Businesses face ‘unprecedented’ political risk ahead of Budget
UK business leaders are battling an “unprecedented scale” of simmering global tensions which are set to impact profitability, according to a new survey.
Concerns have spiked from the beginning of the year, a fresh survey from Beazley has concluded, with 85 per cent of UK business leaders saying political risk is affecting their profitability.
This marks a sharp rise from 70 per cent in January this year.
It comes as firms struggle against a batch of global worries, including the ongoing conflicts in Ukraine and the Middle East.
Tax hikes have also impacted the firms over the past year and heightened the impact on their profitability.
With National Insurance going up 1.2 per cent in the last Budget and further taxes expected to come, UK firms are growing more worried.
Bethany Greenwood, group head of specialty risks at Beazley, said: “Businesses are navigating a risk environment that’s more layered, complex, and unpredictable than ever.
“Political shifts, economic uncertainty and global tensions are converging at an unprecedented scale – and the ripple effect is shaking business confidence across sectors and geographies”
Businesses switch up supply chains
The global outlook rose to 88 per cent in August, from 69 percent in January of this year, in global leaders’ conviction of political landscape affecting their trade.
Other significant changes in the UK were seen in the business’ growth ambitions being dampened and their need to reshape supply chains.
UK businesses believe that the current geopolitical and economic uncertainty will impact their growth plans, with numbers rising to 86 percent from 69 per cent earlier this year.
Vast majority of UK businesses – near 90 per cent – are also expecting to make changes to their suppliers or supply chains due to rising geopolitical tensions. The number is up from 72 per cent from January this year.
On the global stage, 32 per cent of businesses further plan to review the security of their overseas operations – up from 23 per cent in 2024.
Inflations concerns are also higher, with 27 per cent of global businesses, compared to 24 per cent in 2024.
Greenwood said that whilst the risks the businesses are facing are complex, there is still room for growth.
She said, “Firms that proactively reassess risks, embed resilience, and work with insurance partners can protect against shocks, move confidently, and capture growth in emerging tech, energy, and global markets.”
The Geopolitical & Economic Risk & Resilience Survey which interviewed 3,500 global business leaders is set to come out with its full report in October.
By Anna Nix