Although the UK is expected to avoid recession in 2023, it’s expected that recovery from the economic downturn will take until the end of next year.
Meanwhile, businesses continue to face financial challenges. It may be necessary, for instance, to review working practices and policies to ensure survival and sustainable growth moving forward.
It’s not all doom and gloom, though, and one helping hand may come in the form of new developments in technology.
Here, we examine key trends in business and finance in 2023 and the outlook for 2024 and beyond. This includes tech innovations and consumer behaviour changes across various sectors.
Generative AI to boost business growth
In April 2023 the government announced an initial £100m funding for an expert taskforce set up to drive the next generation of artificial intelligence (AI) in business.
This followed a March Budget investment of £900m in a state-of-the-art supercomputer to provide AI computing horsepower.
At the forefront of this AI revolution will be the creation of BritGPT – a UK version of ChatGPT. GPT – generative pre-trained transformer – is an AI language deep-learning model that creates human-like text.
The UK aims to confirm its status as a science and technology superpower by 2030, with AI systems boasting a wide range of applications across the economy, including strengthened security for finance transactions.
2022 saw a 20 percent rise in the number of finance firms using artificial intelligence to prevent fraudulent business activities.
Key role of AI
Research indicates that broad adoption of new AI systems could triple national growth and productivity rates.
Ninety-eight percent of executives worldwide believe artificial intelligence will play a crucial role in business within the next five years.
And according to Science, Innovation and Technology Secretary Michelle Donelan, artificial intelligence can transform almost every industry.
Overcoming the skills shortage
A national skills shortage has hit nearly all business sectors over recent years, and Brexit resulted in a shortfall of 330,000 people in the UK workforce.
Ninety percent of employers are currently struggling to recruit and keep staff with the necessary skills. And there’s no sign of this changing in the near future.
It’s estimated that by 2030 20 percent of the workforce will be significantly underskilled, costing the UK economy up to £120bn.
Addressing the skills gap is a key challenge for businesses, the government, and educators, and vital to improve innovation and economic growth.
Business trends to minimise the impact of the skills shortage include investment in internal training. Businesses are increasingly implementing their own training and professional development plans, especially in basic and advanced digital skills.
At the same time, flexible hours and remote working can help attract and retain talent. These strategies give employees greater job satisfaction with a better work/life balance. Businesses also benefit with a more stable and productive workforce.
Sustainability and consumer behaviour trends
Consumer preferences change constantly. Businesses of all sizes need to keep an eye on one key global consumer trend over the next few years – demand for sustainable products.
People are increasingly aware of the climate crisis and importance of sustainability, and are favouring brands that share their environmental and ethical values.
This is especially the case with the products they buy most often, such as food, drink, clothes, and household goods.
As the cost-of-living crisis continues to bite, consumers will be looking for more affordable sustainable products and services.
Small businesses are well-placed to provide these, including locally-sourced, seasonal produce.
And focusing on deeper trends within sustainability – ethical considerations as well as environmental ones – can identify gaps and new opportunities to connect with customers. Consumers value brands, products and services that champion workers’ rights as well as net zero.
Ethical sustainability
Environmental, social and governance (ESG) factors will be a key ongoing trend that businesses must keep in mind.
Ethical consumer spending is growing in the UK, in sectors including transport and eco-travel.
Working towards ethical sustainability can also help businesses attract financial backing.
Socially-responsible investors use ESG criteria to screen potential investments by looking at non-financial performance indicators. The number of investment fund managers who take into account ESG is expected to continue rising significantly over the next 10 years.
Continued rise of ecommerce
Although electronic commerce has slowed post-pandemic, it’s still a growing trend, and businesses need to continue to adapt marketing and sales strategies to maximise the opportunities ecommerce presents.
Ecommerce sales are expected to increase 56 percent globally over the next four years, reaching $8.1 trillion by 2026.
In 2019 ecommerce was responsible for 14 percent of retail sales. In 2023, that figure is expected to rise to 22 percent.
Sectors in which consumers particularly like to buy products through ecommerce transactions include electronics, furnishings, and home improvement.
Embracing cryptocurrency
Cryptocurrency – electronic money stored in computer files or e-wallets – is set to become more mainstream from 2023 onwards.
We can expect a clearer regulatory framework to bridge the crypto world with conventional financial systems.
Lawmakers globally are establishing guidelines to make digital money safer and more accessible.
As virtual money becomes more commonplace, more businesses may need to consider accepting crypto payments from customers.
Lessons learnt and new opportunities to be seized
Businesses had to learn to adapt in the wake the pandemic. They now need to anticipate and respond to challenges in another tough economic climate.
Trends for 2023 and beyond emphasise the need for businesses to remain resilient and find ways to grow by building on the lessons already learnt.
Changes in the business landscape are being driven by a range of technological, economic, social, ethical, and environmental considerations.
Meanwhile, businesses face an uncertain outlook amid high inflation and the prolonged effects of Russia’s invasion of Ukraine. The road to recovery will be rocky, as the International Monetary Fund (IMF) points out.
Along with the challenges, though, come new opportunities that astute businesses can make the most of by understanding emerging trend to gain an insight enabling identification of potential gaps in the market.
To gain a competitive advantage, businesses need to pay close attention to factors such as the AI revolution, ethical sustainability, the continuing growth of ecommerce, remote working, and cryptocurrencies.
