The Economy and where the Business Lies.

Over the last year, we have been in the strangest of times, before I continue with this article, I would like to offer my deepest condolences to those who have lost those close to them over this horrific period in our history.

What will become of our business?

What will become of business in general?

The true cost is yet to be felt, different sectors have been hit at different levels, one thing we can all say it has been very difficult times.

The measures put in place by our government have been unprecedented, figures from Nov 2020 a £394bn and rising, more than during the wars. This has produced a drop of 11.3% in the economy, the depression of 1920/21 saw a drop of 10%. No small figure and one which is difficult to comprehend. Talking with a financial advisor, he mentioned that their fund portfolio for investments worldwide was around £125bn, again no small figure, but it does start to show the size of debt brought on by the government to see us through these times. Do not get me wrong this is not a case of hey! Look how good our government has been, aren’t they great! No, it is a case of understanding the level of debt the country is in, and this must be paid back somehow.

Any downturn in the economy which results in such high borrowing results in higher taxes that are levied on economic activity. The amount of money ploughed into keeping this country going is amazing, and without this, we would have been in a state of anarchy. The country would have collapsed with mass unemployment, the loss of 10’s of thousands of businesses.

The spending is massive, yes appreciated, but this is not the end. Economics show that as we come out of this we will lose businesses; investments will be cancelled and from this, further drops in revenue will result in less taxes collected. This will lead to more expenditure required to prop up the economy, and so it goes around.

For many businesses there was little or no support, I am a great believer and advocate of the micro-business sector, the one which has 4.6 million businesses with 0 – 9 employees and the small sector which has 1.1 million, totaling 5.7 million of our 5.9 million businesses within the UK. A sector that employs over 16.8 million people and generates around 47% of the GDP. During this pandemic many of these I have spoken to received no support at all, apart from a loan and by the very definition that has to be paid back.
But what do we think the future will hold for the business world? There are many differing opinions, but, do we think that we will fall into a recession?
Sounds all doom and gloom doesn’t it.
What will be the road forward for businesses? If we look at history, it tells us one thing that with massive debt comes a recovery period and that will mean casualties. We will probably see a rise in new start-up businesses, why?

Well, we have already seen many jobs being lost, many more will follow. The furlough scheme has been fantastic for keeping people in jobs, it has provided a lifeline to many businesses, who; without would have had to make redundancies. It has meant that many people have been in a position where they have effectively been on a paid holiday for months. I understand it has not been on full pay, my wife has been one of those and yes losing 20% of the wages was hard, the silver lining is that she has a job to go back to.

When jobs become scarce, people will need money, this has to be found from somewhere and that will be through self-employment.

The law of economics shows that if there is a reduction in revenue then a business cannot maintain its state. This means something must change to balance this out. Losing staff is not something businesses like to do. Often they have trained and invested time within their staff. Unfortunately, if the order books are becoming empty then there is little choice.

Businesses will rightly hold onto as much new business and revenue that they can, releasing far less to the supply chains. This means the second and third tiers have less, so they also struggle, and more jobs are lost. This spreads down to the bottom level. It is here where so many people are running a job or very small business. As others lose their jobs, they need some way to pay the mortgage and generate some income. A few will resort to starting their own business. This thought is not taken from an opinion but fact, with what happened in our area after the closure of SSI.

There was suddenly, an influx of government funding aimed at supporting start-ups. This harmed the local economy as many businesses started with little chance of success, but it looked good on the numbers, showing help had been provided and this is how many new businesses started. The effect hit the other small business trading in the area, making it difficult for those to make a living due to the surge of new businesses, all trying to undercut each other to get a part of an ever-decreasing pie.

These instances did not affect me or our businesses, but we know many who it did hit over in the Redcar area.

A worry/concern is that we will enter a slow down within the economy. This will result in the loss of jobs, which will further increase the velocity of the water going down the plughole. This will then have a knock-on effect further down the supply chains making it more difficult. To the point where we have too many businesses, not enough work and lots of people moving into their own job/business.

So, what does the future for business in the UK hold, is there a way of us being able to stop what many believe to be inevitable. Doom and gloom it sounds like, a little like David Attenborough’s witness statement.

Yes, there is a way, first, we need to reorganise and produce a fairer way of pushing opportunities into our local economies, whilst I am biased with Crust Today; it is a platform like this that is required. By getting local authorities to utilise these services and make sure opportunities get right down into the supply chain, is so important. Then look at the larger organisations and help them to use more of the local chain. To help them create a more diverse supply chain.

Bring in and force the Social Value Act to be adhered to and not pay lip service to it. For authorities and local government to become more accountable for their actions and more transparency.

Our micro-economies need to flourish, if they do then our national economy will flourish and with that, we will be able to rebuild and rebound very quickly.

If all we do is throw money into new startups to try and fudge the unemployment figures then this will not work. The local government may pat themselves on the back to say how well they have done, the reality is they will have caused more hardship for many businesses.

What else can help us, to be honest, the education of people to use local businesses, to stop buying directly from places like Amazon or eBay. They do very little for local economies.

From an economics point, taxes will rise, these will hurt many smaller businesses, so if we look toward the giants and stop letting them get away with taxes.

It is no good saying that they are giving jobs to the local people as that is not their intentions, they have an underlying plan. If we look at the true reality, we will see that while jobs go to local people the adverse effect on local businesses outweighs that benefit. That the profits from those businesses are not ploughed back into the local economy.

The way to save our economy and the way forward has to be; change our mindset, for local government to change its mindset. To stop bickering and point scoring within a corrupt and dis-functional political mire, and make Britain Great again (just without all the bad bits, of crusades, slavery, killing and being so far up our own backsides in self-importance)

What will become of our business?

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