It influences all of the EY Geostrategic Business Groups top 10 political risks for 2021: COVID-19 will not only influence these discrete political risks in 2021 it will also generate high levels of uncertainty about the policy environment that companies face. Impact of Covid-19 on UK businesses - Bank of England It must also consider historical and projected information under various scenarios. By clicking the "Submit" button, you are agreeing to the As a business in the UK, you have to be wary of political factors that can alter the entire business scenario. Additionally, the government has noted that it aims to bring the national living wage threshold down for those who are 21 years old by 2024. In many countries, COVID-19 has also exacerbated tensions around economic inequality, access to healthcare and social justice. This text highlighted that there would be a continued shift to online consumption and that by mid-2021 the UK economy would, with vaccination, enter a period of post-pandemic recovery with a predicted uplift in consumer expenditure on hospitality and travel by the end of the second quarter of 2021. Issues of climate change became even more acute than they already were, with a record number of natural disasters, including fires, hurricanes and droughts. All firm must follow the law and rules because several aspects on government policy given a lot of impact to an industry. Passionate about generating insights to help executives make better-informed decisions. 6. However, note that climate change also offers business opportunities for willing businesses. The TCA also affirms the UKs commitment to maintaining a system of carbon pricing but is silent on methodology. Note that for a good number of businesses on tight margins, every pound spent on documentation simply entails less revenue for wages, hiring, and investment. Although there was a marked improvement in reported sales from around -30% relative to what they would have been in the absence of Covid in 2020 Q2, respondents to the October DMP survey estimated that sales were still 17% lower than they otherwise would have been in 2020 EY is a global leader in assurance, consulting, strategy and transactions, and tax services. remember settings),Performance cookiesto measure the website's performance and improve your experience,Advertising/Targeting cookies, which are set by third parties with whom we execute advertising campaigns and allow us to provide you with advertisements relevant to you,Social media cookies, which allow you to share the content on this website on social media like Facebook and Twitter. Trust in governments rose at the beginning of the COVID-19 pandemic, but through the course of the response, governments have come to be perceived as the least ethical and least competent stakeholder, according to the 2021 Edelman Trust Barometer. Prime Ministers room for manoeuvre declines over time like the space around a flooding island. While the world has battled COVID-19, the war against climate change has continued. All rights reserved. Since they will be paying higher prices, it will surely limit their purchasing power, causing inflation that will, in turn, affect business costs. Discover how EY insights and services are helping to reframe the future of your industry. In the 2022 Gartner CEO and Senior Business Executive Survey, we surveyed more than 400 senior business leaders about their 2022-23 priorities. Global political risk hit a multi-year high in 2020 and is set to persist in the year ahead. All these actions can encourage competitiveness and open new market opportunities. Communicate and coordinate political risk management across the company. Listen to, and collaborate with, key stakeholders. Please see www.pwc.com/structure for further details. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. Before the pandemic, education reform was on the agenda in most countries. Select your location Close country language switcher, EY Global Geostrategic Business Group Insights Leader; EY Global Research Institute Director EY Knowledge. Although it may be ambitious to expect changes to the regime to happen in 2021, we should at least hear more about the likely direction of travel. These include: Governments can raise or lower corporation tax. Although the challenges governments face are nearly universal, how leaders go about tackling them might vary significantly, depending on the government structure and ideology. World leaders face six interconnected challenges, and although approaches and solutions will differ by country, taking key actions will benefit all. 3. Geostrategic priorities to manage these risks. \n Thank you for your patience. However, during 2021 the UK will consult on new legislation to remove all links to DAC 6 and to implement its own regime as HMRC puts it, in order to move from EU to international rules. NASA officially ranked 2020 as tied for the hottest year on record, and the past seven years have been the warmest in human history. The insights and services we provide help to create long-term value for clients, people and society, and to build trust in the capital markets. EY-Parthenon teams help develop and deliver strategic opportunities for clients by providing in-depth market, competitor and customer insight incorporating financial, operational and implementation perspectives across their entire organization. Another call for evidence published in December suggests that the government is looking at possible changes in relation to digital platforms in the sharing economy. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. Holistic and data-driven analyses will enable governments to make informed and defensible decisions for all constituents. Many might be able to make a positive impact through green recovery programmes and other related measures to direct stimulus funding to clean energy businesses, sustainable production and green infrastructure. The next decade will be one of rapid and revolutionary change as governments, consumers and companies begin to take climate change seriously. These changes can be economic, legal, or social and can include the following factors: In a referendum on 23 June 2016, the UK electorate voted to leave the EU. British Petroleum Companys SWOT and The inlets of parliamentary rebellion, media criticism and party division fill up at different times, and electoral wins can dam them temporarily, but the waters still rise. and A decade-long boom, generated substantially from inexpensive finance and lower-cost energy, led to structural stresses such as highly leveraged debt, crumbling international alliances and bubble-like asset prices. Particular attention is paid to the moral and ethical questions raised by In so doing, we play a critical role in building a better working world for our people, for our clients and for our communities. Overseas Business Risk - Sweden To accept all cookies click 'Accept all'. The most important? Asking the better questions that unlock new answers to the working world's most complex issues. Analysis Note that the prime minister is the head of the government who is elected for a five-year term. They can also affect Uncertainty continues in the UK business markets and investors due to the UK leaving the EU. Now that the Brexit transition period has come to an end and the UK is fully out of the EU, 2021 may be the year when we begin to see the UK moving away from EU VAT law in some areas or at least signalling where it intends to do so in the future. 8 a.m. 7 p.m. Although patients initiated cancellations in some cases, capacity constraints have also been a big factorand all of this deferred care is expected to increase healthcare challenges in 2021 and 2022. and Firms in the UK economy that export more goods and services to the EU, import more materials from the In addition, border management policies continue to shift based on new data on the virus and vaccines. We bring together extraordinary people, like you, to build a better working world. Birmingham B15 2TT lifestyles. Health and Safety Legislation. The home state is in turn obligated to share the report automatically with all member states affected by the arrangements. February 17, 2021. It is recognised by decision makers that, in the longer term, the survival and success of a business are dependent upon adopting objectives and strategies In Parliament the PM has suffered rebellions over social care, parliamentary standards and Plan B. During 2022, the EU will have to adjust to Germanys new three-way coalition and to the continuing fallout from the on-going 2022 French presidential election. However, the impact this factor will have on a business in the UK will more or less depend on whether the tax is paid directly to the government or indirectly via businesses. Companies should leverage the cross-functional teams and lessons learned from COVID-19 crisis management to enable better communication on the political risks stemming from the pandemic. WebA perfect example of the political climate having a major influence on business can be seen in the fallout that has followed the UKs vote to leave the EU in 2016. The PMs over-promising enthusiasm, whether over Brexit, levelling up or COVID-19 has ground his and his partys poll position into the red, and for the Conservatives nothing is so unpopular as not being liked by the public. Note that any increase in income tax entails that workers pay more tax on their income, and are left with less money to spend on goods and services. They are more likely to lead to disputes as UK VAT moves away from the EU system. The incoming Biden administration will realign US policy in 2021. In addition, climate change can instigate innovation, inspire new products and services that are genuinely less carbon-intensive or which enable carbon reduction by others. At that point, a transition period began that ended on 31 December 2020. read. Across the breadth of life and environmental sciences, we discover, apply and translate science to forge major advances in human and environmental health. In addition to transforming traditional education programmes to better serve all students, governments must determine how to pave the way to a better future via adult education, as well. Gartner Terms of Use However Average Wage Inflation stands at 3.5%, so you might find yourselves under pressure to increase salaries by more than the rate of inflation. Experts believe that increases in minimum wage will pile up pressure on businesses and will increase unemployment as businesses strive to safeguard their bottom line. And the geopolitics of technology and data also warrants close assessment, as some executives may be unaware how widespread the impact of this risk could be on their business. Since BP operates in different areas around the world, each area has its own political decisions. Much turns on the extent to which the coronavirus vaccine roll out and new Trade and Cooperation Agreement (TCA) delivers an economic boost and whether that comes quickly enough for the Budget on 3 March to be used for tax-raising. They also plan on making a digital society where every user will feel safe and protected in terms of their information. This entails that those businesses that leverage the national minimum wage as a basis for their employees pay will have to pay their workers more every year, at least to stay in line with government guidelines. With more than 1,000 academic staff researchers and around 80 million new research funding per year, we are dedicated to performing world-leading research with the ultimate goal of improving human health. Governments must now urgently identify the combination of regulations, policies, organisational structures and skills required to create transparency and restore trust. Forward-thinking countries are targeting such sustainable programmes that will help achieve the Paris Agreements net-zero targets while providing growth and future jobs. Each will bring a unique and important perspective when considering options. Major trading partners Whilst the UK has decided to remove Pros and Cons, 4 Most Tax Efficient Ways to Take Money Out of a Company, What to Do When Forced to Work Night Shift Against Your Will. Governments must seek to repair societies and communities in an inclusive manner, reducing inequality and the underlying vulnerabilities. The government has extended this power to depart from CJEU decisions to the Court of Appeal and its equivalents. The current crisis has also highlighted how a lack of clarity about the roles and responsibilities of national versus subnational governments leaves constituents feeling vulnerable. While 2020 was the year COVID-19 took the world by storm, the pandemics medium- to long-term effects on the geopolitical environment will begin to crystalize in 2021. 2020 EYGM Limited. On 12 August 2020, my forecast for the UK economy was that there will be a period of significant economic growth from 2023. Digital platforms, if employed strategically, can serve as a great equaliser. Proud feminist. COVID-19 restrictions and the immediate effects of Brexit are stifling economic growth when the government needs to start recovering the costs of its pandemic response. Even before the events of 2020, global consumer and citizen trust was at an all-time low. Most stakeholders have accepted that going back to the way things were in 2019 is not an optionor even a goal. Six macro factors that will reshape business this decade The pandemic coincided with and catalyzed societal shifts, spurring a strategy reset for many industries. Economic, social and political issues In 2021, shortly after the death anniversary of George Floyd, Vodafone UK was quick to become even more sensitive to Black people and other ethnic minorities working for the company. The World Bank is predicting a modest rebound in 2021, with 4% growth in global output, contingent upon broadscale COVID-19 vaccination success and government policies and programmes that promote private-sector growth and reduced public-sector debt.