This morning’s update from the Office for National Statistics has boosted optimism about the UK’s economic recovery. GDP fell 2.6 per cent in November, reversing the trend of six consecutive months of increases since April’s significant contraction. This takes GDP back down 8.5 per cent below February’s levels – wiping out the recovery gains made between roughly the end of July and November.

Not, on the surface, good news. But the case for optimism comes alongside the context of what was happening in November: England’s second lockdown and a host of fire-breaks and circuit-breaks throughout the UK. November’s significantly smaller contraction compared with the March shutdown has forecasters thinking that the economy may have become more resilient to lockdowns.

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In business, we make decisions on facts; if the facts are lacking, you test & measure. If the data isn’t there, you wait to make decisions, and you delay, you pause while the KPI (Key Performance Measure) becomes available.

Most of the thousands of SME business owners who have heard me speak will testify to  my views on how to prosper. The decisions we need to make to drive our businesses forward. The methods of obtaining a commercial advantage. The areas of opportunity that many companies miss. Or too swamped with the pressures of the day to day to make the most of the opportunity.

So to examine the UK Conservative governments actions, the shared western democracy panic as the first wave of the Covid 19 pandemic hit. Would have been premature.

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Julian Jessop 24 June 2020

The economic recovery is already taking shape nicely – and the shape looks increasingly like a “V” after all. Despite this, many commentators are still pessimistic and even eager to emphasise the downside risks. It is time to view the glass as “half full” instead.

Let us start with what we already know. The economy shrank by an unprecedented 25 per cent in just two months between February and April, but it could have been even worse. The Office for Budget Responsibility’s projections for the public finances are still based on a 35 per cent fall in GDP, sustained for a full three months. The Bank of England had warned of a 30 per cent decline.

What’s more, there is now ample evidence that April was indeed the trough, and that activity picked up sharply in both May and June, even while large parts of the economy were still in lockdown. This evidence includes surveys of business activity, such as the Purchasing Managers Indices (PMIs) published by Markit. The handful of official numbers released so far have generally been better than expected too, including a 12 per cent jump in retail sales last month.

Indeed, both the OBR and the Chief Economist of the Bank of England, Andy Haldane, have now acknowledged that the economy is performing less badly than either had predicted. Even the record level of Government borrowing is slightly below the path that the OBR had pencilled in.

Of course, it is still too much to hope for a neatly symmetrical “V”-shaped recovery, where GDP returns to its pre-crisis level as quickly as it fell. But the latest data suggest that the UK economy should get back close to this level much sooner than many had anticipated, and the picture will look far more like a “V” than the “U”, or even “L”, that some had feared.

 

Indeed, I’d go further and say that an initial “V” is now nailed on. Some people will understandably be reluctant to venture out and spend, even if they are allowed to do so. But the latest polling suggest that a clear majority of the public support the further easing of the lockdown.

In the meantime, some households have been hit disproportionately hard, including many poorer families and the self-employed. Many of those on the Government’s furlough scheme are worried about losing their jobs when it ends. Nonetheless, most households have actually built up their savings during the lockdown. Pent-up demand is therefore still likely to be strong.

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Keeping your business open

With the exception of some non-essential shops and public venues, we are not asking any other businesses to close – indeed it is important for business to carry on.

However, you should encourage your employees to work from home unless it is impossible for them to do so.

Sometimes this will not be possible, as not everyone can work from home. Certain jobs require people to travel to their place of work – for instance if they operate machinery, work in construction or manufacturing, or are delivering front line services.

See the full guidance on work.

Many UK SME businesses are misunderstanding what the government instruction is… relating to COVID 19

All companies can carry on working, and the direction is that people should not breach social distancing. So Retailers, Pubs, Restaurants and Businesses that necessitate people to meet, Theatres, Clubs etcetera, should not open.

Remember that deliving your food or product to the customer is not only OK, in many ways for businesses it’s A unique opertunity. First you learn who and where your customers reside and secondly the delivery person, drives afficency as the customer will be available to receive the order.

newspaper journal shopping

You can, however, trade if you can protect the public, your customers and perhaps most importantly, your employees.

Consider social distancing, don’t have teams travelling in the same vehicle. If you can work from home, do so, so clerical duties can continue. (more…)