The latest GDP figures for the UK show that the economy is still facing some challenges to return to pre-pandemic levels. Economic recovery has been slow, but not all hope is lost for businesses to grow in the UK economy. In this article, we touch on some of the factors that can impact businesses which include the pandemic, labor shortages, rising fuel prices, and higher inflation. We also examine if there is hope for businesses to grow in the UK economy.
Type of Industry
There have been some huge variations in the performance of different sectors in the UK. For instance, the accommodation and food services sector posted a growth of 30% following the reopening of businesses after an extended period of Covid-19 induced lockdowns. The arts, recreation, and entertainment sectors grew by 19.6%, and the health sector also witnessed a modest 3.5% growth.
The construction industry fell by 1.5% as many companies faced challenges such as supply issues and rising input costs. On the other hand, the manufacturing sector fell by 0.3%. A close analysis of these statistics shows that the situation is not very bad for business. New businesses can grow in the UK economy, but it can take time depending on the industry. If you want to launch a business, you should scan the market first.
Register Your Business
Before you establish your business, you should register your company first, and there are a few steps involved. The good thing about the process of company formation in the UK is that it takes no more than 3 to 24 hours to get your certificate of incorporation. You can register your company online, and all you need to do is complete an online form. The system checks your application for errors before processing it.
Registering a business in the UK may seem daunting, but it shouldn’t when you have the right information. If you work with professionals who have extensive experience in dealing with registration services, the process will be easier and this can give you peace of mind. When you complete the company registration process, you should be ready to penetrate the market. However, it is essential to understand all the factors that can impact the viability of your business.
Supply Chain Disruption
The pandemic has significantly impacted the supply chain across different sectors, and other industries are still feeling the pinch. The disruption in the supply chain has led to shortages of raw materials and this has affected business. For instance, the automobile industry has been hit by shortages of different types of raw materials which have forced manufacturers to reduce production.
Toyota reduced its production by 40% as a result of shortages of microchips in the global market. Other automobile manufacturers such as Nissan, Ford, Jaguar, Land Rover, and Honda have also been forced to scale production for the same reasons. The delays in the delivery of raw materials have been caused by disruptions in the global supply chain.
The restaurant sector has also been hit by shortages of chicken. Retail shops have also not been spared by this challenge. However, the disruption of supply systems is not something that can last forever. Instead, there are positive indications that it is possible to live with Covid. There are no signs that the pandemic can end anytime soon. Therefore, businesses need to tackle the elements that can impact their operations since the virus will be something we learn to live with.
Another aspect that can affect the growth of business in the UK is the shortage of labor following Brexit. When the UK left the EU, it found itself facing labor shortages since migration from other countries in the bloc was suppressed. The UK is still grappling with labor shortages in different sectors, and the commercial transport industry was hit hard. The agriculture sector has also not been spared by the shortage of labor.
As a result, the government has since put in place measures to attract migrant workers from different parts of the globe. However, labor costs have since increased as a result of the shortages. The new barriers to trade caused by Brexit continue to bite. While Britain’s economy does not show signs of crumbling, it is facing many challenges. Therefore, you should understand the implications of opening a new business in the UK. You also need to have clear strategies about how you can address the challenges you can encounter in your operations if you want to succeed in your business.
Higher Fuel and Raw Material Costs
The manufacturing industry has been hit by the high cost of raw materials although increases have been viewed as temporary. Apart from raw materials, the price of fuel has been on the rise since 2021 and the UK has not been spared by the impacts of the Ukraine-Russia conflict. Many countries in Europe relied heavily on crude oil supplies from Russia. The issue here is that Russia is the second-largest oil producer in the world after Saudi Arabia. If the war continues unabated, it means the UK, like other countries, should brace itself for increases in the price of fuel.
Analysts believe that as Covid-19 recedes, the economy will peak, and many businesses will rise to their former glory. The uptake of vaccinations in countries within the strategic global supply networks can also stimulate economic activity in the UK. On the issue of rising fuel prices, the situation will improve though it might take time. The positive thing is that these challenges are not permanent.
Following the outbreak of Coronavirus and other factors related to Brexit, the UK economy has recorded a slight drop in terms of GDP. However, there is hope that business will rebound when all industries are fully operational. It can take a bit longer for businesses to revert to their pre-pandemic performance levels, but there are positive indications of growth. For instance, the reopening of businesses in July 2021 witnessed strong growth in the food services, accommodation, recreation, and entertainment sectors. The manufacturing and construction industries recorded the least growth.