From the government merry-go-round and changes at the helm, to the ensuing cost of living crisis which has brought misery to households across the country, it’s been one heck of a year. The next 12 months will be fraught with uncertainty and challenges, and once again our resilience will be tested. And even though economic growth is stagnating as we dive head first into a recession, job vacancies are still at high levels as employers compete for scare skills. In this end-of-year update, we round up some of the key public policy and public affairs moments of 2022.

No one could have predicted that the Ukraine conflict would wreak so much havoc just after we thought we had seen the back of the pandemic. And then if someone had told you that we’d have three prime ministers in a calendar year, you wouldn’t have believed it before 2022. But that’s precisely what happened, with Boris Johnson’s controversial tenure coming to an end in September, which was followed by Liz Truss’s short-lived, disastrous premiership, which shook up the markets like never before. And here we are with former chancellor Rishi Sunak now in charge.

Mini Budget, Maxi Crash

In such a tumultuous year, markets looked to September’s ‘Mini Budget’ for some stability which, unfortunately, didn’t come. Liz Truss, her trusted advisers and cabinet colleagues, notably then chancellor Kwasi Kwarteng, decide to go on a tax cutting spree to stimulate growth. The measures included a reduction of the basic rate of income tax from 20% to 19% as well as scrapping the 45% higher rate threshold for higher earners and shelving plans for a corporation tax hike from 19% to 25%. The government had also promised to ditch the Off-Payroll rules rolled out not too long ago.

A paper prepared by two leading economists had warned the then-Prime Minister in no uncertain terms of the prevailing mood of unease. “The markets are nervous about the UK and about policy options. If immediate economic policy announcements are handled badly then a market crash is possible,” it said in the report. Those words proved to be prophetic as Kwarteng’s £45bn of unfunded tax cuts announced on the 23rd September – which would require a fiscal tightening of more than £60bn – sent the markets into a tailspin, with sterling plummeting to its lowest level since 1985.

Financial and fiscal stability

In stepped chancellor Jeremy Hunt, replacing Kwarteng on 14th October, to try to calm the markets when delivering his Fiscal Statement of the 17th October (just eight days before Truss’s resignation, having been in power all of 44 days). He announced that the basic rate of income tax would not fall with dividends tax also not to be reduced by 1.25%. Some of the changes had already been made prior to the statement – the abolition of the 45% top tier tax rate had been announced on 3rd October and the freeze on corporation tax came 11 days later.

One change that didn’t prove popular was Hunt’s decision to repeal the IR35 changes affecting companies and contractors. Many had welcomed Kwarteng’s planned reforms, which would have freed up time and reduced the administrative burden on employers looking to engage contractors to prove a worker’s status.

Combating climate change

Outside the UK’s politically changed economy, there has been a lot happening across the globe that’s been influencing the public affairs and public policy arena. The COP27 summit, which took place in the Egyptian resort town of Sharm El-Sheikh from 6th- 20th November, came to an end with countries agreeing to establish a fund for poorer countries affected by climate disasters. Some, though, lamented the lack of ambition in tackling the emissions that caused them. Nevertheless, the result was seen as a success in the continuing battle against global warming with US Special Climate Envoy John Kerry applauding a deal to “establish arrangements to respond to the devastating impact of climate change on vulnerable communities around the world”.

One of the key agenda points at the summit was the temperature goal targets first announced at COP21 (Paris, 2015). Countries had agreed to focus on the 1.5C limit established at the COP26 Summit in Glasgow a year earlier – the commitment to cut greenhouse gas emissions was reaffirmed in 2022. The commitment to phase down on fossil fuels, which had already been agreed in Glasgow, has stayed the same, albeit some countries wanted to go further. A provision to boost “low emissions energy”, including wind and solar farms, was also tabled.

Looking ahead to 2023

These were just some of the key highlights of a truly incredible 2022, a year in which the UK government, economic growth and public investment have all been in the spotlight. Despite the challenges ahead, there will be opportunities for organisations to ignite their talent attraction strategies and hire the best policy, public affairs and comms talent.

For your hiring needs, please talk to our public affairs, policy and strategic comms specialists.