Farmers and growers are increasingly concerned by reports that the Treasury is considering major changes to Agricultural Property Relief (APR) as part of the forthcoming budget, something which would have a serious impact on many family farms. APR allows working farms to be passed from the principal farmer upon their death to the next farming generation, by making such businesses free from Inheritance Tax so long as they are working farming businesses. Significant changes to, or the abolition of, APR could have a disproportionate effect on small family farms, which are the backbone of British agriculture. NFU analysis of APR suggests that scrapping it would only save the Treasury £120 million a year, whilst the negative impact on farming would be much larger. The Union recently wrote to Chancellor Rachel Reeves about the vital need to protect family farms and tenants through APR, and NFU President Tom Bradshaw also made the case to the Chancellor at the Labour Party Conference in Liverpool this year. Mr Bradshaw said today: “NFU members keep seeing these alarming media reports and they are understandably worried and upset. Major APR changes would put at risk many farming families’ succession plans and consequently undermine the government’s own ambitions for food and environmental security." “I’m also very concerned that changes would damage the tenanted sector, as landowners will have much less incentive to let land to agricultural tenants. In short, this “Family Farm Tax”, which is what removing APR amounts to, could be too much for some farming businesses which are already struggling with numerous challenges.” Mr Bradshaw added: “Farming is often a generational business, and APR is what makes it possible for small family farms to pass from one generation to another. We’ve given the Treasury the details and evidence for our concerns and we stand ready to meet ministers and officials again, at any time, to reinforce the point that a Family Farm Tax could push many small family farming businesses over the edge.”

Family businesses hold a unique and significant position in communities worldwide, serving as pillars of economic stability, social cohesion, and cultural continuity. Their impact is multifaceted, extending beyond mere economic contributions to encompass social and cultural dimensions that enrich the communities they serve. Economic Contributions Family businesses are a cornerstone of the global economy. They account for a substantial portion of GDP in many countries and are responsible for a significant share of employment. This economic influence is particularly pronounced in small towns and rural areas, where family-owned enterprises often dominate the business landscape. By providing jobs and stimulating local economies, these businesses help reduce unemployment and foster economic resilience. Their long-term perspective allows them to weather economic downturns more effectively than some non-family counterparts, contributing to community stability. Social Impact Beyond their economic role, family businesses have a profound social impact on their communities. They are often deeply embedded in the social fabric, with generations of families living and working in the same area. This deep-rooted presence fosters a sense of trust and loyalty among employees and customers alike. Family businesses tend to prioritise relationships over transactions, creating a supportive work environment that values employee welfare and development. This approach not only enhances job satisfaction but also contributes to lower turnover rates, ensuring continuity and stability within the community. Cultural Significance Family businesses also play a crucial role in preserving and promoting local culture and traditions. Many family enterprises are involved in industries such as crafts, food production, or hospitality, where cultural heritage is integral to their operations. By maintaining traditional practices and supporting local artisans, these businesses help preserve cultural identities that might otherwise be lost in an increasingly globalised world. They often sponsor cultural events, festivals, and other community activities that celebrate local heritage, thereby strengthening communal bonds. Community Engagement The commitment of family businesses to community engagement is another critical aspect of their importance. These enterprises frequently engage in philanthropic activities, supporting local schools, hospitals, and charities. Their investments in community infrastructure—such as parks, recreational facilities, or public spaces—enhance the quality of life for residents. Moreover, family businesses are often at the forefront of addressing environmental concerns within their communities. Their long-term orientation aligns with sustainable practices that benefit both the environment and future generations. Challenges and Opportunities Despite their many contributions, family businesses face unique challenges that can impact their ability to serve their communities effectively. Succession planning is a critical issue; ensuring a smooth transition between generations requires careful planning and management. Additionally, family dynamics can sometimes complicate business operations, necessitating clear governance structures to balance familial relationships with professional decision-making. Nevertheless, these challenges also present opportunities for innovation and growth. Family businesses are increasingly adopting modern management practices while retaining their core values, enabling them to compete effectively in today’s dynamic market environment. By embracing technological advancements and expanding their reach through digital platforms, they can continue to thrive and contribute positively to their communities. In the world in which we live today, family businesses matter immensely to communities around the world due to their substantial economic contributions, social impact, cultural significance, and commitment to community engagement. Their unique blend of tradition and innovation positions them as vital players in fostering sustainable development and enhancing the quality of life for countless individuals globally. As they navigate the challenges of the modern business landscape, family businesses remain steadfast in their dedication to serving as stewards of community well-being for generations to come.

During the transition of family-owned businesses to the next generations, the issue of whether the upcoming generation should acquire experience outside the family company before coming on board becomes more relevant. We asked our Global Family Business Think Tank Panel if they thought that it is important for the next generation to gain experience outside of the family business before embarking on a career within it. Obtaining outside experience can prove to be a strategic decision for various reasons, influencing the future of family enterprises on a global scale. Again, our panel strongly believe that it is important for the next generation to gain experience outside of the family business before embarking on a career within it. THE THOUGHTS OF OUR ‘THINK TANK’ REPRESENTATIVES: “The competencies to be successful as a next generation member can be learned in multiple ways, not just working outside. Personally, I think that requiring the next generation to work outside without a precise plan of what the experience needs can be very negative for a family.” Isabel Botero George E. & Mary Lee Fischer Chair in Family Entrepreneurship, University of Louisville “This is so important as gaining experience outside of the family firm helps them gain broader experience and networks and to grow outside of the family spotlight.” Kedge Martin CEO, KM Advisory "This depends a bit on the type of business the family operates and what the aspirations of the family are. Some businesses will need to innovate their way of doing things substantially if they are to remain competitive in the digital age, and in many case the next gen may have to gather insight and experience themselves through outside experience. In other types of businesses it may not be as necessary and the next gen may actually learn more from building their experience and legitimacy by climbing the ranks within the family business.” Jasper Brinkerink Lecturer in Entrepreneurship & Innovation, University of Edinburgh “Experience outside of the family business gives the next generation confidence. It allows them to bring new and fresh ideas to the table and ensures they receive respect from their colleagues.” Kirsten Taylor-Martin National Head of Family Business Consulting, Grant Thornton Australia “I see many benefits that heirs can gain from working in non-family businesses early in their careers. They will learn to face challenges in a less protected environment, understand hierarchy, performance evaluation, career progression, self-knowledge and self-confidence.” Rogerio Fae Rodrigues Family Business Consultant, UNE Consultoria “It is important for the business to know that the family member has credibility, just as it is for the family member to know that they have earned their credibility (elsewhere).” Tom White Chairman, Haws Corporation “I think, these days, the importance of this can be overplayed. Today, there are many ways the next generation can accelerate their development, including accessing mentoring and/or joining virtual boards or collaborative organisations. These new ways can expose the next generation to experiences outside the family firm whilst simultaneously building their knowledge, relationships and credibility within the business.” David Twiddle Managing Partner, TWYD & Co “Research shows that resilient family firms look outwards, always horizon scanning so it is vital that the next generation sees what is going on elsewhere, learns from it and then decides how to use it back at the family firm. Of course, that may be a challenge for the older generation!” Rachel Mallett Partner, Brown and Mallett Agriculture, PhD Student, Harper Adams University “The research is literally 50/50 on this and one family’s best prescription is another family’s poison. It is more important to clarify entry and exit ramps for the family enterprise early than have one way to do this that may disincentivize individuality. An unintended consequence of outside employment is that the next generation may not come back to the family’s ‘unsexy’ business.” Natalie McVeigh Managing Director, Eisner Amper “First for me, the key to success is success as a family to become a generative family or a family of affinity and how can that happen if the rising generation don’t have the opportunity to individuate and go on their own hero’s journey? The same applies to working in the family office – go and work somewhere else first. The human capital is more important than the financial capital. If you have someone who has only ever worked in the family business then there is too high a risk that such a person cannot accept their own vulnerabilities, can’t accept their own shortcomings and shadow, and can’t grow as a person.” Christian Stewart Independent Family Advisor, Family Legacy Asia "Gaining experience outside the business before embarking on a career within it can provide priceless perspective, new ideas, feedback and opportunities to learn whilst not being under the proverbial ‘microscope’ in the family business.” Nick Di Loreto Partner, BanyanGlobal These results were part of the 2 024 Global Family Business Think Tank Report  that was published in Autumn 2024. A copy of the final report is available to download below and is free to Family Business United members and digital subscribers (simply log in to access). If you are not yet a member or digital subscriber and wish to obtain access to the report, you can find out more about becoming a member  of Family Business United here  or take out a digital subscription  to access all areas and content available on the platform including this report here Download the Global Family Business Think Tank Report, Autumn 2024 here

Over the past few years there has been growing recognition for the need to protect the planet and resources, and to try and minimise the impact of activities on the environment. To that end, we have seen more written about doing business the right way and in many cases, family businesses lead the way in this regard, taking the long-term view, being firmly embedded in the communities in which they operate and acting as stewards for future generations. We asked our Global Family Business Think Tank Panel if they thought that family firms feel that it is important to do 'business right' and make decisions that align with this principle more than their non-family counterparts. Our panel strongly believe that family firms feel that it is incumbent upon them to do business the right way. THE THOUGHTS OF OUR ‘THINK TANK’ REPRESENTATIVES: “This is especially true when business is seen as an extension of the family identity and doing business right has an impact on the community.” Jeremy Cheng Founder, GEN+ Family Business Advisory & Research “I think that progress towards ‘responsible business’ is also a regional phenomenon. Family businesses in Europe are at the forefront.” Malgorzata Smulowitz Managing Director, Selenza Generations “Younger generations are absolutely conscious of their environmental and community impact. I see this as a huge win for all industries and local communities as well.” Ruschelle Khanna Family Business Therapist & Consultant, Ruschelle Khanna Consulting “Leaders of family businesses have a much longer perspective that other types of businesses, because they and their family’s involvement in the business is indefinite, which leads them to be very aware of the environmental conditions and regulations in which their businesses operate.” Jaime Ale Director, Ale & Associates “It is the strength of family business, if correctly harnessed, that they understand that looking after people, planet and profits is necessary to ensure the sustainability of their business and the communities in which they operate. The business needs the community and the community needs the business, where both survive and thrive.” Creagh Sudding KPMG Private Enterprise “Not all family firms operate in the same way, but many family firms have been pioneers in sustainable behaviour and are a true benchmark in this respect. Social and environmental sustainability is in the DNA of most entrepreneurial families, given their long-term orientation and strong sense of legacy.” Salvatore Sciascia Professor, Cattaneo University – LIUC “Family businesses inherently recognise themselves as part of a larger community, setting them apart from profit-hungry organisations. This core belief motivates family businesses to seek different avenues for giving back to the community and is strongly aligned with the principles of conducting business in the right way.” Sunil Soni Family Business Advisor, IFBN Consultants “Family firms are generally more connected to ESG principles, and they do it in practical ways, often quietly and without fanfare, compared to large corporates who are sometimes more interested in letting the world know, rather than direct and measurable impacts on stakeholders.” Robert Powell Founder & Managing Director, Family Boards “Yes, due to the presence of family-centred non-economic goals, which leads them to prioritise the preservation of their socio-emotional wealth.” Alfredo De Massis Professor of Family Business & Entrepreneurship, Free University of Bolzano, IMD Business School and Lancaster University “I think family firms generally think about being better ancestors than their non-family owned counterparts. This ancestral view is long term, sustainable and more likely to focus on doing business right.” Mairi Mickel Founder, Mairi Mickel’s Business Families “I think that progress towards ‘responsible business’ is also a regional phenomenon. Family businesses in Europe are at the forefront.” Malgorzata Smulowitz Managing Director, Selenza Generations Family businesses think about generational impacts, it’s in their DNA to do so. So doing the right thing, being sustainable for future generations and making long term decisions come naturally to a family business. It’s arguable the best, and certainly amongst a minority of business models which has the potential to tackle some of the existential challenges we’re facing today.” Adam Walsh CEO, John Good Group These results were part of the 2 024 Global Family Business Think Tank Report  that was published in Autumn 2024. A copy of the final report is available to download below and is free to Family Business United members and digital subscribers (simply log in to access). If you are not yet a member or digital subscriber and wish to obtain access to the report, you can find out more about becoming a member  of Family Business United here  or take out a digital subscription  to access all areas and content available on the platform including this report here Download the Global Family Business Think Tank Report, Autumn 2024 here

Business activity at UK small and medium-sized enterprises (SMEs) stalled in June with the NatWest SME Purchasing Managers’ Index recording 49.9, ending a seven-month period of sustained growth. Some surveyed SMEs suggested that decision-making among customers had slowed in the run up to the general election, which led to delays with new projects and subdued domestic demand. Key Findings: Output levels broadly unchanged as customers delay decision-making in June Employment growth at its fastest since February as SMEs backfill vacancies 36% of surveyed SMEs reported sustainability actions as a high priority in the next year Just under a third of UK SMEs (29%) plan to at least partially switch to UK suppliers in the next five years NatWest’s index is a key indicator of the health of the UK SME economy. A PMI reading over 50.0 indicates growth or expansion, while a reading under 50.0 suggests contraction. Despite the slowdown, employment growth was its fastest since February as improved candidate availability allowed firms to fill vacancies and replace departed staff. Hopes of a broader economic recovery, lower borrowing costs and a post-election rise in demand also kept business confidence upbeat at 70.3 in June. Confidence levels among small businesses were close to those seen among large firms and much higher than the low of 56.2 recorded in October 2022. Sebastian Burnside, NatWest’s Chief Economist said: “Business activity stalled in June, rounding out a solid second quarter performance overall. A slowdown was to be expected after a strong start to the year and especially rapid GDP growth of 0.4% in May. But some small businesses also pointed to the General Election as a factor which delayed decision-making among their customers and led to subdued domestic demand." “Price rises have eased in recent months, but businesses and their customers are still feeling the squeeze. Higher staff costs, particularly due to the rise in the National Minimum Wage, have meant services firms have had to pass additional costs onto their customers. Manufacturing firms also attributed higher input costs to rising transport bills, especially for container freight from Asia." “However, business confidence remains high and job creation is at its highest level for four months. With inflation now back to the Bank of England’s target of 2% many firms are hoping for lower interest rates and an increase in demand from the consumer sector.” Sustainability goals across UK SMEs appeared somewhat on the back burner in the second quarter of 2024, as just 36% of the surveyed businesses reported sustainability actions as a high priority in the coming 12 months. While the headline figure was unchanged on the quarter, it remained notably below that seen when the survey first began in early 2020 (44%). However, the latest survey data showed that small and medium-sized businesses are keeping up with and in some cases, outperforming larger firms in terms of having already implemented greener action regarding their supply chains. 12% of UK SMEs have already at least partially reshored their supply chains, compared to 7% of large companies. Nearshoring – switching to suppliers which are geographically closer to the UK, but not in the UK – has also now been undertaken by 30% of surveyed SMEs, compared to 22% of larger companies. Notably, almost a third of SMEs (29%) reported plans to switch to UK-based suppliers within five years, in some cases prompted by shipping disruptions linked to the Red Sea crisis. Commenting on these findings, James Holian, Head of Business Banking at NatWest Group, said: “We’re seeing that a sizeable minority of SMEs – some 30% - have already moved their supply chains closer to the UK, and 12% have already at least partially switched to UK-based vendors. And when you look at the next five years, just under a third of SMEs are planning to reshore their vendors." “There are various reasons SMEs might move their suppliers to closer to home – not least to drive down costs, lower their carbon footprint and reduce their risk exposure to geopolitical events. However, there is never a one-size-fits-all solution. My advice to SMEs is to map your mix of suppliers and identify any gaps. Look at where the goods come from, where they go to, and what the capacities of your suppliers are. Speak to suppliers to understand their challenges and work together to develop solutions.”

Scrapping IHT relief on family businesses would appear to be at odds with Labour’s mission to kickstart economy but rumours continue to flow that Rachel Reeves might be thinking about scrapping or restricting business relief. The Institute of Fiscal Studies (IFS) has said capping inheritance tax relief for family businesses at £500,000 would generate £1.1bn a year for the public purse. Its impact, says accountants James Cowper Kreston who represents ambitious owner-management and family businesses, would be devastating for those businesses and the economy. And, the firm says, if the government were to go further and remove IHT relief on AIM shares, it would create a fire sale of those shares hurting both the “engines of the UK economy” and investors. Stephen Barratt, a partner in the Private Client Services team at James Cowper Kreston comments; “The Labour government’s first and foremost mission is to ‘kickstart economic growth’ with good jobs and productivity growth in every part of the country." “A business is not an asset class like investments but an engine for jobs and economic growth and so should be treated differently from other assets. Whilst scrapping or capping inheritance tax relief on family-owned businesses might generate additional revenue, though a relatively modest amount, it is likely to have a wider economic impact in terms of the business disruption." “In many cases, the business will be the family’s most valuable asset and will need to be the source of the capital required to pay the tax. If this involves a sale, perhaps at a reduced price due to the circumstances, if indeed there is a market at all, the disruption caused could impact the stability of both the business and the jobs reliant on it. Ultimately it could result in closure." “As for the suggestion of a proposed cap of £500,000, this looks to be an entirely arbitrary figure and would create an artificial cliff edge. If anything, the wider consequences caused by the disruption of more valuable businesses could be even worse in terms of the number of employees impacted." “Tax policy must support the aims of government and removing IHT on family businesses would be in direct conflict in its wish to restart economic growth." “The government may also be tempted to remove the relief on AIM shares, to bring the AIM market in line with the main market. But this would risk a fire sale of shares and great volatility, potentially wiping hundreds of millions of pounds off the value of AIM-listed companies – the very businesses the government needs to achieve its primary mission. It would also hit private investors hard." “The Chancellor would do well to weigh these matters carefully."

The latest Lloyds Bank Business Barometer showed that business confidence remained at 50% in August. Although there was no increase to the overall confidence figure, the result highlighted the continued positivity amongst businesses, with confidence still at the highest level reported since November 2015. This continued confidence was displayed in the economic optimism metric, which showed an increase from 45% in July to 47% in August, continuing the upward trajectory of confidence readings throughout 2024. Meanwhile, trading prospects remained positive, albeit with a minor decline, to 54% in August – down from of 56% in July. However, this result is still the second highest recorded in 2024. Key Findings: Business confidence remained at eight year high, alongside increasing economic optimism Sharp increase in Construction trading prospects (58%), while manufacturing and services remained resilient, despite dip The Northeast and Scotland reported highest confidence levels with an 8- and 13-point increase respectively Wage expectations rose as a third of firms (34%) anticipated at least 3% pay increases Hann-Ju Ho, Senior Economist, Lloyds Bank Commercial Banking said: “As in July we’ve seen a particularly strong outcome for business confidence. It remains at an elevated level of 50%, which is well above the long-term average of 29% - and it has been above the average for the past 15 months. Official GDP data for the first half of this year was encouraging and the survey results indicate that solid economic performance will likely continue as we move into the second half of the year." “On a more cautious note, we have seen wage growth expectations pick up this month, although not enough to negate the downward trend so far in 2024." “Overall, the economy looks to be stable and from the positive results recorded, businesses are echoing this sentiment." Pricing Insights Price expectations among firms decreased once again for the second time in three months. In August, 58% of firms planned to raise prices in the next year (down from 60%), whereas 4% intended to lower them (up from 3%). The net balance dropped three points to 54% making it the second lowest in 2024, with a three-month average of 55% - the lowest since September 2023. Despite this decline, the net balance remained high in contrast to pre-Covid levels. Sector Insights Output expectations for the various sectors remained at or near their three-year highs. Construction had a steep increase to 58%, up by 14 points, whereas other sectors experienced slight declines. Trading prospects for manufacturing dropped by 2 points to 58%, at the same level as construction, while Retail and Services fell to 53% down 7 and 3 points respectively. Paul Gordon, Managing Director for Relationship Management, Lloyds Bank Business & Commercial said: “With business confidence levels remaining at an eight year high, it is reassuring to know that UK firms are making strides in this space. It is great to see economic optimism rising steadily throughout the year and we hope to see this continue." “Our priority is to provide ongoing support for all businesses regardless of their confidence or trading prospects, to ensure that we can continue to help Britain recover and prosper.” Regional Insights Six of the UK’s 12 regions reported higher business confidence in August with the Northeast and Scotland being the most upbeat followed by London and the Northwest. Although the East Midlands and East of England displayed lower confidence this month, they remained above the national average. Wales, the Southwest and Yorkshire & the Humber were in the lowest quartile. However, the latter two regions still showed higher confidence in August compared to July.

August saw business activity rise universally across the UK for the first time in three months, the latest NatWest Regional Growth Tracker showed. The Business Activity Index is the first fact-based indicator of regional economic health published each month, tracking the monthly change in the output of goods and services across the private sector. A reading above 50 signals growth, and the further above the 50 level the faster the expansion signalled. Key Findings: Business activity growth led by Northern Ireland Employment rises in ten out of 12 nations and regions Rates of input cost and output price inflation slow in most cases For the first time since May, business activity increased across all 12 nations and regions, up from ten in July. Northern Ireland topped the growth rankings for the third time in the past four months. It was followed closely by the South West. The North East saw the slowest rise in output and was one of just two areas (alongside London) that saw a softer pace of expansion than in July. Sebastian Burnside, NatWest Chief Economist, commented: "Our latest Growth Tracker report showed business activity rising across all 12 UK nations and regions in August, representing an improvement from the ten that recorded an expansion in July. Renewed upturns were seen in the East Midlands and Wales, although it was Northern Ireland that remained the brightest spot in terms of outright growth." "Business optimism generally softened in August, following a post-election bounce in growth expectations in most areas in July. Nevertheless, sentiment towards future activity remains positive across the board, which is helping to support labour market conditions." "Alongside broad-based growth in business activity, it was encouraging to see price pressures ease in most areas, in what will be very welcome news for the Bank of England's policymakers. This will be something to watch going forward as we look to assess the direction of travel of inflation and the timing of further interest rate cuts." Demand London led a broad-based increase in new business in August. It marked the first time in 16 months that all 12 nations and regions recorded growth on this front, with the East Midlands seeing a renewed upturn. The softest rise in new work was recorded in the West Midlands, where the latest increase was only marginal and slower than that seen in July. Outlook Expectations towards growth prospects remained positive across the board in August, but the degree of optimism weakened in most nations and regions compared to the month before. The greatest loss of confidence was in the North East, which also recorded the weakest overall sentiment. Firms in the South East remained the most upbeat about future activity. Employment The strongest rate of job creation in August was recorded again in Northern Ireland, where it reached the fastest since April 2023. The North East also recorded a solid and accelerated increase in employment. In a repeat of the situation in July, the only decreases in workforce numbers were seen in the East Midlands and West Midlands, although in the case of the latter the rate of decline remained marginal. Capacity Almost every nation and region once again recorded a reduction in outstanding business (i.e. workloads awaiting completion) in August. As has been the case in three of the past four months, the steepest decrease in backlogs was seen in Wales. Northern Ireland continued to go against the trend and recorded a third straight monthly rise in work-in-hand. Inflation Cost pressures generally weakened midway through the third quarter, as highlighted by a slowdown in input cost inflation in nearly all areas. The only exception was Wales, where operating expenses rose at an identical pace to that seen in July. Firms in the South East and West Midlands reported the joint-weakest overall rise in costs, while those in Northern Ireland recorded the strongest. Average prices charged for goods and services rose across all nations and regions in August, although only in the East Midlands, Scotland and Northern Ireland did the rates of inflation accelerate. They eased everywhere else and most markedly in the South West, although it was there where output prices continued to rise fastest overall.

Grocery spending saw its highest uplift since March, fuelled by a surge in shopping for picnic and barbecue foods at specialist stores. Almost half of Brits are buying affordable luxuries even when trying to make cutbacks, especially confectionery and cosmetics. Garden centres benefitted as the UK basked in sunshine, and the retail sector returned to growth for the first time since March. Consumer confidence in household finances jumped five percentage points, yet one in five are concerned about keeping up with rising costs this Christmas. ‘Double-dip shrinkflation’ has emerged where products go through multiple size reductions without a price cut. The Barclays Consumer Spend report combines hundreds of millions of customer transactions with consumer research to provide an in-depth view of UK spending. Consumer card spending returned to growth in August, rising 1.0 per cent year-on-year following two consecutive months of decline, although it remained below the latest CPIH inflation rate of 3.1 per cent. Non-essential spending also bounced back (up 0.7 per cent) thanks to the late arrival of barbecue and picnic weather propping up butchers, delicatessens and garden centres. Meanwhile, nearly half of Brits report treating themselves to affordable, mood-boosting luxuries, such as pastries and cosmetics, even while tightening budgets. Spending on groceries (up 1.9 per cent) saw its largest uplift since March this year (2.7 per cent), fuelled by robust growth at food and drink specialist stores – such as butchers and delicatessens – which saw their largest increase (5.1 per cent) since January 2024 (5.2 per cent), thanks to Brits enjoying barbecues and picnics outdoors in the sunshine. Supermarkets (up 1.5 per cent) also saw their highest growth since March this year (2.8 per cent), in part reflecting a shift towards healthier home cooking. Nearly half (45 per cent) of Brits say they are prioritising buying raw or whole-food ingredients to prepare fresh meals and snacks, in order to avoid ultra-high-processed foods. The Sweet Treat Economy Almost half (47 per cent) of consumers say that they continue to spend on small, luxury purchases that bring them joy, even when trying to make cutbacks. Sweet treats, such baked goods, are the most popular type of pick-me-up that these joy-seekers prioritise (45 per cent), perhaps influenced by the rise of viral sensations like the ‘crookie’ and the ‘Dubai chocolate bar’ on social media. Demand for little luxuries also bolstered pharmacy, health and beauty retailers, with the category enjoying yet another month of growth (7.3 per cent) – the highest since January 2023 (10.2 per cent) – reflecting the long-running trend of shoppers prioritising cosmetics even as budgets tighten, often referred to as the ‘lipstick effect’. Double-Dip Shrinkflation Concerns related to shrinkflation – i.e. products getting smaller but costing the same – remained stable in August, with eight in 10 reporting that this trend is having a negative impact on their household finances. A quarter (26 per cent) have also started to spot ‘double-dip shrinkflation’, where products go through two or more rounds of size reductions, without a corresponding reduction in price. The top five most frequently cited products hit by ‘double-dip shrinkflation’, according to this group, are chocolate (57 per cent), crisps (44 per cent), packs of biscuits (41 per cent), snack bars (36 per cent) and sweets (36 per cent). Retail Sector Shows Green Shoots The retail sector (up 0.1 per cent) returned to growth for the first time since March this year, while brick-and-mortar businesses witnessed the ongoing resurgence of in-store shopping. The recent heatwave contributed to a return to the high street, with 55.7 per cent of all credit and debit card spending in August conducted face-to-face (as opposed to online) – the highest level so far this year. The retail sector also benefitted from an 8.0 per cent increase in spending at garden centres – the category’s largest uplift so far in 2024 – as the drier and hotter weather across large parts of the UK encouraged Brits to invest more time and money sprucing up their outdoor spaces. However, the sunshine has not had as much of an impact on clothing retailers, which saw only a mild improvement, declining by a marginal -1.7 per cent compared to -2.3 per cent in July. Clothing remains one of the most common areas where discretionary spending is reined in – of the 46 per cent of Brits who say they’re planning to make cutbacks, 53 per cent say they’ll spend less on clothing and accessories. Cut-Price Travel Deals Snapped Up The travel sector (up 6.8 per cent) had a particularly strong month, following news that several low-cost airlines have been offering last-minute holiday deals in order to tempt Brits abroad. Travel agents (up 7.2 per cent) and airlines (up 8.3 per cent) both had strong months, seeing their highest growth since February and March respectively. Consumer Confidence Climbs Despite Christmas Cost Concerns Looking ahead to the upcoming festive season, over a third of Brits (35 per cent) anticipate that this Christmas will be more expensive than last year, and one in five (19 per cent) is worried about how they’ll keep up with those rising costs. Meanwhile, a quarter (24 per cent) are concerned that shrinkflation will mean they get less value for money on their festive spending. That said, the summer spirit has arrived for the vast majority – Brits are feeling noticeably more confident in both their household finances (70 per cent) and ability to live within their means (73 per cent), compared to last month (65 per cent and 70 per cent respectively). Karen Johnson, Head of Retail at Barclays, said: “The long-awaited British summer has unlocked pent-up demand across a number of retail categories, such as garden centres and butchers, as many Brits dusted off their barbecue for the first time this year." “We’re also seeing an emerging trend of consumers indulging in retail therapy for mood-boosting pick-me-ups, often in the form of sweet treats and cosmetics. This is a much more immediate version of the long-running trend of consumers making room in their budgets for memorable experiences, like tickets for next year’s Oasis tour, which went on sale over the weekend." “While cost-conscious shoppers continue to rein in discretionary spending to account for rising prices, especially in the run-up to Christmas, it’s encouraging to see that Brits are feeling noticeably more confident in their personal finances – a strong indicator of future spending as we approach the crucial festive period.” Jack Meaning, Chief UK Economist at Barclays, said: “Having seen government spending drive the economy in the second quarter, and private consumption relatively muted, this data very much supports our view that the balance will shift over the second half of the year and into next. Growing real incomes and strengthening consumer confidence should combine with falling interest rates to increasingly allow consumers to put their spending power to work.”

Consumer confidence has increased following the base rate reduction, with 70 per cent confident in their household finances, up from 65 per cent in July The start of the new academic year squeezes rental supply, as one in six 18-34-year-olds say the influx of students is causing too much competition in the market Making the most of the sunshine, Brits invested more on their outdoor space in August, resulting in the highest growth for garden centre spending this year, up 8.0 per cent Barclays Property Insights combines transaction data from millions of Barclays current accounts* with consumer research to provide an in-depth look at UK housing costs The latest Barclays Property Insights report found that growth in rent and mortgage spending slowed to the lowest rate in 17 months, following the Bank of England’s base rate reduction on 1 August. In response, consumers are feeling more confident in their household finances, though some concerns around rent and mortgage affordability remain. Meanwhile, housing supply for renters continues to be an issue, with the influx of students into the market adding to the competition for younger house-hunters. Spending on rent and mortgages grew by just 1.1 per cent in August, the lowest rate recorded since March 2023.This follows the Bank of England’s decision to drop the base rate by 0.25 per cent earlier in the month. For now, Brits are saving on costs through their bills, as warmer weather coupled with the Ofgem energy price cap resulted in the fourth consecutive month of falling utilities spending, dropping -11.4 per cent year-on-year. Amidst the easing of some of these financial pressures and reduced inflation, the proportion of consumers confident in their household finances hit 70 per cent for the first time since April this year, up from 65 per cent in July. Confidence in the UK housing market has also risen, increasing from 25 per cent to 29 per cent in the same four-month period. However, with 78 per cent of mortgage holders reporting they have a fixed-rate deal, only a small proportion of consumers will be feeling the benefits of recent interest rate reductions. This is reflected in the marginal decrease in those not confident in their ability to afford rental or mortgage payments, which dropped from 16 per cent to 15 per cent month-on-month. Freshers Frenzy For renters, competition for properties is an ongoing struggle as, for the fourth month in a row, 20 per cent report getting less value for their money due to high demand. Amongst the 18-34-year-old group this rises to over a quarter (26 per cent). Young renters are also facing additional pressures as students enter the market for the new academic term, with more than one in six (17 per cent) saying the influx of students is causing too much competition for properties. Given the extra squeeze on housing supply, only 14 per cent of 18-34-year-old homeowners say they are considering selling their home, with many opting to retrofit instead, as three in 10 (28 per cent) say they are making improvements to their home to make it more energy efficient. Good Weather Brings Greener Thumbs Spending at garden centres reached record growth for this year, up 8.0 per cent, as the long-awaited improvement in weather resulted in people choosing to spruce up their gardens in August. As more people spent time out of doors, home improvements & DIY was down -5.7 per cent, though many – particularly younger people – are intending to get started on projects once Autumn begins, with 18 per cent of 18-34-year-olds saying they are beginning home improvements ahead of the Christmas period. Mark Arnold, Head of Mortgages and Savings at Barclays, said: “In the year to date we’ve seen encouraging signs that spending on rent and mortgages is decelerating on the whole, but unsurprisingly it isn’t a linear descent and we could see some volatility over the coming months, despite the recent interest rate cut. “Many people think that interest rates are what really determine the mortgage market – and whilst that’s true to some extent , for me, the biggest driver is confidence. If you're going to make the biggest purchase of your life, you need to be confident that the economy is stable, inflation is under control, and you know what you're going to pay. That stability and confidence will determine how people spend, even for renters.” Phil Spencer, TV Property Expert, said: “As we head into the Autumn, there are a number of seasonal impacts to the property market which can prove to be a sticking point for consumers trying to move. Particularly for renters living in university towns, timing is everything as over the coming weeks many students will be entering the market to find accommodation near to their classes. “Landlords too might want to consider how and when they advertise their properties – though September might bring plenty of candidates, if you are looking for a longer-term tenant, it could be worth waiting for a few weeks until the back-to-school flurry calms down.”

Top CEOs have shown resilience over the last decade as they have backed their businesses to prosper in the face of declining confidence in the global economy, a survey of more than 1,300 corporate leaders from across the world finds. The KPMG CEO Outlook , now in its tenth year globally, revealed that just 72 percent of CEOs were confident about the direction of the world economy over the next three years, compared to 93 percent in 2015, when the survey first launched. This confidence is demonstrated in CEOs future hiring plans, with 92 percent saying they were looking to boost employee headcount over the next three years. This is the highest proportion since 2020. This bullish attitude towards hiring comes despite CEOs feeling the growing demands of leading a large organization keenly, with 72 percent confessing they feel more under pressure than the previous year to ensure the long-term prosperity of their business. Factors that CEOs believe are top threats to growth have also shifted, with supply chain challenges and operational issues pushing ahead of cyber security and last year’s number one threat – geopolitics and political uncertainty. Bill Thomas, Global CEO & Chairman, KPMG International, adds that: "The last ten years has been framed by a backdrop of volatility and change, from a global pandemic to surging inflation and the rise of AI. In the face of such pressures, CEOs are steadfast about the need to invest in the future. Turbulence calls for leaders to be more resilient, agile and innovative than ever before." "As we look ahead at the next ten years, CEOs who set bold strategies to adapt to our fast-changing world and invest in the right technologies and talent to make their plans a reality, can deliver sustainable, long-term growth." Investing in innovation: AI front and centre as the urgency around adoption accelerates Behind economic uncertainty (53 percent), the race to embrace artificial intelligence (50 percent) is the issue most top of mind for CEOs today – and it is clear that most leaders are reaffirming their commitment to increase investment in innovation and technology, including AI, as a driver of growth. Indeed, a majority (64 percent) identified AI as their top investment priority in 2024 – though most are looking at it as an investment that will pay off in the medium term, with 63 percent expecting to see a return on their investments within the next three to five years. There is clear evidence that CEOs see people and capabilities as central to realizing the potential of generative AI, with the top three benefits of AI implementation recognized this year being increased efficiency and productivity, upskilling the workforce for future readiness, and increased organizational innovation. Despite this, CEOs remain aware of the risks that the rapid push to implement new technology presents. Well over half (61 percent) of CEOs cited ethical challenges as some of the most difficult to address when implementing AI within their business, while a lack of regulation (50 percent) and technical skills and capabilities (48 percent) were other areas of concern. Finally, while over three quarters (76 percent) of CEOs believe that AI will not fundamentally impact the number of jobs in their organization, only 38 percent felt that their employees have the right skills to fully leverage the benefits of AI and 58 percent agree that the integration of generative AI has made them rethink the skills required for entry-level roles. Putting people first: CEOs doubling-down on the return-to-office debate Since 2015, CEOs have grappled with shifts in working patterns as employees seek more balance, flexibility and strong alignment between personal beliefs and organizational purpose. This shift has seen successful leaders put people at the heart of their growth strategies and evolve their social contract with employees to attract and retain diverse talent and support growth and productivity. This year’s survey shows increasing conviction that a full return to the office is on the cards in the near future. In fact, 83 percent now expect a full return-to-office within the next three years – up significantly from 64 percent in 2023. A further 87 percent of respondents say they are likely to reward employees who make an effort to come into the office with favorable assignments, pay rises or promotions. While the focus remains on the workplace debate, CEOs acknowledge there are other talent-related issues that could affect their future growth. Almost a third (31 percent) say they are concerned about labor market shifts – specifically the number of employees that will soon retire and the lack of skilled workers available to replace them. In response to a perceived talent shortage, 80 percent of CEOs agree that organizations should be investing in skills development and lifelong learning within local communities to safeguard access to future talent. Committing to ESG: navigating increasing politicization in some countries The past decade has also seen CEOs renewing their commitment to ESG and sustainability as a source of value creation. In 2015, CEOs ranked environmental risk as their least concerning priority risk; fast-forward to 2024 and almost a quarter (24 percent) acknowledged that the principal downside of failing to meet ESG expectations would be giving their competitors an edge, coming out ahead of threat to their own tenure (21 percent) and recruitment challenges (16 percent). Moreover, despite the increasing politicization of the ESG agenda in some countries, leaders are particularly sensitive to the impact ESG issues can have on trust and the reputation of their organization. Three quarters (76 percent) of CEOs said they would be willing to divest a profitable part of the business that was damaging reputation, while 68 percent of CEOs say they would take a stance on a politically or socially contentious issue, even if the Board raised concerns with them doing so. However, well over half (66 percent) of CEOs admit they are not prepared to withstand the potential scrutiny and expectations of stakeholders, as well as shareholders, when it comes to ESG, suggesting they will take action to mitigate this. In response to growing stakeholder and external pressures, CEOs also appear to be shifting in how they communicate their ESG efforts. In this year’s global survey, 69 percent of CEOs revealed that while they’ve retained the same climate related strategies over the last 12 months, they’ve adapted the language and terminology they use to meet changing stakeholder needs. Tellingly, as we head into 2025, when many organizations will be reporting on environmental targets, 30 percent say the greatest barrier to achieving their climate ambitions is the complexity presented by the decarbonization of their supply chain – an issue further compounded by current geopolitical tensions around the world and activities impacting major global trade routes. The next generation of CEOs Finally, as well as tracking trends over the last decade, the 2024 survey revealed a generational shift. Younger leaders (78 percent of 40–49-year-olds) admitted to feeling under greater pressure to ensure the long-term prosperity of their business than older leaders (68 percent of 60–69-year-olds). However, younger leaders also showed higher levels of confidence in navigating some of the critical issues facing their organization. While they are less confident that their organization can address all its ESG priorities simultaneously compared to their older counterparts, they are more confident in their ability to stand up to stakeholder scrutiny over ESG policies, with 43 percent of CEOs aged 40-49 expressing confidence compared to 33 percent of CEOs aged 50-59 and 30 percent for those in the 60-69 age group.

Private sector firms expect no change in activity over the next three months (weighted balance of 0%), according to the CBI’s latest Growth Indicator. This month’s findings end a run of seven consecutive surveys in which growth expectations had been positive. However, the headline number masks divergence between different sectors. Business volumes are anticipated to pick up marginally in services (+4%), as growth in business & professional services (+7%) offsets a modest decline in consumer services (-9%). Both distribution sales (-4%) and manufacturing output (-7%) are also expected to fall marginally in the three months to December (-7%), the latter marking the first time that manufacturers haven’t expected growth in ten months. A softening in the outlook comes after activity fell in the three months to September (-15%). The decline was broad-based, with all three major sectors reported falling volumes. Alpesh Paleja, CBI Interim Deputy Chief Economist, said: “After a run of positive expectations, the outlook for growth for the rest of this year has deteriorated. While consistent with our expectation for softer growth momentum going into the second half of 2024, the divergent outlook across sectors highlights just how uneven the UK’s recovery has been so far." “This reinforces the fact the government needs to use the forthcoming Budget to build momentum behind the economic recovery and give businesses the confidence they need to invest. Pressing ahead with reforms to planning, publishing a business tax roadmap and delivering a clear and comprehensive industrial strategy would all help to achieve that goal.” Key findings from the monthly Services Sector Survey showed: Business volumes in the services sector fell in the three months to September (-13%), after being broadly unchanged in August, marking over two years of generally flat or falling volumes. Within this, business & professional services volumes fell (-7%), after being unchanged in August. Consumer services volumes declined more sharply (-37%), and at the fastest pace since January 2023. Hiring intentions within the services sector are mixed. Business & professional services expect headcount to rise marginally over the next three months (+5%), but consumer services companies anticipate a sharp fall in numbers employed (-29%). Price growth expectations for services firms ticked up in September (+12%) and were above their long-run average (+6%). Inflation expectations for business & professional services firms picked up somewhat (+13%, from +2% in August), and weakened for consumer services firms (+9%, from +17%).