Financial trends and challenges coming up in 2023
By Mr Bankruptcy
17th January 2023
Without doubt 2022 was one of the most financially challenges years that many businesses and individuals have experienced. Unfortunately, the predictions for 2023 don’t paint a much brighter picture. Here’s what some of the experts are saying.
The 2023 outlook for businesses
A report by JP Morgan claims that UK business leaders are less optimistic about the future than they were a year ago. In 2022, 66% said they were optimistic about the future of the global economy, but that figure has dropped to 46%, and 69% of UK business leaders expect a recession in 2023.
The fears of business leaders are supported by the British Chambers of Commerce which expects the UK economy to be in recession before it returns to growth in the final quarter of 2023. Even then, recovery will be slow.
While inflation is expected to have peaked and levelled off through 2023, the enduring high rate will continue to put pressure on incomes and this will be the main driver for a recession as people cut their spending.
The high cost of fuel, ongoing supply chain issues, increasing taxes and rising costs of materials and labour, the difficulty to recruit and retain staff and rising interest rates all mean business must continue to juggle pressures from numerous directions, so investment will also be negatively impacted, further slowing growth.
The 2023 outlook for individuals?
The cost-of-living crisis and the impact this has had on people have made the headline news for much of 2022 and Sky News reports that UK households are facing a cost of living “groundhog day”, suggesting that disposable income will fall even further in 2023 and standards of living will get worse before they begin to improve again.
PWC is predicting that real wages in 2023 are set to fall back to 2006 levels. The amount of disposable income in UK households dropped by around 10% in 2022, it is likely to fall further in 2023.
Financial pressure and pressure in the housing market, with house prices predicted to fall, means the UK can expect to see a record fall in happiness levels.
Reasons to be optimistic? Be prepared anyway!
We’ve had better GDP growth figures this autumn than expected and the UK might show positive GDP growth for the last quarter. This means we could avoid the official definition of recession (2 consecutive quarters of negative growth – i.e. shrinkage) but I don’t think that’s going to affect the realities of life for most people or make them happier.
The outlook for 2023 is still likely to be bleak for businesses and individuals, putting pressure on many of us to find ways to cut costs and manage budgets in the context of rising costs and falling incomes.
We all need to ensure that we have a clear understanding of our financial situation so that we can identify if we need to seek support or take action before financial problems become unmanageable.
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