Overview: Looking back: The retrospective view of 2022

The economy is currently experiencing massive socio-economic changes, staffing crises are affecting multiple sectors simultaneously.  Workforce pressures remain one of the biggest issues facing all sectors of the UK Economy.

The reduction in available labour is, and was, interconnected to the UK’s exit from the European Union and the exodus of overseas nationals which returned to native soil during the years of the Pandemic. In reverse, there are also the challenges of fewer EU workers travelling to Britain given the current economic climate, coupled with the government’s new post-Brexit immigration points-based Visa programme.

Baseline salaries are front and centre of corporate decision making, however, employers continue to be hesitant to bite the bullet and absorbed additional fixed costs when the global economy and investment markets remains in turmoil. Employers need to think carefully and consider their employee engagement and earning strategies or run the risk of handing top talent to competitors.

In February 2022, Russia invaded Ukraine. This tragic event continues to have profound consequences for the Ukrainian people.  The ramifications of the war for the global economy have also been far-reaching, setting in motion a chain of events which have resulted in seismic shocks in the energy market and limitations on the exportation of commodities from the region. The result, persistent and rising inflation.

The once-negative interest rate curve is now rapidly growing, impacting the cost of products and services.  Across the world, economies are bracing for a potential recession and people and businesses are facing a cost-of-living crisis which many of us have not witnessed before.

The recent political changes have also caused economic uncertainty and weakened global confidence in the UK financial system.  Three Conservative Party leadership changes in relatively short succession, coupled with an intermediate lack of understanding on how interconnected and important the Bank of England stabilisation effect is on the political landscape have all undermined important opportunities for recovery.

As the cost-of-living increases, spiralling prices have resulted in a drop in living standards and disposable income. Spending patterns change as consumers start to tighten their belts and watch expenditure levels.

ESG issues are no longer a box ticking exercise. From portfolio managers to corporate business leaders, all are expected to be accountable for their corporate footprint.

Betsy Williamson CEO, Core-Asset Consulting

Fund Management businesses that rode the accelerated wave of technology advancement pre and post lock-down, and the healthcare and pharmaceutical focus brought about by the Pandemic are now grappling to re-adjust investment decision making. Investment stylisation is less likely to flex, and for those firms and portfolios wedded towards a distinct regional focus, or growth and ultra-growth philosophy, re-adjustment may take some time. We could be ushering in a cycle of Value and Quality Investing as market sentiment starts to turn.

The pandemic triggered an accelerated move towards digitalisation across the financial and professional services industries from functional operations to product design and the customisation of customer interactions.  It also provided added impetus to policymakers and regulators to turn their attention towards the continued and increased risks of the digital age and how to protect customers and clients as more transactions move into digital format.

The demand for sustainable investment strategies and products is projected to continue. International policymakers are squarely focused on the selection of green based criteria, seeking more data and reporting from investors and shareholders alike.  ESG issues are no longer a box ticking exercise. From portfolio managers to corporate business leaders, all are expected to be accountable for their corporate footprint.

Diversity and inclusion continue to be a priority for the professional services industry in Scotland. The UK FCA has indicated that it expects to see “sufficient diversity” in regulated firm’s leadership teams, with Diversity and Inclusion acting as a key consideration in “positive business conduct”. The focus is to continuing asking tough questions of firm’s ethnicity, gender, and wider diversity policies and representation and whether business cultures are open and inclusive.

Financial services and professional service firms will need to be more open minded to the concepts of flexibility, re-training and work based transferable skills, especially if the scales tipped by COVID and the UK’s Exit from the EU are to be re-balanced.

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