Money (2)

The UK economy is the biggest concern for businesses for 2016, rather than any other external factors, according to the ICAEW.

The survey of ICAEW members in business also revealed that the negative impact of uncertainty about the UK position in the EU was less of an issue than 12 months ago, falling from 50% in 2014 to 41% last year.

External political factors outside the UK are expected to have less of a negative impact in 2016, particularly for businesses that do not export, highlighting the dependence on domestic sales and this is set to continue.

Low inflation is expected to have a positive impact on over a third of companies (36%) but over half (52%) would be negatively impacted by any interest rate rise in 2016.

Any changes in the regulatory and tax environment are expected to have a negative impact on businesses ranging from the increase in the national minimum wage (29%) to an increase in the standard rate of VAT (53%) and an increase in income tax (51%)

Instability in the Middle East and Ukraine is much less of a concern to business with 29% of respondents expecting a negative impact (down from 41%).

Stephen Ibboston, ICAEW director of business, said: "Next year will throw up a number of changes for businesses and they are rightly concerned about them. The reliance on domestic sales for UK growth is highlighted by the negative impact any interest rate increase would have. New year resolutions for more exports continue to be challenged with slow growth in the Eurozone and developing countries.

“This is more worrying when so much emphasis has been placed on exports and rebalancing the economy. The dependence on domestic and consumer sales could mean a car crash for the UK economy in 2016 if sudden and unexpected hazards appear in the road in 2016.”