Sustaining COVID-era urgency for the long run, Total Impact Measurement & Management (TIMM), ESG (Environmental, Social and Governance). This will be especially important in 2021, given the high levels of political and policy uncertainty generated by COVID-19. This deal highlights that the UK is playing an increasingly international game rather than a predominantly EU focused game. You must rethink how work gets done and who does it to enable responses to disruptions and change. While the world has battled COVID-19, the war against climate change has continued. Because the well-being of society as a whole is at stake, potential solutions to need to be inclusive of all. In 2019 exports accounted for 47% of GDP Sweden is the eighth largest economy in the EU with a GDP of 500bn. WebA brief outline follows illustrating the factors that are likely to hinder economic recovery from COVID-19. by 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. These legislations are designed to keep everyone safe, buttressing the need for safety procedures and ensuring there are consequences for those that are not following these health and safety regulations. 6. The UKs financial services sector must help regulators spot developing financial crime threats as the cost-of-living crisis starts to bite, according to one legal expert. It is intriguing to reflect on text written at the end of 2020 that speculated on key trends and patterns for the UK economy for 2021. Assess how these political risks could affect your company. Even governments that are not supporting a clean energy agenda must consider strategies for disaster preparedness and climate adaptation. Meanwhile, the EU will wield its trade, investment and industrial policies and its ability to shape global norms and standards to move toward strategic autonomy. The geopolitics of COVID-19 will shape many political risks around the world, including emerging market debt and new industrial policies. 4. It should come as no surprise that the top political risk were watching in the year ahead is COVID-19, which has already prompted unprecedented government policy responses. Issues of climate change became even more acute than they already were, with a record number of natural disasters, including fires, hurricanes and droughts. We are working to understand the impact of climate change on the planet and its people, to improve air quality, and developing new technologies to decarbonise energy and transport in partnership with industry and government. They can only make so many improvements in productivity and effectiveness, especially as organizations shift in response to rapidly changing conditions, when theyre confined to the same old processes and workflows. The uncertainty associated with such a dynamic policy environment across virtually all countries around the world simultaneously will challenge companies strategy development and execution. By clicking the "" button, you are agreeing to the Two key risks that bear monitoring, as they are likely to evolve as the year progresses, are US policy realignment and the debt situation in a variety of emerging markets. Social factors are the things that affect the habits and spending of customers. Also, note that government can implement new laws like the National Minimum Wage that can genuinely impact profits as the wage costs of the business will rise. Anticipated cost-of-living pressures in 2022 will prove hard to explain in the red wall seats with already-fractious MPs. No matter which unique dimensions of the six challenges are present in different countries or what each governments distinct approach is likely to be in seeking solutions, it is critical that all governments consider five key actions for sustainable success: 1. Governments are developing pandemic response policies rapidly and innovating on them in real time. Negotiations are ongoing as to whether credits from one system can be used in the other. Privacy Policy. The EU and UK have used the TCA to reaffirm their respective commitments to achieve net zero greenhouse gas emissions by 2050 and to meet their latest carbon budget commitments for 2030. ECONOMIC: Economic factors will include exchange rates, economic Five primary issues are likely to motivate protestors in 2021: pandemic restrictions, inequality, social justice, climate change and governance issues. Where is the pressure coming from? Americans are currently feeling the effects of the highest inflation in 40 years, with prices on both essential and non-essential items rising across the board. The world will enter an era of neo-statism as COVID-19 continues to heat up the debate on self-reliance, causing many countries to launch efforts to reshore manufacturing or diversify supply chains. 1. President-elect Biden has declared a focus on strengthening industrial and environmental policies, and volatility is also likely in immigration, anti-trust and trade policy. Global Consumer Insights Pulse Survey - June 2022, Ukraine: Tax, Legal and People considerations. and read. Those who have claimed the support need to continue to remain vigilant to ensure that they are complying with the rules and to make sure that they are aware of what has been happening on the ground. HMRC raids in relation to the strict liability facilitation of tax evasion offences, also known as the corporate criminal offence (CCO) began at the end of 2018. Since they will be paying higher prices, it will surely limit their purchasing power, causing inflation that will, in turn, affect business costs. In relation to VAT and other parts of the tax system which constitute retained EU law, the tax tribunals and the courts will have to begin to use new rules to interpret that legislation. So have political events, including rallies and protests. There are a series of supply constraints that may temper UK economic growth in 2022. significant trends in regulatory and policy changes. Leverage stakeholder relationships to manage political risk. Green programmes. Similar case studies exist across almost all citizen services. The rules essentially shift the responsibility for observing the rules to the engager (if a medium or large business), as happened first for public sector engagers. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. Brexit is likely to lower UK productivity growth in the future. Vaccine nationalism, export controls, restrictions on cross-border people movement and the domestic political consequences of the pandemicwill create political risks in markets around the world. WebDemographic social factors like age, gender, race, income level, and education level of customers affect the business of retailers. It has therefore never been more important for companies to dynamically monitor political risks for potential opportunities and challenges in the year ahead. There are sure to be many cases where, unbeknown to senior management, employees have been working whilst on furlough, whether as a result of an instruction from their line manager or because they think they are helping their employer. \n Thank you for your patience. A new form of partnership is emerging across the public, private and multilateral community, however, involving deep collaboration on design, development and financing of groundbreaking programmes. That may be a relatively small portion, but this is the first time the category has ever cracked the top 10 and reflects a very significant increase in interest. Please try again later. In education, for example, Estonia, which has the top-ranked school system in Europe, had a mature digital component prior to COVID-19 and was able to move seamlessly to a remote-learning environment. By clicking the "Submit" button, you are agreeing to the Other countries are looking at how to replicate the universal access and success of this model. 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. Edgbaston Webvolatile, affecting negotiations with suppliers. One of the most pressing business and social issues is countering climate change. January 18, 2021. Numerous political factors in the UK impacts businesses and can also introduce a risk factor that can cause businesses to suffer losses or compromise their profit stream. Crime, including domestic violence, robberies and looting, has increased in many countries during the pandemic. On 1 January 2021, the UK left the EU regulations and directives dealing with administrative cooperation, information exchange and recovery of taxes and duties. In addition, heightened stakeholder expectations could magnify reputational risks for companies. COVID-19 has highlighted hurdles in almost every element of the healthcare value chain, including supply chains, preventative medicine, primary care and in-patient treatment facilities. We were overdue for a reckoning., Download now: Your Guide To Winning in the Weird Economy. Together, well embark on the journey towards a better tomorrow. The TCA also affirms the UKs commitment to maintaining a system of carbon pricing but is silent on methodology. Indeed, health and safety in the workplace are very crucial as it works to ensure the general welfare of employees. Many large businesses expressed relief that HMRC has deferred proposals for requiring large businesses to notify HMRC of uncertain tax positions until April 2022. Political factors involve the decisions and laws that governments make. All rights reserved. Nevertheless, consumption will drive economic growth in the UK in 2022, unemployment will continue to decline, but inflation will increase linked to higher energy and commodity prices and supply shortages. As the COVID-19 pandemic adds increasing pressure on systems, plans and operations, how does your business build resilience for what's next? Rising levels of inequality within and across countries have contributed to the severity of the COVID-19 crisis and created significant geopolitical unrest. The UKs aging Fighting for new headcount will be challenging, so organizations will have to get creative. 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. Since the countrys exit from the European Union, there have been numerous changes in policies and actions of the prevailing government. Review ourcookie policyfor more information. Data reflects general population and a 27-market average. Now, the ripple effects, such as supply chain and talent shortages, and overall brand mistrust demand a relentless focus on customer value. A famous world leader once proclaimed that one should never waste a good crisisa philosophy many governments have embraced in 2021. Owing to that, it is critical for every business in the UK to always plan for the variability in policies to ensure it maintains a stable business environment. Meanwhile countries which are major markets for the technology giants continue to take more aggressive stances under current rules on digital PEs and withholding taxes or, like France and the UK, press ahead with temporary unilateral digital services taxes. 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. Economic stimulus plans that support clean energy and decarbonisation through innovative partnerships will create new models for sustainable growth. 2 Net change is the difference between more important and less important responses. We bring together extraordinary people, like you, to build a better working world. The home state is in turn obligated to share the report automatically with all member states affected by the arrangements. This is particularly true for shifting climate policies, neo-statism shaping domestic economies, and the rise in social unrest in a variety of markets. In addition, ambitious climate policy agendas are likely, as part of COVID-19 stimulus plans.