The road to recovery for UK SMEs
There’s no denying that the road since March 2020 has been far from smooth for businesses of every size. Even success stories have required a lot of hard work and determination to pull off. Now, many business owners are wondering what’s next and how to prepare.
It’s not all doom and gloom. Things are definitely looking up, with lockdown easing and consumer spending on the rise. Many of us are starting to embrace our freedoms and lots of businesses are ready for recovery. We go through what the road to recovery looks like at the moment and what you can do to make sure you’re ready to keep up.
The Bank of England released their latest quarterly economic Monetary Policy Report in May and in it the future looked more certain and a lot brighter. As a result, they’re expecting inflation to reach the target level of 2%. This is a low and stable rate that the Bank of England believes supports jobs and growth, which in turn helps people plan for the future.
In the report, the Bank of England says it’s expecting households to spend around 10% of the savings they’ve managed to make during the pandemic. This is twice the figure they previously gave, suggesting that the second quarter will prove much stronger than the beginning of the year.
The vaccination campaign has played a large part in the more positive outlook, according to the report. The more people we vaccinate, the more likely herd immunity becomes, with restrictions ending as a result. The numbers we’re achieving are driving a strong economic recovery. Now all over 30s have been offered their jab, so the numbers are only going up.
On 17 May the country got a taste of freedom, with restaurants and other leisure venues opening indoors and larger groups being able to meet up. As a result, consumers spent 10% more between Monday and Wednesday last week than they did over the same period in 2019. It was the highest increase of any week since restrictions were introduced in March 2020 at the start of the pandemic. This data was shared by Fable Data, which analyses consumer spending by tracking bank transactions.
Research company GfK also reported a boost to consumers in their Consumer Confidence Index. The impression people have of their own personal finances jumped up six points in May. In general, analysts are estimating that the strong spending we’ve seen since the latest easing of lockdown restrictions means a faster than expected recovery.
Job vacancies rose above pre-pandemic levels for the first time since lockdown began. Logistics and retail have seen the biggest surge as businesses prepare for reopening and matching consumer demand.
The latest job market data from KPMG and REC points to the steepest overall rise in job vacancies for the past 23 years. An increase in hiring means more business spending and anticipating growth. This is consistent with a lot of conversations we’re having with our customers who are preparing for a busier period and anticipating bridging the gap between delivering goods or services and receiving payment.
So things seem to be going in the right direction for individuals as well as businesses. With consumer confidence at an all time pandemic high, it’s important that businesses are ready to respond with their own confidence. The government has introduced a number of schemes, grants and opportunities to encourage business activity and growth.
Here are four you could look into:
Help to Grow – The government introduced the scheme to give businesses the tools to recover stronger. The £520 million programme will help 30,000 SMEs gain access to discounted software and digital advice, as well as management training. Learn more here.
Brexit support fund – Leaving the EU means there have been a number of changes to customs and tax rules when trading with the bloc. To help smaller businesses manage the extra time, money and expertise this requires, the government is offering grants of up to £2,000. You can apply here.
The Recovery Loan Scheme (RLS) – the latest government-backed loan scheme is designed to accelerate your post-pandemic ramp-up so you can start focussing on the future. Borrow between £25,001 and £10 million to fund the upgrades your business needs. From hiring more staff to keep up with increased consumer demand to leasing better warehouse space to meet your needs, the scheme is a huge lifeline to businesses. We’ve broken down what it is and who it’s designed for in more detail here.
Restart Grant – As a result of the strict lockdown restrictions, the government made £5 billion worth of grants available to the hardest hit businesses in the UK. Non-essential retail businesses that had to wait until 12 April to open are eligible to claim up to £6,000. For hospitality and leisure businesses that have only just reopened or are hoping to next month, they can apply for up to £18,000. You can check your eligibility here.
With new variants and outbreaks there’s still a level of uncertainty until the country safely reopens fully. However, it’s clear to see that with consumer confidence and the strong vaccine rollout, there is a lot to look forward to. Making sure your business is set to tackle the next stage of growth and challenges is key. Look into the different support options available to you to give yourself the strongest chance of success.