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Tag: Rishi Sunak

  • COVID-19 Recession: The importance of adopting an agile mindset

    COVID-19 Recession: The importance of adopting an agile mindset

    In the last week, the Chancellor Rishi Sunak has all but confirmed the fears of businesses and SMEs across the UK by warning that the UK faces a ‘significant recession’ as a result of the coronavirus outbreak.

    The recent figures state that the UK’s economy has shrunk by 2% in Q1, and GDP was down by 5.8% in March. The data released by the Office for National Statistics also states that the accommodation and food service industries have been most affected by the nearly two-month lockdown imposed in the UK.

    While these figures are actually lower than some experts predicted and are more favourable compared to other economies in Europe such as Italy, France and Spain, it must be noted that the UK went into lockdown later than many other nations, thus producing lower drops in Q1.

    In light of this, it is expected that the UK will face a “more historically significant” contraction in economic activity in Q2.

    But what exactly does this mean for large businesses and SMEs in the UK? While economic activity taking a downturn is set to impact the entire country, it remains to be seen how individual companies will react, and in some cases, whether they will even survive this crisis.

    Drawing light comparisons to the 2008 banking crisis

    Throughout the coronavirus pandemic and subsequent closure of many trading businesses across the UK, the phrase ‘worst since 2008’ has been bandied around in regards to the economy. This, of course, referring to the great recession in 2008.

    While the recession in 2008 was fundamentally down to deep-rooted issues concerning regulation and lending in the banking sector, the coronavirus economic response hinges on medical and scientific breakthroughs, as well as increased support for those simply unable to go to work.

    Measures introduced by the Government such as extending the furlough scheme for UK employees by a further four months as well as continuing to provide Coronavirus Business Interruption Loans (CBILS) are just a couple of examples of how cash is being offered to give businesses the best possible chance of survival.

    Despite more support for businesses in the short term, this rapid expenditure will eventually pose a significant impact on the future of the economy in the UK, much like it did back in 2008.

    The importance of agility amidst the coronavirus pandemic

    While the economic experts will be busy determining figures and analysing data for the foreseeable future to determine the direct impact of COVID-19, business owners want to know when they will be able to trade again, whether they will be able to pay their employees and other operational costs, and ultimately whether or not they will survive.

    The economic impact will prove to be incredibly severe for many businesses. However, we cannot stress enough the importance of adopting an agile mindset both now and in the coming months in order to preserve cash flow and set up the company in the best way possible to come out of the other side.

    In terms of operations, implementing and embracing a new mentality that focuses on the quality of deliverance as well as collaboration and respect will go a long way in ensuring continuity.

    Without this, businesses run the risk of falling behind as a result of their failure to adapt and react to severe market conditions. Read more about our approach to agile mindsets in the workplace here.

    Here at MDA Training, we are doing our bit to support businesses and SMEs during this crisis. Our experiential programmes are currently being adapted to aid the remote workforce by utilising virtual and digital methods. In addition, we are regularly posting guidance, advice and tips on our dedicated YouTube channel.

    CTA: FOR MORE INFORMATION ON OUR DIGITAL WORKPLACE TRAINING SOLUTIONS, CONTACT MDA TRAINING TODAY.

  • Analysing the UK Government’s economic response to the COVID-19 pandemic

    Analysing the UK Government’s economic response to the COVID-19 pandemic

    There is no doubting the fact that the COVID-19 pandemic has already begun to cause significant disruptions to the worldwide economy.

    Given the fact that the majority of businesses in the UK will see their operations affected, it is no surprise that attention has fallen on the Government, along with what is going to be done to slow down the rapid decline in trade and investment throughout the country.

    Even before Rishi Sunak delivered the first budget speech of his tenure as Chancellor last week, the impact of coronavirus was a hot topic, made even more relevant by the fact that the Bank of England decided to slash interest rates to 0.25%.

    In response, the Chancellor introduced policies like £7bn in support for the self-employed, businesses and vulnerable, as well as a £5bn emergency response fund for the NHS. Just one week later, however, and the situation has been completely turned on its head.

    In light of updated medical advice and strategies, there are now much higher financial measures in place to support businesses through this uncertain time. A £350bn package is now available for companies with £330bn in loans, and £20bn in other aid.

    In addition to this, the government will pay the wages of employees unable to work due to the pandemic, in a move to protect jobs. They will pay 80% of salary for staff who are kept on by their employer, covering wages of up to £2,500 a month.

    Even with this much support, which may seem like a way out for businesses in the coming months, careful consideration needs to be made before taking on so much debt. Small companies may wind up paying a vast majority of their profit margins back to the Government if they act without thinking.

    Fast forward since the budget announcement and the Bank of England made another sweeping move by slashing interest rates for the second time in a week; this time from 0.25% to 0.1%, the lowest they have been in the Bank of England’s 325 year history. Partner this with the fact that the pound has dropped to its lowest level in 30 years and you begin to realise just how much of a downturn in public spend is to be expected.

    Make no mistakes; businesses need cash flow, and they need it quickly. This is going to be an extremely challenging period for so many business owners, but the fact that China has begun to report no new cases 80 days on from the first reported case of COVID-19, there is but a flicker of hope.

    Empty words and promised loans will not serve as the long term solution in paying rents, rates and supporting livelihoods; cash flow will.