The New Year always brings hope of starting over, whether that’s a fresh look at longstanding challenges or using a quieter period of the year to think creatively and sense check your assumptions. Given the current economic climate we see challenging times over the next 12 months for many businesses in the South West and having an agile strategy will be essential given what feels like a war in attrition on profitability.
There are very few businesses which won’t be affected by some or all of: high inflation related to energy costs; disruptions in supply chains caused by the Russia-Ukraine war and lockdowns in China; hikes in interest rates; and staff shortages caused by Brexit. Another key factor is the redeployment of the labour force experienced during Covid-19, with employees heading to sectors where working from home became more achievable and where a growth in demand was sustained, such as home deliveries.
In many sectors, businesses have been able to pass on rising costs to customers through price increases, with a limited impact on demand given consumers’ surplus funds from reduced commuting costs, built up capital and credit card debt capacity paid down during the pandemic. This now appears to be reaching a pivot point, with consumers also burdened with inflationary pressures and interest rate rises.
