The “New Normal” For Business In 2025
By Samuel Miley
As business leaders survey the “new normal” of the post-Covid landscape, they are increasingly realising that long-term success hinges not just on profitability but on resilience, responsibility and technological foresight.
The past few years have witnessed profound changes in the way companies operate, driven by external shocks like war and the pandemic, combined with the push for sustainability, digital transformation and governance reform. These shifts have forced companies to re-evaluate traditional models and embrace new frameworks for managing risk and driving innovation.
For mid-market firms, an economic backdrop for 2025 of slow but steady growth provides a cautiously optimistic outlook. These companies, often more agile than large corporations but with more resources than small businesses, are well-positioned to capitalise on recovery trends.
How we got here has been a fascinating journey. For the past three years we at the Centre for Economics and Business Research (Cebr) have been working with Moore Global to survey mid-market businesses in the world’s key markets to explore their attitudes towards these structural changes: it has been very revealing.
Post-pandemic realities
The Covid-19 pandemic fundamentally reshaped how businesses operate, with hybrid working models becoming a lasting feature of the corporate world. In fact, 77% of businesses now support remote and hybrid working, signalling a significant shift from pre-pandemic norms.
The impact of hybrid working has been largely positive, with many businesses reporting productivity gains. This is corroborated by other research, such as Cebr’s study for Virgin Media, showing that Covid-driven digital change can significantly boost employee productivity, equating to an additional two hours of work per day for remote workers.
However, the extent of its success varies significantly across industries. In sectors such as IT and finance, where face-to-face interaction is less critical, Moore Global’s survey found that around 70% of businesses reported that hybrid working had a very positive effect on productivity.
In contrast, industries such as tourism, public services and healthcare that rely heavily on in-person interactions reported lower levels of productivity improvements.
Another significant change in the post-pandemic world has been the shift in consumer behaviour. E-commerce has boomed, with businesses across various sectors recognising the long-term potential of online sales. The pandemic accelerated this shift, making online shopping a default choice for many.
Sectors such as electronics, IT, and retail have especially benefited from the surge in e-commerce, with both business-to-business (B2B) and direct-to-consumer markets adapting to the digital age. This transformation has not only propelled many organisations into the digital space but has also proven to be an advantageous shift for those that embrace it.
Companies already invested in digitisation are doubling down on their efforts, while those that fail to enter this evolving landscape risk significant losses, ultimately jeopardising their competitiveness and market relevance.
Outlook for mid-market businesses in 2025
As business leaders continue to adapt to these new realities, the economic environment they face remains a critical factor in determining long-term success. Mid-market enterprises will need to navigate a complex macroeconomic landscape shaped by inflationary pressures, interest rate dynamics, global supply chain recovery and the impact of conflict.
While inflation surged in recent years due to post-pandemic supply-demand imbalances and geopolitical tensions, 2025 is expected to bring more moderate inflationary pressures. For instance, Cebr forecasts interest rates will be significantly lower than those seen in recent years, which should provide some relief to businesses and enable more investment in capital projects, expansions and digital transformation initiatives.
However, since interest rates were raised to near-term highs, borrowing costs will remain above those witnessed over much of the last 15 years. Consequently, companies relying on loans for expansion must manage cash flow carefully to avoid overleveraging, especially in sectors with tighter margins.
Another critical issue that has stirred concern is the potential for a global recession, driven by a perceived slowdown in the US economy. Initially, this was linked to a softening labour market, but fears of a sustained downturn have now dampened. The performance of the US will continue to play a key role in shaping the landscape for businesses globally, particularly those in countries at risk of increased trade disruption under the new Trump presidency.
International supply chains, still recovering from the disruptions caused by the pandemic, remain under pressure. Uncertainty in the Middle East has reignited concerns about supply chain vulnerabilities. Disruptions in key markets could lead to delays in production or increased costs, especially for industries such as manufacturing, retail, and technology.
Despite these challenges, the growth outlook across major regions has been stronger in 2024 compared to 2023, with this upward trajectory expected to continue into 2025 and beyond.
Navigating economic pressures, supply chains and cybersecurity
The escalating concerns surrounding supply chain vulnerabilities are evident, with nearly half (45%) of businesses reporting that supply chain disruptions are a greater threat now than they were five years ago. The financial implications of these disruptions are significant.
A survey of 400 senior supply chain executives across eight countries by The Economist revealed that two-thirds of respondents reported revenue declines of between 6% and 20% due to supply chain issues in 2021.
Nevertheless, companies are being proactive when it comes to mitigating these risks. On average, businesses conduct supply chain audits three times per year, with 19% of organisations carrying out more than four audits annually. Companies with more diversified supply chains tend to be especially diligent, with 98% of them performing audits at least once a year.
In addition to supply chain vulnerabilities, businesses are increasingly concerned about the financial and operational impact of cyber attacks. More than half (54%) of the surveyed companies reported that cyber threats have become more severe over the past five years.
The reality of these risks is underscored by a Cebr study revealing that more than a third of UK businesses fell victim to fraudulent activities, cyber attacks or data leaks in the past year, resulting in costs of £11.3 billion to the retail sector alone.
There are some elements of supply-side risk that are more difficult for businesses to guard against. A particularly notable post-pandemic example relates to the labour market and the struggle for talent retention.
These concerns are particularly prevalent in the UK and Germany, where 31% and 27% of businesses, respectively, report that their ability to retain talent has worsened since 2019. As companies continue to adapt their operations and invest in technology, addressing workforce challenges will likely remain a priority.
AI as a driver of innovation and efficiency
Amid the challenges of recent years, businesses have also been presented with significant opportunities. Perhaps the most prominent of these is AI.
While some organisations have hesitated to fully embrace AI, those that fail to do so risk missing out on one of the most transformative tools available today. Awareness of this is growing, with 77% of businesses reporting an increase in AI investment or usage over the past four years.
For larger businesses, the average annual AI investment has reached $1.5 million, highlighting a strong commitment to the technology’s potential. Despite these significant investments, many of the anticipated benefits of AI have yet to be fully realised.
The impact of AI will vary across sectors. Industries like IT and finance will be among the strongest gainers and can expect to generate substantial productivity improvements. In contrast, sectors reliant on human-centric tasks, such as healthcare or hospitality, may face challenges in fully integrating AI into their operations.
This variation highlights the complexity of AI adoption and the uncertainty surrounding its long-term impact.
Nevertheless, a majority (56%) of businesses view AI as a positive force for their organisation, more than double those that view it as a potential threat. This clear majority underscores the growing recognition of AI’s ability to drive innovation, boost efficiency and, ultimately, transform industries.
As businesses continue to navigate the uncertainties of AI, those that invest strategically and embrace the technology will be better equipped to harness its full potential. Arguably, AI is not just a tool for the future, but a driver of success in the present.
The future of business: resilience, sustainability, and technological foresight
As businesses navigate the evolving environment, success will favour those that are adaptable, forward-thinking, and committed to sustainability. Hybrid working, e-commerce and AI are not mere trends but opportunities to boost efficiency and innovation.
Yet, challenges remain. Supply chain disruptions, cybersecurity threats and economic uncertainties continue to exert pressure. Companies that proactively manage these risks while staying ahead of regulatory changes will be better positioned to thrive.
By converging risk management, ESG principles and technological adoption, businesses can build resilience and unlock new opportunities. Ultimately, those that balance innovation with responsibility will lead the future.
Samuel Miley is Managing Economist at the Centre for Economics and Business Research