What do directors want in 2022?

Kitty Ussher, Chief Economist, Institute of Directors

2022 has been an uncertain year for business so far, with Omicron threatening the economic recovery from Covid at the end of 2021, the energy crisis increasing costs for business, and the crisis in Ukraine posing further uncertainty not to mention acute supply chain issues for some industries. Despite these difficulties, the economy had a strong start to the year, shrugging off concerns over Omicron and getting back to business in January before the Plan B restrictions were fully relaxed.

IoD members are broadly optimistic about the future prospects of their organisations: their organisations have plans to grow and expect revenues to rise in 2022. The number of businesses who plan to raise levels of investment is higher than those planning to reduce investment.

However, that is not to say that the year ahead won’t present difficulties, with rising inflation now hardwired into routine business decisions, costs expected to rise particularly fast over the next 12 months and the longer-term impact of the Ukraine crisis is still uncertain. The key question as we go into April is whether consumer confidence will remain sufficiently strong to keep the economy growing. As highlighted in the IoD’s short report, What Do Directors Want in 2022?, we went into 2022 with the areas of highest concern for business being the wider UK macroeconomic environment, skills shortages, and international trade.

Following Brexit and the difficulties that the transition to the new trading relationship with the EU has presented for exporters, there is a need to rebuild confidence in trade and support British exporters to find new opportunities in the wider world. April’s increase in National Insurance contributions will present significant difficulties for organisations and will feed into the wider cost of living crisis and squeeze on business finances.

Since that report was published, rising energy costs have highlighted the urgent need for business to transition to green energy alternatives; with a new focus on energy security and their decision to transition away from Russian oil and gas by the end of 2022, the government is also now focused on the need to transition away from reliance on fossil fuels.