A new Zoho Digital Health Study has revealed that nearly two in five UK businesses (39%) still cite inflation as a primary concern impacting their recovery. The study, which surveyed a range of UK businesses, highlights the ongoing struggle many faces as they continue to contend with inflation, rising costs, and supply chain disruptions.
Despite some optimism, with over half of respondents (55%) suggesting that the UK is past the worst of macro-economic challenges, inflation remains a significant hurdle. Currently sitting at 4.6%, inflation is still well above the government’s target of 2%, and 45% of businesses expressed concern about the broader economic outlook.
Tech Investment Limited by Interest Rates
The Bank of England’s interest rate hikes, implemented to combat rising inflation, have had a noticeable impact on technology investments. According to the study, 68% of UK businesses have scaled back or delayed tech spending this year due to the higher cost of borrowing. While budget cuts are necessary for many, respondents indicated they are prioritising key areas for future investment, including customer experience (CX), employee experience (EX), Artificial Intelligence (AI), and data privacy.
The evolving focus on technology is reflected in the fact that 67% of businesses surveyed are either using AI or plan to invest in it. As digital transformation continues to be a focal point for many companies, businesses are increasingly realising the long-term value of emerging technologies that can drive efficiency and innovation, even in times of economic uncertainty.
Data Privacy Takes Centre Stage
With the growing reliance on digital tools, data privacy has become a top priority for many companies. Thirty percent of the surveyed businesses listed data privacy and protection as one of their main concerns. Ensuring that sensitive customer and employee data is protected has become more critical than ever as businesses embrace new technologies.
Sachin Agrawal, Managing Director of Zoho UK, commented on the findings: “The turbulence of recent years has understandably led many businesses to question their long-term stability. The UK economy is still in a fragile state, and companies are taking steps to future-proof themselves. Technology and data privacy are emerging as key areas for investment as businesses seek to become more resilient.”
Agrawal also stressed the importance of using AI responsibly. “For businesses to successfully adopt AI, they need to do so with customer trust in mind. Technologies like AI offer vast benefits, from automation and forecasting to enhanced customer service. But companies must ensure these technologies are adopted in a way that safeguards customer trust.”
The Digital Health of UK Businesses
According to Zoho’s study, only 19% of UK businesses currently boast good digital health. Agrawal emphasised that this should serve as a wake-up call: “The right digital toolkit, leadership, and customer focus can significantly improve a company’s adaptability, resilience, and innovation. Digitisation is no longer optional but a necessity to stay competitive in today’s challenging market.”
As the UK government pushes for “Tech Superpower” status, 57% of respondents believe increased funding is essential to support businesses developing innovative technologies.
This comes against a backdrop of the Office for National Statistics reporting a 0.3% contraction in the UK economy for October, highlighting the challenges that still lie ahead for the business community.