The gap between the successful and less successful UK accounting practices will get much wider in 2014, says Steve Pipe.
In many senses this is a “safe” prediction , since the gap has been widening in recent years anyway. But there are also some particular reasons why 2014 will probably see an acceleration rather than merely a continuation of that trend.
Austerity will continue to change everything
The economic recovery is fragile and slow, and the need for many more years of austerity is an accepted fact. Life will continue to get tougher for clients due to a “perfect storm” of:
- Prices increasing faster than earnings – leading to falling real incomes
- Higher taxes – reducing real disposable income even further
- Negative real interest rates – reducing the income and wealth of savers
- Less generous pension arrangements – meaning shorter and less comfortable retirements
- Cuts to services provided by the state – forcing us to start paying for things we used to get for “free”
This is precisely why the Chancellor warned that 2014 will be “a year of hard truths”.
And the hard truth for accountants is that...