as bad as, or worse than, the dot-com bubble at the turn of the millennium. Businesses should, therefore, be cautious about how much they invest in AI and what their expected returns are.

That said, the government has brought forward the Data (Use and Access) Bill, which includes relaxing rules around using people’s data for automated decision-making. This could allow businesses to speed up their processes and work more efficiently using AI.

More broadly, a new government with new policies will always tend to create new business opportunities. Still, it is important for businesses to exercise care when committing their resources as the outcomes of these new opportunities can be highly unpredictable.

Borrowing and debt refinancing options

With interest rates coming down and expected to continue falling, 2025 may be a good time for businesses to consider their borrowing.

Lower interest rates will make borrowing cheaper, so those who have held off on taking on new debt for investment could find that the new year offers a good time to seek new financing. For those carrying existing debt, it may be possible to refinance at a lower rate and cut their repayments.

Before making any sort of borrowing decisions, businesses should always seek expert financial advice to ensure they are making a sound financial decision and can secure the most attractive terms. Legal advice on those terms is also recommended.

Changes to employment law

Employment law never sits still, and the new government has committed to a number of key changes.

If enacted, the Employment Rights Bill will make major changes to UK employment law. Perhaps most significantly, it will give employees the right to parental leave, sick pay, and protection from unfair dismissal from the first day of their employment.

Other measures include banning exploitative zero-hours contracts, ending ‘fire and rehire’ and ‘fire and replace’ policies, and strengthening protections for new mothers.

The government has also proposed an Equality (Race and Disability) Bill to expand the right to equal pay to include disabled people and those from ethnic minority backgrounds.

Businesses will need to monitor these changes to employment law and ensure that their policies and procedures comply with any new rules that come into force.

A move towards greater accountability for company directors and chief executives

The government has proposed two new Bills that introduce greater accountability for directors of large companies and the chief executives of water companies. While this won’t immediately impact most businesses in the UK, it could signal the start of a broader move towards greater accountability for directors and senior executives.

The proposed Audit Reform and Corporate Governance Bill is intended to ensure that regulators of significant UK companies can hold more directors accountable for making incorrect financial statements (currently, only those who are members of an accountancy body can be held accountable).

The Water (Special Measures) Bill includes a proposal to make water bosses personally criminally liable for any lawbreaking by their companies. While this only impacts one industry, if the measure comes into force and is deemed successful, there is the possibility that it could be applied more widely.

Staying up to date with regulatory compliance

Regulatory compliance is always an important concern for businesses, but the presence of a new government with a strong majority means that a raft of new major legislation is likely to come into effect over the next few years. How much of the legislation will come into force in 2025 is hard to predict, but a strong majority means the government may be able to push legislation through faster than the previous government.

Therefore, businesses would be wise to monitor any new legislation that might affect them and ensure they have the right legal advice and support to maintain compliance.

How Longmores can help your business

At Longmores, our Company and Commercial Law team can help businesses to make the most of the opportunities that new policies and economic conditions bring, while also assisting with effective risk management for any new challenges that arise. We can review contracts, policies and procedures against new legislation, as well as helping with creating effective frameworks for managing regulatory risks.

For expert support with all aspects of company and commercial law, please get in touch and we will be happy to advise.

Please note, the contents of this blog are given for information only and must not be relied upon. Legal advice should always be sought in relation to specific circumstances.