Tag Archives: recovering UK economy

Signs of economic recovery in the UK – depending on your viewpoint…..

In the last month or so I have attended various events where the subject of the UK economy has been a major topic. It is clear that the perception or otherwise of a slowly recovering UK economy is dependent on whether you are being targeted as a voter or a business, especially an SME company. Five years of record low Bank of England base rate however has left savers out of pocket against inflation but borrowers getting better deals. The problem for businesses who have been surviving with low interest rates is what happens when they rise, even by small increments.

The public perception, being generated by politicians and those picking the most apt economic statistics, suggest the worst is over and growth is picking up, unemployment falling and house prices booming. It is however questionable whether fuelling the economy with “help to buy” for new and other property values of £600k actually helps the banks to lend more. It also allows buy to let landlords cash-in but hopefully stimulates more movement in the property market for first time buyers and those who have held back on moving recently. The warning signs are that possibly interest rates will rise earlier, that has an impact on mortgage rates and repayments and that year after year there are significant increases in utility, food and fuel costs that outstrip increases in wages, let alone the inflationary impact.

From a business perspective the view of how government and the banks are helping business is somewhat different. The larger corporate businesses have survived in the main and retrenched by holding cash rather than borrowing, investing or acquiring companies, but this may change. The SME companies however are still finding it hard to get appropriate and cost effective funding from the banks with some not wishing to be rejected with the additional information and forecasts being demanded as part of the loan negotiations. Potentially rising interest rates, consistently high business rates and rents are being pushed upwards. One of the costs that will impact a vast number of smaller businesses in the next year is auto enrolment for pensions with all the associated costs and administrative burden being with the companies.

It is not all doom and gloom but it does look that the recovery of the economy is going to be over a number of years, and certainly after the next UK election, due in 2015.

“Out of Africa” and the comparison with successful businesses

Having recently returned from a safari in Kenya I was struck by the similarities of the life of animals in the Masai Mara and successful businesses. Survival of the fittest, working as a team, stalking your prey, adapting strategies and sharing in the spoils are traits of many of the animals and most especially lions, and this philosophy can be applied to businesses of all sizes.

As a business you should know your competition, understand what makes the business unique, identify your target market and how to leverage your current and potential new customers. Having a clear mission statement and objectives and working as a team, from the Board and cross functionally throughout the organisation, will bring rewards. Increased sales, optimised costs, improved cash flow and potentially rewarding shareholders and staff, that can be further enhanced by developing a corporate culture and incentivising where appropriate.

In the slowly recovering UK and global economy is your business ready to survive?