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Switching the Economy Back on Again – It’s Still Cold Out There

by | Mar 14, 2022 | Covid

With falling COVID-19 infection rates, a successful vaccination programme and growth returning, anyone could think that the pandemic is over. Yet as we emerge from COVID-19 and we switch the economy back on again, it’s still cold out there.

The economy is centre stage

The economy is fundamental to the challenges we are all facing today.And in 2022, you would expect the economy to be in full swing as we emerge from COVID-19.

Though economic growth in 2021 set a new UK record since the Second World War, new challenges have emerged; Brexit, labour shortages and inflation – and of most recent war in the continent. 

Brexit – surely it’s over?

With the signing of the European Union-UK trade agreement in December 2020, you would hope that the Brexit debate is over. Instead, we are only now seeing its full impact.

As the UK economy has recovered strongly, our trade with the EU has not rebounded as much as it has with the rest of the world. Small businesses especially are finding trading with the EU a maze of paperwork and rules. And so businesses are now turning their focus to other geographies, such as India, Japan and Australia, where EU red tape will not restrict them. 

We spoke to a client recently who has pulled out of some, previously lucrative, EU territories because the hoops required to jump were just too not worth the energy. 

Back to the future 

The re-booting of the economy is having a profound shock on the economy with higher inflation and shortages in labour. Witness the spike in energy prices and wider inflation. The energy regulator, Ofgem, has increased the energy price cap by 50% from April. UK inflation is now at 5.5%, a 30-year high. It last reached this level when John Major was Prime Minister. 

The number of Europeans leaving the UK has begun to overtake those arriving, leading to a severe shortage of staff. Job vacancies hit a record high in 2021; two in five employers face difficulties in recruiting people. Hauliers have faced a particular challenge with the sector having a 100,000 shortfall in drivers.

David Smith from The Sunday Times believes this is short-term: “things should soon settle down and we will get a more normal picture of economic growth, with fewer big numbers and not so many records being broken.” (Need to reference this quote, Mandy to find the link.) Nonetheless, it’s still cold out there as the economy gets switched back on again. 

How can we help?

As the UK emerges from COVID-19 and the full impact of Brexit can be seen, Foxley Kingham can help you navigate these challenging times. 

We have a range of services that can support you now. We can help with business and strategy planning so you can steer your company more easily through the next few months and years. (Mandy to link to appropriate service pages)

Above all, our services are flexible, personal and geared to maximise your financial health. We are passionate about supporting our customers and the business community. We work together with the same drive and determination as if it were our own business.

As the economy is switched back on again, we can work together to emerge from the pandemic.

Contacting Foxley Kingham – the next steps

If you are impacted by any of the challenges we have outlined, you can contact the expert accountants at Foxley Kingham for a free consultation call when you can discuss your requirements and options in confidence.