Positive business news or signs of economic upturn are not normally the darling of the media. Sensationalising negativity is preferred as misfortune is of more interest to readers than success. Bad news sells, unfortunately!
How much do we read into the comments from Barclays Bank Chief Executive? Can past booms predict what will happen this time?
Post WW2 the UK had austerity and crippling war debt. It, however, also had full employment pointing to an active economy and 15 years of economic growth, albeit slow at first, that culminated in a very strong period in the 60’s. The discovery of North Sea oil was the single biggest positive factor that allowed the UK’s economy to accelerate. Simply put, oil tax paid off the UK’s debt burden thus avoiding tax increases.
The 80’s saw a decade of boom-and-bust culminating in a sizeable recession in the early 90’s. The dot.com bubble drove the economy briefly before its collapse and the financial crash of 2008 lasted just short of a decade.
Post Covid-19 (and Brexit) the UK has again austerity and crippling debt.
Brexit is an astonishing act of economic self-harm that will cause more damage to the UK than Covid. As the full impact of Brexit has not yet been felt this will hinder our economic recovery.
There is no miracle cash injection around the corner, like the one the discovery of oil provided. Thus growth in any future economic boom will be slower but longer lasting. What Barclays CEO said can be attributed to it being in their interest to talk up the economy. To talk matters down does not serve their agenda. However, unless you are a speculator or trade commodities, give me slow growth coupled with stability over boom-and-bust.
The period between 1992 and 2007 saw slow steady growth (in borrowing, confidence, political stability) that allowed business to speculate and invest in new technologies, services and products. In these 15 years mankind went from phones with curly cords connected to wall sockets and written letters to the boom of mobiles and desktop PCs with internet and email. You could argue this was the 4th industrial revolution.
So what does this mean to business owners in the UK? Simply put, ‘Time to come out of hibernation’.
There will be new competitors emerging for the products and services you offer, and new opportunities created by the failure of old competitors. Companies who are complacent and who perhaps fall back on pre-Brexit/Covid ways of engaging with their consumers may not notice at first, but they will suffer. There has been a mindset shift in most consumers. B2B & B2C businesses will need to make the effort to understand their customers and not assume they still know them.
Your competitors, the ones that have survived, will be hurting and looking to capitalise on the ‘coiled spring’ of consumerism releasing. There will be talent movement across most sectors as companies jockey to find the best skills to position their businesses as best they can. This injection of talent will create new market leaders.
Every economic boom in history has seen the development of new products and services, and the next 5 years will be no different. The world has never been a smaller place and your marketplace of 2019 will not be your only option now.
The point of this Hot Take is:- economic recovery is here and will be with us for some time. It’s up to business owners to decide to what extent you will allow your competitors to capture this at your expense.