UK economy: Firms are optimistic but Trump’s trade wars loom large
The majority of British business leaders are optimistic about growth potential, despite also being concerned about Trump’s US tariffs and the impact of trade wars on their organisation.
According to a new report by Capgemini, 63 per cent of business leaders in the UK are planning to increase investment this year, as the reported noted 6 in 10 are optimistic about their growth potential for 2025.
Rob Walker, managing director UK business unit, Capgemini stated that “it’s encouraging to see that UK business leaders are feeling more optimistic about their growth potential this year.”
“Our UK clients certainly echo the findings that their technology investments will play a pivotal role in enabling them to enhance competitiveness and productivity in 2025,” he added.
Despite that, seven in 10 are concerned about trade tariffs and the impact of trade wars on their organisation.
On Monday 20 January, Donald Trump will be inaugurated as the next president of the US, with the promise of trade wars and tariffs. European and British firms have previously expressed concerns about the impact on trade with the US, seeking exemptions.
It was reported in the Times that independent forecasts suggest that tariffs would cause Britain’s GDP to fall by as much as 0.9 per cent.
The report revealed that as a result of fears of trade wars and economic uncertainty, almost eight in 10 UK businesses are de-risking their supply chains.
The businesses have reported to be investing in emerging countries to reduce reliance on China, while 63 per cent are focusing on friend shoring by moving sourcing and production to countries which are considered ‘allies’.
Businesses in the UK have said they are ramping up sustainability investment, with two thirds planning to increase investment in this area.
Leading the top investment areas is climate technologies, followed by sustainable research and development, biodiversity, and water.
In order to achieve this, UK businesses are investing in batteries and solar, followed by nuclear energy, hydrogen and wind energy.
Additionally, Gen AI is the top tech investment priority for eight in 10 UK businesses, followed by cloud (41 per cent), data analytics (33 per cent) and cybersecurity (30 per cent).
Commenting in this, Walker added that “we know that the UK is one of the leading destinations in the world for AI and digital innovation, with a thriving ecosystem that spans academia, engineering, entrepreneurship and progressive policy making.”
“UK businesses are in a prime position to fully unlock the opportunities of this transformative technology, and crucial to this success will be investing in data and engineering upskilling, while aligning their technology investments with enhancing their sustainability and customer engagement,” he concluded.
This comes after it was revealed last week that the AI sector received an average of £200m in private investment daily since July, as firms rally behind Starmer’s blueprint to turbocharge AI.