A once-in-a-generation set of market disruptors are anticipated to continue to have a compounding negative impact on UK businesses.
William Arthur Ward once said, “The pessimist complains about the wind; the optimist expects it to change; the realist adjusts the sails.” Given how world events have impacted the UK economy since the start of 2022, business owners are now having to consider how local and global developments are going to impact their companies. From factoring in the rise in fuel prices due to the energy crisis, to the practicalities of transporting resources over now restricted borders in regions experiencing war – even assessing the spending power of customers as the cost-of-living crisis really starts to bite.
In November, Savanta’s UK Business Tracker explored 1,018 UK business decision-makers’ opinions regarding the current state of market disruptors and their trajectory. To them, the storm is likely to get worse.
More than two-thirds are expecting to see an exacerbation in disruptors for their business, including a rise in fuel prices (70%); issues with supply chains (70%); dips in customer spending (66%); staff shortages (65%). Half are even anticipating that the economy will be affected by blackouts (52%).
Sentiment among small businesses
There appears to be a correlation between company size and the perceived impact the above factors would have on businesses. Small businesses were significantly more inclined to state that the economic situation for their organisation, their sector and the UK was not likely to improve.
Among small businesses, the audience that was most pessimistic were the retail and wholesale sector. Half (51%) stated that it was unlikely that the economic situation for their business will improve. As 3 in 4 (73%) of these small businesses forecast that customer demand and spending will dip, it can be strongly inferred that they think the current state of the economy is having a snowball effect on their business, starting with the struggles of the end consumers. Given that this study was conducted before the Christmas period (a time of year that historically has benefited the economy), despite the typical increase in spending at this time of year, retail and wholesale businesses are still feeling pressure and are cynical about their businesses’ future.
Looking at the pressure that businesses have felt since the start of 2022, it is understandable that many decision-makers are feeling discouraged about the future of their business. There have been several impacts on the UK economy since the Covid-19 pandemic and Russia’s invasion of Ukraine, leaving many to extend their gaze more and more towards external factors.
But has this series of unfortunate events left business owners cynical? With so many external influences, are they being realistic with their predictions of the future, or is this pessimism a realistic barometer of what is to come? We’ll continue to track and watch how this plays out via our Business Tracker in 2023!