Why businesses should prepare for a post-lockdown boom
9th March 2021
The Treasury recently predicted the largest economic boom and growth in the UK economy since the end of the Second World War, with even the most conservative forecasts predicting an unprecedented 9.7% growth in GDP over the next two years.
The long-awaited unlocking of the country started on March 8th and over the next few months we’ll see a gradual lifting of restrictions. Schools have reopened, and, from April we’ll hopefully see mixing outside, shops and non-essential retail will open and from April 12th, some pubs, restaurants, and bars will open their outside areas to groups from mixed households. If all goes as planned, the lockdown will continue to slowly ease with almost the entire economy unlocked by the end of June this year.
Silver linings: Making the most out of an unprecedented situation
Though everyone’s experience is different, most of us have been bowled over by the ability of people and communities to adapt. And - though often not ideal - that’s what we must continue to do. Although Covid-19 has undoubtedly been a strain on most businesses, the next few months are the last (and very unusual) chance for businesses to make the most of their reduced trading: in their preparations, their planning, their strategy; their forecasts, and beyond.
Assuming there is a successful easing of the lockdown and a continued, efficient rollout of the vaccine programme - the experts say we’re set to see an exceptional summer of spending and growth.
So, read up. Identify your opportunities. Then let’s get to work.
Here’s our breakdown of the factors at play for a post-lockdown boom:
A pent up demand in the market
Because the economy has been constrained - in some shape or form - for the past 12 months, there is now an increased demand in products and services that have been unavailable to consumers and businesses during this time. People want to taste normality again and are happy to spend their money to get it.
Significant capital injection
Over the past 12 months, there have been economical winners and sadly, businesses that have been unable to weather the course. Overall, however, there has been more capital injected into the economy and people’s pockets directly than ever before – and many have not had the opportunity and freedom to spend it. According to the Bank of England deposits held on account have increased by 200% since the pandemic.
The Brexit bonus
Britain finally leaving the E.U. means that the Brexit uncertainty within the economy has nearly all but dissipated - an unrest we’ve been living with since 2016. The successful trade deal has also given many a more optimistic outlook on the UK economy. This optimism will be reflected not only in people’s attitudes but also within the plans and strategies of many businesses that have held off on projects for the past five years due to Brexit unpredictability. Brexit limbo is finally over.
New trade opportunities
Since Brexit there have been 93 trade deals signed worth £897bn. After the lockdown, the opportunities created because of these trade agreements can begin to be fully realised.
An optimistic post-war sentiment
As a natural reaction to the relief that the lockdown is mostly over, people will be jubilant, happier, and generally more willing to spend money on themselves, friends, and family in celebration of a brighter daily reality.
International competitive advantage
Because of the huge success and speed of the UK’s vaccination programme, the UK economy is set to be unlocked for good and passed through the COVID19 Rubicon. Like the freedoms New Zealand has now, we’ll have an entirely open economy which in-turn will give us an advantage over economies that do not have the same levels of immunity within their population. Activities that are not safely possible in a partially or non-vaccinated economy will be able to happen on British soil sooner.
Alternative revenue streams
Many of the businesses that have survived the pandemic will have had to adapt their products and models. Though this has most certainly been a challenge for many, this imposed diversification could be something that can continue to work in businesses’ favour. Many businesses will now have new revenue streams and product offerings that can still generate money even when they return to re-offering their pre-covid products or services.
Less saturated marketplaces
There has been an unfortunate loss of businesses during the pandemic. And though extremely sad, the reality is that this will create more space for new businesses that offer more innovative and competitive products and services.
New product launches
Many businesses who have seen reduced trading will have spent their time developing new products and services that they’ve not yet had the opportunity to launch. We’ll see many of these on the market as the UK starts to open up.
Less international travel
As more people are likely to be staying local in 2021 due to travel restrictions and high rates of infection in other countries, it will mean they’ll be spending their money in the UK, providing the British economy with an additional boost.
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Past performance and forecasts are not reliable indicators of future results. Your capital invested is not covered for compensation in the event of a loss by the FSCS. Tax treatment will depend on the individual circumstances and may be subject to change. Please see our Risk section before making an investment decision.