It’s that time of year, when Business Link Magazine invites the region’s business leaders to offer up their predictions for the year ahead.
It has become something of a tradition, given that we’ve been doing this now for over 30 years.
Here we speak to Vinod Patel, Deal Advisory Partner at BDO LLP.
Whilst macro-economic headwinds have continued to create a difficult trading environment for many regional East Midlands businesses, their resilience and ambition remains unwavering. The region is well known for its strong manufacturing, logistics and technology base and these sectors will continue to evolve in the coming months. Businesses that successfully leverage emerging technologies and automation will attain enhanced productivity and efficiencies. This is increasingly important in a time of labour challenges (availability and cost), tighter budgets impacting operational and capex spend and higher ‘growth’ targets.
It goes without saying that the Autumn Budget has definitely added an additional layer of pressure for many businesses; notwithstanding, it has provided a degree of certainty about how the UK and regional East Midlands economy will look in the coming years. Yes, the National Insurance Contribution (NIC) increase will sting for many, undoubtedly impacting on cost bases in 2025. For some, this will result in a reduction in headcount, a pause on pay rises and a freeze on recruitment, amongst other things. What it’s likely to also bring, is a greater examination of pricing strategies (by those businesses that are able to) in response to increased costs.
Against what remains a challenging business landscape, the East Midlands region must continue to invest in education and skills development, ensuring that the workforce is equipped to meet the demands of a rapidly changing job market. Local universities and colleges will continue to attract students and researchers, contributing to innovation and economic development. However, this also requires greater collaboration with businesses to provide tailored training programmes, fostering innovation and entrepreneurship. Retention of talent in the East Midlands is also critical and the region’s strategic location certainly offers a varied mix of urban and rural living which appeals to a broad talent pool. This is complemented by affordable housing, high quality education, healthcare and a range cultural and recreational activities.
Of equal importance, is the strong transport infrastructure, including major motorways, rail links (although these would benefit from increased investment) and proximity to East Midlands Airport, all supporting increased national and international trade in 2025 and beyond.
Overall, there is a growing sense of optimism and excitement for the East Midlands in 2025 and beyond, thanks to a relatively stable base post-election. Additionally, government initiatives and local enterprise partnerships are actively supporting growth through investment in infrastructure, business support services, and skills development. This was evidenced most recently, through the approval of the £160 million East Midlands Investment Zone (“EMIZ”) and East Midlands Freeport investing more than £2 million in the Future Energy Skills Hub (“FESH”). Funding of this nature certainly helps to create a more business-friendly environment that encourages investment and expansion – something that a number of East Midlands businesses and entrepreneurs are focused on in the coming months.
Combined with the market expecting interest rate reductions during the next 12 months (likely to be welcomed by many), this may further strengthen appetite for deals – trade, private equity, debt and IPOs. M&A activity could also be triggered by a desire to consolidate, particularly in those markets that are becoming increasingly fragmented and/or facing revenue and margin pressures.
In short, investment in people, technology and infrastructure must continue to be the priority, to ensure that the region (society and economy) remains competitive and forward-thinking.
