Brian Mulholland, Chief Financial Officer, says the dramatic impact COVID-19 has had on the economy has left a nervousness, but more and more evidence points to a surge in business activity with the economy set to bounce back.
The pandemic will leave a long-lasting impact on SMEs, with business owners and managers adopting hesitancy, with Brian saying there is a new “natural caution” among businesses.
However, Brian says there is plenty of data which suggests there are more than green shoots coming through, with official forecasters increasingly optimistic that world output will start to recover this year and grow thereafter.
According to the latest GDP monthly estimate for the UK from the Office for National Statistics (ONS), monthly gross domestic product (GDP) grew by 0.8% between April and May 2021. That is still 3.1% below its level in February 2020, the most recent month not impacted by the pandemic.
This same ONS report brings good news for the services industry, with a month-on-month rise of 0.9% in services.
Recruitment is also gathering pace. In June, the number of workers on payrolls went up by 356,000 and there was also an increase in job vacancies to 862,000 after a rise of 241,000 between April and June. Job vacancies are 10% higher than they were compared with early last year, demonstrating that businesses are struggling to find workers in some sectors, as they look to expand and capitalise on growth opportunities.
Another report, the Accenture/IHS Markit UK Business Outlook, says business expectations have risen to the highest level in six years. It suggests that 67% of private sector companies based in the UK expect a rise in turnover during the year compared to 11% expecting a reduction.
Brian said: “Data suggests the UK economy is starting to move into a better place after a bruising time following the disruption caused by the global pandemic. We feel the confidence too, but also, we are fully aware that nervousness is a hangover of the pandemic, nervousness over another wave, nervousness of not knowing what is around the corner and nervousness created by the general instability we have had since March 2020.
“However, the positive figures and general optimism is combining to create a confident but cautious approach to the future from business owners. This is also what we are hearing anecdotally.”
While the numbers and forecasters are looking good, the recession we experienced last year due to COVID-19 was not a typical one, Brian says.
He explains: “Previous economic downturns, and especially the banking issues of 2007/08, really prepared the banks to now support UK businesses, and in particular the needs of SMEs. Banks are now stronger and that has given confidence to the whole of the UK as we all combine to fight back against the virus.”
The bounce back
Brian says COVID-19 has created a new stronger breed of business owner. He said: “It has been a challenging time, but there is no doubt people are learning from the experience and coming back stronger. We have already seen, and are continuing to see, true entrepreneurship to build really innovative and robust businesses.”
At Redwood, thanks to our bespoke customer service and dynamic decision making, we are ready to help, as Brian says: “Being really close to customers, and being flexible in our approach, will help small UK businesses to maximise opportunities and accelerate their individual recovery which impacts the wider economy.”