The one sure prediction for 2015 – uncertainty yet again
News | 10th February 2015
As ever, at the start of 2015, there were plenty of predictions for the coming year for business and the UK economy. But even without geopolitical instability, the picture was hardly clear and it was easier to identify the causes for concern then to predict that there would be positive solutions.
The International Monetary Fund called global growth “mediocre” in its most recent outlook, with its Chief Economist Olivier Blanchard saying that “secular stagnation in advanced economies remains a concern.”
As 2015 dawned Argentina, Venezuela and Brazil were struggling, Russia and the Eurozone were near-stagnation and China’s productivity was also heading downwards. Only the USA and UK were seemingly recovering well from the 2008 crash.
However, for the UK there remains considerable uncertainty given that the Eurozone is the primary export market for British business. It remains to be seen whether the announcement of a Quantitative Easing programme by the ECB (the European Central Bank) will stimulate more economic activity.
Then there is the UK general election looming in May this year. With no clear indication as yet of any front runner among the main parties and seemingly considerable appetite for smaller parties like UKIP and the Greens. Political accord is difficult at the best of times, and so the prospect of a rainbow coalition will only slow the prospect of change.
Not surprisingly the latest of Lloyds Bank’s twice yearly report into business confidence has discerned a dip:
- Overall business confidence has fallen from a record high in July, although it is still well above its long-run average.
- Business expectations for sales and orders suggest that economic activity will continue to be solid but at a more modest pace in the first half of 2015.
So are there any measures UK businesses can take to protect themselves from the current uncertainty?
One piece of advice for those businesses that offer a product or service that can be exported is to look further afield for customers rather than relying on the US and Europe.
For domestic businesses, this is a time to pay attention to cash flow and to ensure that any debt continues to be paid off as fast as possible.
Keeping overheads and costs down is going to be essential, either by outsourcing services and buying only the hours needed rather than having dedicated in house employees. Or by installing robust and automated systems for book keeping, stock control and invoicing. Moving to the Cloud can reduce capital commitments and help with today’s demands of quicker, faster and cheaper.
For those businesses hoping to expand, it may be time to invite outside expertise to revisit the business model and review the business plan. You never know - often a fresh pair of eyes will spot opportunities.