Is the economic future really as dire as people make out?
Businesses would be forgiven for fearing the worst right now. The amount of doom and gloom stirred up by the media surrounding Brexit and its implications on the UK economy is enough to make any company director want to freeze their growth plans indefinitely until the whole thing has been sorted out.
But we are, arguably, yet to see any real-world evidence that things are as bad as the forecasters said they would be.
In 2017, Bank of England’s chief economist admitted that his profession was in a crisis, having misjudged the impact of the Brexit vote. It followed the bank coming under intense criticism for predicting a dramatic slowdown in the UK’s fortunes in the event of a vote for Brexit, only for the economy to bounce back strongly and remain one of the best performing in the developed world.
While it would be wrong to suggest that the UK economy has been completely unaffected by the Brexit vote, perhaps it’s time we made our own assessments rather than being so heavily influenced by economic experts.
UK inflation falls to two-year low
One indicator of the state of the UK economy is inflation – and January marked a two-year low, with the Consumer Prices Index falling to 1.8% from 2.1% in December, according to the Office for National Statistics.
Economists had forecast that CPI would fall in January to 2%, but a drop in the price of energy bills and fuel meant that estimates were exceeded.
With wages rising at 3.3%, the Institute of Directors said the lower inflation was a "boon" for the economy. If Brexit risks were to be quelled, consumers could well regain some willingness to spend – which would be great news for business.
Companies post record profits
Perhaps consumer confidence is still fairly high, despite charts suggesting that it has slumped over Brexit fears. While struggling brands like Debenhams and House of Fraser have made the headlines after reporting record annual losses, other businesses have managed to go the other way.
In March, Greggs, the baker and takeaway food group, reported a 10% rise in 2018 profit and said it had made a “very strong” start to its new financial year. The firm said annual sales had broken through £1bn for the first time, following a huge investment trying to transform people’s perceptions of the brand.
Meanwhile, in the same month, UK-based online food delivery service Just Eat announced its financial results for 2018, which showed a total profit of £101.7m before tax, after recording a loss of £76m in 2017.
SMEs target growth in 2019
It’s not only the big brands that are making the most of others’ uncertainty by investing in growth. UK SMEs are also hoping to grow their headcount over the next 12 months.
In new research from business energy supplier Opus Energy, over half (51%) of the business owners surveyed said they intended to grow their business in terms of people, with some even predicting they’ll increase their workforce by 50%.
Given the importance of SMEs to the UK economy, it’s encouraging to see that business owners are still harbouring growth ambitions, when it would be so easy to park them for a later date.
Don’t cause your business to stall when it could be motoring past the competition. If you’re an SME planning for growth, it’s likely you’ll need finance to do so. Many business owners are wary of taking out finance that needs a Personal Guarantee, which is typically secured against their house.
But with Purbeck, we offer Personal Guarantee Insurance for SME Directors who have business loans or financial agreements. This covers up to 80% of your risk, giving you peace of mind as you plan the future growth of your business – whatever the economic climate.
Please contact one of our specialists today to learn more on 0208 004 7252.