How will our Business Support Ecosystem cope with the economic impact of Covid-19

Like many other G20 countries the UK was ill prepared for the Covid-19 pandemic and with contradictory daily briefings and U-turns the government's modus operandi quickly switch from the expected controlled and well rehearsed pandemic management plan to something more akin to ‘winging-it’ as we tried to contain, delay and mitigate the spread of the virus that has already taken the lives of 46,000 citizens. 

Having endured almost 5 months of lockdown the government is now tentatively easing restrictions and restarting the economy. What does the short-term future for enterprises of all sizes across the UK and the businesses support ecosystem?

A recent RSA survey of 500 senior managers from a range of businesses identified five Covid-19 categories that described their current situation. Hibernators (28%) that battened down the hatches; Survivors (32%) who managed to keep operating but at a much lower level; Pivoters (21%) who flexed to meet needs of new customers; Thrivers (6%) that by good luck or judgement have increased output; Business as Usual (12%) whose new norm is much the same as their old one! 

The latest PWC Covid-19 Economic Update highlights that in early July 9.4m people were furloughed. As the uncertainty continues businesses will face slow economic growth both in the UK and globally. With the job retention scheme ending in October PWC forecast that around around 17% of furloughed workers as at June 2020 are at risk and may not have jobs to return to by the end of 2020. Those sectors at greatest in June are listed below.

ONS reported a fall in employees on payroll of 660,000 between March and June and Bank of England and the OBR, project a rise in the unemployment from 3.9% in Q1 2020 to around 10% by the end of the year.

Thankfully, business activity is starting to pick up as restrictions are eased and by end of June around 89% of UK businesses were in operation, with a further 4.3% planning to start trading in early July. PWC have modelled two scenarios with smooth exit and a bumpy exit, which factors in secondary local waves of infection resulting in further localised lockdown measures, together with the impact of a deeper contraction in Q2, which would be much larger than any quarter during the 2008-09 financial crisis

With the estimated cost of the governments fiscal measures running in excess of £200bn for 2020/21 and 2021/22, and budget deficit and government borrowing increasing, what could this mean for the business support ecosystem in the UK?

In the next 3-12 months many business owners’ resilience will be truly tested like never before. Businesses will fail, many will fight for survival and some will continue to thrive. In the face of continued weak demand, supply chain challenges and increased operational costs post-furlough, reserves will be squeezed. History shows that previous economic shocks resulted in an increase in unemployment and an upsurge in new start-up activity. The Business Support Ecosystem, including enterprise agencies, business gateways and growth hubs will see an increase in demand for services from existing and new businesses. With current budgets arrangements agreed pre-Covid, regional agencies will be seeking additional emergency budgets to mitigate risks of increased business failures and unemployment. 

With a forecast increase in demand for advice and funding support the Business Support Ecosystem will require additional short-term capacity and improve productivity to crank up intervention volumes. Business Innovation & Growth Experts is a new digital platform where business owners can easily find experts relevant to their needs and book them instantly to access information and knowledge to support key business decisions. The platform has been designed with ease of use and productivity in mind for our start-up, SME and larger business clients. It lowers the overall cost of service delivery, improves productivity for both experts and users and will contribute to a significant reduction in carbon emissions as most engagements will be online, continuing the new communications routines developed over the last five months. If business support organisations are looking for an innovative resource management solutions to work efficiently with existing and a new wave of post-Covid clients, the platform could offer additional ‘flexible’ capacity at minimum cost.

If you would like to explore the Business Innovation & Growth Experts platform and a range of tailored innovative client interventions options that would create value for your business adviser teams and your clients please contact jim@innovation-experts.online