At the start of January the Chancellor, George Osborne, warned of a dangerous “cocktail of risks” facing the UK economy arising from the global economy.
The prospect of doom and gloom returned to the business media in January – and the dire outlook was reinforced by comments coming from bodies representing business, such as the British Chambers of Commerce (BCC).
Volatile stock markets, plummeting commodity prices, a “slowdown” in China, a poor Christmas for retailers and uncertainty about the UK’s future in the EU are all contributing to the general unease.
Of greater concern is talk about an impending financial crisis which is introducing fear and uncertainty.
For the moment at least, parts of the UK economy are enjoying some degree of success thanks to low costs resulting from the same low commodity prices, particularly oil, to low interest rates. There is also an easing of consumer credit.
Consumers have been spending a little more, especially on leisure and new cars. While it is unlikely that pay rates will increase, perhaps everyone is fed up after seven years of austerity and they are reassured by the property market. But there isn’t much confidence about.
While the increase in consumer spending may be propping up some businesses, sooner or later commodity prices will rise again and prices will follow.
Steps for protecting a business
Whatever the future, businesses need to be prepared. Plans must be made and these rely on predicting what might happen.
We believe that now is not the time to be investing in growth, but by the same token it is not a time to cut expenditure to the bone. Endless cuts end up with having no business to take advantage of the recovery, when it eventually happens .
So what should businesses be doing to “future-proof” themselves as preparation for an uncertain future? Staying calm and consolidating their share of the existing market is the short answer, whether it is focus on existing customers or it is improving operational efficiency. We will be looking at these issues in more depth over the coming month.