The Christmas and New Year period is a time for reflection as much as celebration. Looking back on the year just gone, the highlights and lowlights and thinking forward into 2025.

Even in those who are traditionally more half-empty than half-full, a glint of optimism is hard to resist. New start, new hopes, new dreams, maybe this time next year Rodney we’ll be millionaires…

The advice to those people however may be to switch off your phones and laptops and don’t read any emails until at least January 3rd. Some of that New Year cheer may fall flat.

There is a lot of material traditionally put out by economists, research organisations, consumer bodies and trade associations at this time of year about what to expect in the 12 months ahead.

Despite the high hopes of Hogmanay and the New Year these reports, surveys and predictions offer up a more sober dose of reality for 2025.

Take a look at brokers AJ Bell which just before Christmas issued its thoughts on the news that the UK economy had stalled in the third quarter.

In addition, according to the Office for National Statistics early estimates suggest GDP per capita actually shrank in Q3, to the tune of 0.2 per cent.

Laith Khalaf, head of investment analysis at AJ Bell, said this was “unfestive news” for Chancellor Rachel Reeves and PM Keir Starmer.

“They promised to get the UK growing again. Clearly the government can’t be expected to turn on the taps of the whole economy in its first three months, but the fact GDP has flatlined does outline the scale of the problem,” Khalaf said. “It also comes as business groups have criticised Labour’s first Budget in which Rachel Reeves chose to increase National Insurance for employers, which businesses are understandably warning will cost jobs and put upward pressure on inflation.”

He added that if the Bank of England’s expectation of zero growth in the fourth quarter proves to be correct the UK would be “pretty close to a technical recession, defined as two quarters of negative economic growth.”

“All in all, it’s a pretty dreary economic picture as we enter the new year. The latest readings and forecasts also somewhat put the kibosh on the idea that the UK might reap an economic dividend from the political stability provided by a new government with a strong majority,” he said.

The British Retail Consortium has also warned that 2025 could be a challenging year for retailers.

New data from the BRC shows that consumer expectations for the state of the economy for the next three months have fallen.

Helen Dickinson, chief executive of the British Retail Consortium, said: “Public confidence in the state of the economy took a nosedive. This created a widening gap between expectations of the economy and of people’s own finances. Retailers could find themselves facing a New Year spending squeeze just as they unveil their January sales.”

She warned that with sales growth unable to keep pace, retailers will have no choice but to raise prices or cut costs – closing stores and freezing recruitment.

The Confederation of British Industry is also feeling gloomy. Its latest Growth Indicator shows that private sector firms expect activity to fall in the three months to March.

Alpesh Paleja, CBI interim deputy chief economist, said: “There is little festive cheer in our latest surveys, which suggest that the economy is headed for the worst of all worlds – firms expect to reduce both output and hiring, and price growth expectations are getting firmer. Businesses continue to cite the impact of measures announced in the Budget – particularly the rise in employer NICs – exacerbating an already tepid demand environment.”

It's not all bad news though.

Findings from the payment group Visa’s first-ever Retail Spend Monitor has signalled a potential rebound in consumer confidence.

It analysed retail spend in the UK over seven weeks starting from November 1st.

It found that online shopping surged by 6.1 per cent, with e-commerce now representing 41 per cent of total retail spend. Department stores experienced a 6.9 per cent increase in sales, driven by Black Friday spending.

"This holiday season we observed a tentative rebound in consumer confidence, reflected in moderate growth in overall sales and stronger online shopping – as well as solid growth in spending at department stores," said Alicia Ngomo Fernandez, Head of UK Consulting at Visa. “Price conscious consumers took advantage of a late Black Friday to stock up on presents, leading to an early surge in shopping followed by a decrease in spend mid-month. Despite the recent slowdown, the growth in retail demonstrates the adaptability and the resilience of both consumers and retailers."

What should SME owners make of this all as they get ready to join hands and welcome in 2025? How much notice do they or should they pay to these forecasts and predictions?

Is a recession on the cards? Or are there enough glints of hope that confidence is returning?

Owners know the conditions they are facing better than anyone else. They know their customers and suppliers, the feelings and performance of their staff, the strength of their finances and market opportunities. That should be their focus.

Always be aware of the outside environment however and be prepared. That means also focusing on cashflow, ensuring those invoices are settled, that customers are treated well, that the supply chain is solid and diversified, that financing is secured, and your employees have the skills and confidence they need to perform.

There is a lot of noise out there but stick to the fundamentals and don't get distracted.

Good luck in 2025!