In the early 1990’s, a recession was something you kept on going through to come into some sunlight the other side. However, the last eight or nine years have been very different.
We have all had to adjust to ongoing turmoil – pressures that may change but are unlikely to ease in the way they did before.
Increasingly, I find that SME owners focus less on national or even international politics and economics, and more on simply getting their heads down and triumphing over immediate business challenges as they arise.
Slower economic growth has been forecast by many for the UK this year, which means business owners have to have a total focus on, and belief in, their business to take the risky step of investing.
Many, however, are now faced with the choice of investing or getting out of the game, in an increasingly competitive marketplace.
If owners have to borrow money to make that investment, will there really only be a negligible rise in interest rates this year?
Certainly, lower inflation and steady interest rates would help business and consumer spending, the latter having defied predictions and continued in the face of Brexit.
Meanwhile, EU workers flee a Brexit threatened Britain, and the combination of low unemployment and the worst shrinking of living standards for decades, means that workforces negotiating for higher wages look to be holding a stronger hand than they have for several years. While unemployment is forecast to rise over the next five years by the Office for Budget Responsibility, that is not going to help firms faced with those negotiations in the short term in a country with massive skills shortages. This could leave many firms squeezed on both sides, given the UK’s growth dropped behind all other G7 economies last year and little change to that is forecast in 2018. And all this pressure on our businesses, before I even mention the unstable government or the possible pressures on the pound. Yet if wages go up, along with increased pension contributions, and increased minimum wages, inevitably companies will have to increase prices and we cannot fail to see knock on inflation.
There has been good news for some. Few could have predicted the incredible rise of Bitcoin and now other cryptocurrencies. Launched back in 2009 but it was 2017 in which they hit the headlines. According to CoinMarketCap.com, the total market value of the capitalisation of cryptocurrencies had topped 500 billion dollars – over 3,000 per cent rise in the year. Not just that, they are becoming mainstream currency and while we are not yet paying for our daily loaf with a bit of a bitcoin, those days are not inconceivable. There are plenty of doom-sayers too who predict the entire crypto-collapse.
Against all odds, the traditional stock market grew last year both in Europe and in the US as well, despite the worries of Trump, Kim Jung On, Brexit, the Middle East, Russia, China, Mexico, Boris and points East and West. So the IMF is optimistic that the global economy will do slightly better still this year, even allowing for UK’s stagnant efforts. Economists are tending to still take a semi-optimistic view of the year ahead, albeit with some cautions of stability and a fair wind.
The High Street Banks are shrinking faster and faster, unable to provide the ease of digital banking now demanded in the marketplace. The pressure on the whole High Street has remained unrelenting. Theo Paphitis is quoted as saying “In all my years, I have never seen it so hard and unforgiving”. Paphitis blames the government for pushing retail to the edge of the precipice, saying that their thinking lags well behind global development in areas of business legislation, policy and taxation along with their continued disinterest in retail. I take his point but then I don’t think it is much different in many other sectors.
With the impatience of the modern consumer, financial brokers may find their roles under pressure, as middle men are cut for speed and increased customer service. Financial services are starting to suffer the disruption of the shared economy and digitisation. With more mobile banking, that means more cyberattacks. Tech security is a booming industry to be in, with voice recognition ID being a particularly hot rock.
IoT hacks and attacks are on the increase, with the dark web having plenty of malware available for any would be hackers. Large scale attacks will become more common. Add in the sinister RATS (remote observation tools), IT security will be an area everyone will need to invest in. To add to that, we have GDPR hitting us in May, which seems to be producing extremes of panic or disinterest depending on whom you talk to. Many businesses are leaping on the gravy train of opportunity afforded by the panic and offering training, audits, additional “help”.
Many feel that workplaces are going to step up with heavier handed anti-harassment training and policies as the wave of accusations continue and we will see what the year brings with this. There is plenty of unrest to contend with.
2018 might not be the year that we all become out of work from automation, but our world of work is already starting to be transformed and this is going to impact on all our lives and our lifestyles from now on in a greater and greater way as every month goes by. And the biggest reason I hear that people are automating? Staff issues.
Undoubtedly, ever changing technology, AI, changes in the economy, and changes to our expectations of quality of life are all going to be hot topics in the year ahead. But on the everyday coal face, virtually every business owner I speak says it is still staff issues that are causing them the most headaches.