Businesses Face Continued Economic Uncertainty as Inflation and Energy Costs Remain in Focus
Business leaders from across the region joined Hawsons and the Bank of England for our latest Economic Update Webinar, where Paul Mount, Agent at the Bank of England, shared insights into the current economic landscape and the factors influencing inflation, interest rates, investment decisions and future growth.
The session explored how recent global events are shaping the UK's economic outlook and what businesses should be considering as they plan for the months ahead.
While uncertainty remains a dominant theme, the discussion also highlighted areas of resilience and optimism among businesses.
Here are five key takeaways from the webinar.
In this article
1. The Challenge for Businesses Remains "Relentless Volatility"
Opening the session, Hawsons Managing Partner, Pete Wilmer, reflected on what many business owners have experienced since 2020, describing the period as one of "relentless volatility".
From the pandemic and supply chain disruption to inflation, rising interest rates, geopolitical tensions and energy price shocks, businesses have faced a succession of challenges that continue to impact planning and decision-making.
The discussion acknowledged that many organisations are still navigating this uncertain environment while seeking opportunities for growth.
2. The Bank of England's Focus Is on Preventing Inflation Becoming Embedded
One of the strongest messages from the webinar was that the Bank of England's primary concern is not simply today's inflation levels, but the risk that inflation becomes embedded within the economy.
Paul Mount explained that while central banks cannot directly control global energy prices, they closely monitor whether higher costs begin feeding into wage demands and business pricing decisions.
If businesses increase prices and employees seek higher pay to offset rising living costs, inflationary pressures can become self-sustaining.
This risk, often referred to as "second-round effects" or a "wage-price spiral", remains a key factor influencing monetary policy decisions.
3.Today's Labour Market Looks Very Different to 2022
A significant point made during the session was that current labour market conditions differ from those experienced during the energy crisis following Russia's invasion of Ukraine.
According to the Bank's assessment:
- Labour shortages have eased significantly.
- Vacancy levels have fallen from post-pandemic highs.
- Wage pressures are less intense than they were in 2022.
- Consumer demand is generally softer.
These factors may help reduce the likelihood of inflationary pressures becoming entrenched, although policymakers continue to monitor developments closely.
4. Artificial Intelligence Is Already Influencing Recruitment Decisions
Artificial Intelligence was one of the most discussed topics during the Q&A session.
While there is no widespread evidence of businesses replacing large numbers of employees with AI, Paul noted that many organisations are reviewing recruitment decisions more carefully than they might have done previously.
Rather than automatically replacing employees who leave, some businesses are exploring whether technology and AI tools can support existing teams more efficiently.
The longer-term impact of AI on productivity, employment and economic growth remains uncertain, but it is already influencing workforce planning and investment decisions across a range of sectors.
5.Business Confidence Remains More Resilient Than Expected
Despite the economic uncertainty discussed throughout the webinar, attendee responses suggested a degree of resilience among participating businesses.
Webinar Poll Results
Investment Intentions
When asked how they expected business investment levels to change over the next 12 months, nearly two-thirds (60.5%) of respondents said investment would remain broadly unchanged.
Importantly, more than one in ten businesses (11.6%) expected investment to increase by more than 5%, while a further 11.6% anticipated a reduction of up to 5%. Only 7% forecast a reduction of more than 5%.
| Option | Percentage |
| Decrease by more than 5% | 7.0% |
| Decrease by up to 5% | 11.6% |
| Remain broadly unchanged | 60.5% |
| Increase by up to 5% | 0% |
| Increase by more than 5% | 11.6% |
| Unsure | 9.3% |
The results suggest that, despite ongoing economic uncertainty and geopolitical risks, many businesses are maintaining a cautious but stable approach to investment rather than implementing significant cutbacks.
Employment Intentions
Business confidence was perhaps even more evident when attendees were asked about their recruitment plans.
Almost half of respondents (47.9%) expect headcount to remain broadly unchanged over the next 12 months, while more than 31% anticipate increasing employee numbers. In contrast, just 12.5% expect a reduction in headcount.
Responses:
| Option | Percentage |
| Decrease by more than 5% | 2.1% |
| Decrease by up to 5% | 10.4% |
| Remain broadly unchanged | 47.9% |
| Increase by up to 5% | 25.0% |
| Increase by more than 5% | 6.3% |
| Unsure | 8.3% |
These findings were particularly noteworthy given the wider economic backdrop. Commenting on the results during the webinar, Paul Mount observed that the audience appeared more optimistic than some of the broader business intelligence currently being gathered by the Bank of England across the UK.
The poll results indicate that many businesses continue to focus on growth opportunities, investment and workforce expansion despite continued economic uncertainty.
Commenting on the findings, Pete Wilmer, Managing Partner at Hawsons, said:
"Businesses have become accustomed to operating through periods of relentless volatility. What stood out from this discussion was not just the challenges ahead, but the confidence many organisations still have in their ability to invest, grow and create opportunities."
Looking Ahead
A recurring theme throughout the discussion was the importance of balancing inflation control with economic growth.
The Bank of England continues to assess the impact of global energy markets, business confidence, labour market conditions and inflation expectations when considering future monetary policy decisions.
For business owners, the key message was clear: while uncertainty remains, understanding the economic environment and planning proactively will be essential for navigating the months ahead.
The webinar also demonstrated that, despite the challenges facing the UK economy, many businesses remain focused on investing for the future, creating jobs and pursuing growth opportunities.
Watch the Webinar Recording
If you were unable to attend, or would like to revisit the discussion, you can watch the full webinar recording below:
About Hawsons
Hawsons is one of the UK's leading independent firms of chartered accountants and business advisers, supporting businesses, individuals and organisations with audit, tax, corporate finance, wealth management and business advisory services.
To learn more about our events, insights and business support services, visit www.hawsons.co.uk.
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