As I start this blog post, the pandemic has come to an end, but a war has begun in Europe. I never believed I would write such words.
None of us knows the long term consequences of this war. Still, in the short term, energy prices will continue to increase, and inflation will continue to grow. The Bank of England (BofE) raised interest rates recently. It is now likely that the cost of borrowing will continue to increase. Base rates are likely to be 1.5% or more by the end of the year.
During the pandemic, there has been a considerable increase in the value of capital assets. House prices are at an all-time high, rising by an average of £7,000 in January alone. If you have been looking to buy a car, you know that car prices have increased along with waiting times.
Additionally, the pandemic saw over 25% of employees aged 50 to 65 give up work with no intention to return. This helps explain why employers across all sectors are having difficulty recruiting new staff.
The BofE predicts the rise in interest rates will slow down the growth of asset prices, but hopefully not too much as that will lead to recession.
The Chancellor has already announced an increase in national insurance from next month. Given the borrowing deficit, it would not be a surprise if Rishi chose to hike taxes further when he delivers his budget on 23rd March.
The good news is we are transitioning from a pandemic to an endemic COVID situation. So business life will adjust to a “new normal”, albeit with higher overheads, wage inflation, and a reduction in the talent pool.
The only way to thrive in these circumstances is to increase productivity. This can be done in several ways. For example, outsourcing where your business does not have the scale to be efficient. Many companies are outsourcing their logistics departments because of the transport and warehousing sector strain.
You can increase productivity by systemising and automating parts of your business. At Jack Ross, we have started to automate some of the repetitive processes that save time and allow our staff to utilise their talents better.
The government has a scheme called Help to Grow, a 12-week management course subsidised by 90% and a digital grant that covers up to £5,000 of software. See this link for more information.
We have helped several businesses systemise their processes, and if you want help with this, contact me using the link below.