The economy and you

ended 11. March 2022

This morning at 07:00, the office for National Statistics published the latest GDP data for January.  Highlights below.  We sought the views of small business and charity owners to the following question:

  • QUESTION: With interest rates rising, inflation soaring, energy and fuel prices rocketing, tax rises imminent and the tragic war in Ukraine, how confident are you are feeling as a business or charity owner right now?

GDP main points

  • Gross domestic product (GDP) bounced back in January 2022, increasing by 0.8% after falling by 0.2% in December 2021, when the Omicron variant of the coronavirus (COVID-19) and Plan B restrictions had a more significant impact; GDP is now 0.8% above its pre-coronavirus level (February 2020).
  • All sectors grew in January 2022, with services up 0.8%, production up 0.7% and construction up by 1.1%.
  • Output in consumer-facing services grew by 1.7% in the month, mainly driven by a 6.8% increase in food and beverage activities, while all other services also saw growth on the month, by 0.6%.
  • Services is now 1.3% above its pre-coronavirus (COVID-19) pandemic level, while construction is 1.4% above and production is 2.0% below. Within services, consumer-facing services are now 6.8% below their pre-coronavirus levels, while all other services are 3.4% above.

 

17 responses from the Newspage community

"Economic data is one thing, people's lived experience is very much, another. The cost of living crisis hasn’t really started yet and I suspect it’s going to get very ugly very quickly. Let’s just hope the government come to its senses soon, abandons the National Insurance tax rise and designs a better plan to help the worst affected people through what will be a tough time."
Star Quote
"As small businesses we are resilient by nature. We are used to being reactionary to whatever changes come down the track. That said, just as we are trying to get back to ‘normal’ we have a perfect storm that is hitting our employees and businesses directly in the pocket day after day. Scrap the national insurance rise next month and give us all a break. We have enough to deal with bouncing back from COVID without spiralling costs to add to the burden."
Star Quote
"Though the economy bounced back in January, it offers no real cheer. The sheer level of uncertainty is making consumers exceptionally cautious at present. My own business is an app that helps people to save money on their everyday living expenses so in theory we should be needed more than ever, but even we are very quiet. People are sitting on their hands. It's extremely stressful to be a small business owner right now. The economic challenges are as numerous as they are extreme and the tragic war in Ukraine is amplifying the uncertainty."
Star Quote
"Over the past year, 1 in 10 small charities were forced to close due to lack of funding and support. Wind forward a year and of the charities that remain, nearly half may now be forced to close due to rising costs and spiralling inflation, which is making the future of smaller charities across the UK completely unsustainable. Despite the positive increase in the January data, there are a rising number of “forgotten charities” like ourselves that continue to fall between the cracks. Our future, quite frankly, seems bleak."
"I don't remember a time that feels as uncertain as this. Unchartered territory. Until the terrible war in Ukraine is over, a road to recovery for the global economy seems unlikely. The UK economy has a whole host of hurdles to clear during 2022."
"As a small business owner and also one who is a confidant to 100's of other small business owners, to be fair it is scary. Our basic living expenses are going up at a monumental rate not only do you have to think about your own expenses but those of the business. Couple that with the 'Great Resignation' and small business owners are caught between a rock and a hard place: heat the workplace or pay the wages in some cases. It will come down to the biggest cost, which is wages, and staff won't be replaced, service levels will go down and profit will go down." Support is needed now not in 6 months when it is too late !
"As a business we'll get through it but I'm concerned for my staff. I'd dearly love to be in the position to give them all a payrise to help with the rising cost of living but with the impending rise in National Insurance, that's a challenge. The government should scrap the plans immediately and let us employers put it in the pockets of our work force instead."
Despite an optimistic start to the year, the global landscape has changed dramatically in that short space of time. Rising interest rates, soaring inflation, energy and fuel prices, tax rises and the tragic war in Ukraine, will hit businesses hard and this will act as a catalyst for further disruption in global supply chains. Many of the clients we support will feel the brunt of these challenges, particularly manufacturing, construction, food and beverage, automotive, and farming and agricultural, if they aren’t able to partner with a stable and affordable supply chain. It’s a crucial time for businesses to spark open and transparent conversations with their supply chain and seek as much support as possible to overcome this. We must all work together to help.
"The latest ONS figures are significant, as they show we are finally back above pre-pandemic economic levels. This is reflected in what we are seeing from small businesses seeking finance, with many looking to invest and grow in 2022. Our biggest concern is that any spare cash small businesses have is being eaten up by rising costs from suppliers, energy bills, fuel and taxes. With the conflict in Ukraine adding fuel to already soaring inflation, we are expecting an increase in SMEs seeking cashflow funding this year."
"As a small business owner, as confident as I am in how I operate, I feel we are pretty much in uncharted territory with the sheer level of uncertainty right now. Uncertainty, rate rises and spiralling costs will be affecting more people than ever before. Consumers are more cautious than ever with everything going on in the world."
Star Quote
"As a small gift business, things are very quiet. With customers worrying how they will pay their bills, they aren't spending with me. Utility and fuel prices are rocketing and our Government seems to be asleep at the wheel as it continues to levy its 56%+ fuel duty on each litre. It's high time the Government moved to support its people by reducing that. Not everything can be blamed on the Russians, this country is in a financial crisis of its own."
"Fuel, wages, utilities and food costs have all risen, but fortunately for us so have bookings. With a 6.8% increase in food and beverage activities, our sector appears to be booming. Yes, it's all having an effect on our bottom line, but by tightening our belts in certain areas, it's only making us more productive."
"Our confidence that our business will thrive is actually increasing as more and more people turn to solutions that help with the mental health impact caused by increased fear, stress and overwhelm after two years of the pandemic. In a post-Covid world where the political, social and environmental landscapes are increasingly uncertain, we hope our new mobile app will give users a tool to magnify the good in their lives and restore balance."
"Uncertainty continues to dog the high street but in spite of this, we are seeing some incredible efforts from local small businesses, ignoring their own business concerns to support Ukraine with collections and fundraising. With the rapidly escalating costs in supplies and energy, many are just as concerned about the impacts on customers as they are their own businesses."
Even as a voluntary organisation, we are not immune from rising inflation. We've taken over the organisation of an annual "Music in the Park" concert at Wistow in Leicestershire, which was delayed for two years because of the pandemic. And we've seen the costs of putting on this concert (toilets, lighting, marque, etc.) have shot up.
I feel confident that the government has completely lost touch with reality. My heating is off, sales are down, a tenner of fuel will get me from pump 1 to pump 3 at the petrol station, postage costs spiralling and quality of life feels like a distant memory. Little did i know as i built my business and clawed my way out of foodbank poverty that hard work no longer pays. I have nowhere left to economise. Small business growth has been replaced with damage control and the positive spin on the recent economy growth numbers leaves me wondering why i bother.
I have always tried to remain positive about the impact of external factors on my business, after all they are out of my control. I have to say that this time round however, I am worried. My costs are rising, stock is getting harder to obtain and if my customers need to tighten their belts it's their nonessential spending that will be the first go. Sadly I fall under this category.