5 Things to Watch for in 2023

So that was 2022. Ready for 2023?

2022 will be long remembered for the year Russia invaded Ukraine.

What will 2023 be remembered for?

We know the UK will be in recession for most of 2023, and whilst that will come with its own challenges it will also come with opportunities.

So, what might be some of the things we talk about in 2023?

Growing pressure on businesses and governments to respond to climate change. Businesses, shareholders, and customers now see this as a basic requirement, no longer does this give a competitive advantage but a minimum requirement. How will your business respond to this?

Economic challenges, inflation is expected to average 7.5% next year and fall to around 5.5% by December 2023. Interest rates are expected to peak at 4.5%, however this could be higher if inflation remains stubbornly high. Recession will be with us throughout 2023, with growth expected to return in 2024, its exact timing will depend upon how fast inflation falls. How prepared are you?

Employee relations, headlines are full of strike action. Average wages have not kept up with inflation, fuelling the cost-of-living crisis and recession. Public sector wages have grown at a slower rate than that of the private sector. Although inflation is expected to fall, it will continue to be an issue in 2023 with a challenge for companies balancing recession, wafer thin margins with the need to retain top talent and respond to pay demands. What is your planned response?

Staff shortages. The labour market remains tight, and whilst recession is expected to see unemployment double by 2025, this will take time as those industries that have large skills shortages will not be looking to lose existing staff when they are already in short supply. Skills gaps tend to be industry specific, and a rise of unemployment might help fill some gaps as we tread the challenges of post Brexit and record numbers no longer seeking word post Covid. Will AI come further to the fore in 2023?

Onshoring? Global supply chains have been under strain, geopolitical tensions have showed some of the weaknesses of global supply chains, and whilst financially they may offer the best value, they are also an area of growing risk for many businesses which might see a continuation of moves to on shore or at least shorten supply chains. What does your supply chain risk assessment show?

Alternative energy solutions. Energy prices as we know have been out of control in 2022. The risk for many governments relying upon other countries for supply could well see a return to a focus upon internally generated energy. Balancing this with the first point in the article about responding to climate change…coal fired power stations! A focus on reducing consumption is what I recommend to my clients with lots of opportunity to reduce costs through consumption. How will you respond to the end of the government’s energy support in March 2023?

All these challenges will require skill to navigate but being clear upon how recession will affect your business, and that of your customers should be the first area of focus for 2023.

I see businesses reducing investment and looking to slash costs. Tread carefully.

McKinsey’s research shows that companies that showed resilience during a recession focused upon improving their margins by undertaking proactive operational cost cutting, which less resilient companies put off until after the recession.

The Office for National statistics recent publication, “Public opinions and social trends to 4 December 2022” showed when asked about the issues facing the UK today, 92% of adults reported the cost of living as an important issue; other issues frequently reported as important included the NHS (80%), the economy (77%), and climate change and the environment (63%).

The chart below shows the responses

Any surprises from the chart?

What about you?

I’m sure you will have your own personal highs and lows for 2022.

Christmas is a good time to reflect upon 2022 and look ahead to 2023.

For me gratitude has been something I have tried to practice more of this year.

Why don’t you give it a go if you have not tried?

Could you write down 10 things you are most grateful for this year?

For those of you who think 10 is a lot, use the following categories as a prompt:

·????????Health

·????????Career and work

·????????Money

·????????The outside world

·????????Relationships

·????????Material things

Take a look at your list, how does that make you feel?

Then as we look forward to 2023, I’d ask you to do 2 things:

1) If you have not already done so, write down your goals for the first 3 months of the year and place them somewhere you can see on a regular basis. I would also suggest you give some thought as to what you need to do to deliver those goals.

2) And then write down 3 learning points from 2022, and how will use them in 2023?

Finally, thank you for reading my newsletters this year, I hope you have found them insightful and useful.

I hope you and your loved ones have a happy Christmas and a prosperous 2023.

I look forward to sharing more insights with you in 2023.

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Expense Reduction Analysts (ERA) are procurement and cost reduction experts, we work with small companies right through to instantly recognisable brands like BT, DFS and Ikea.

What makes us special, is our cost specialists all devoted to their specific area of expertise which means they can use their knowledge and buying power to rapidly?introduce you to new?insights,?suppliers,?and?processes?to?improve your business and reduce your costs.

Unlike other consultancies if we don’t deliver direct savings, there is no charge.

If you would like to learn more about what the benefits out clients see, please email me at [email protected]