The UK economy is constantly on the front pages of newspapers; although those that support the government will tell you that the nation is doing well, opponents will clarify how we never fall more than a single fiscal blunder away from another period of recession.
The reality generally falls somewhere in the middle, but the present energy crisis, the epidemic, and Brexit are all have an effect on people’s and businesses’ ability to spend money. The economy and the function of small enterprises within it are being impacted by this.
What is the economy?
The UK economy is a gauge of how well the nation is doing in terms of the supply of money, both the manufacture and consumption of goods and services, and both. Each time we spend income or go to work, we add to the economy.
The economy is impacted by what we choose to do with our funds as well as how much we have to spend. This holds true for both customers who purchase goods and services from companies and business owners who must invest money in their SME in order to deliver those goods and services.
How can you tell whether the economy is doing well or poorly?
- When figuring out if the UK economy is doing well or poorly, there are four factors to take into account, according to the Bank of England website:A measure of all the goods and services generated in the UK over a specific time period is called the Gross Domestic Product (GDP). The economy is expanding if the GDP is rising.
- Inflation is the term used to describe the increase in prices for goods and services. The optimum inflation rate, in the eyes of the government, is 2%. Low inflation indicates that consumer demand for goods and services is lower than expected. This frequently hinders economic growth and drives down wages. High inflation lowers the purchasing power of the entire population, which can deter spending and restrain economic expansion.
- The percentage of persons who wish to work but can’t find employment is known as unemployment. Lower unemployment rates indicate a more robust economy. A measurement of how wealth and prosperity are distributed in the UK is inequality. High levels of inequality typically indicate a “unhealthy” economy. The bad news is that according to data from the International Organization for Economic Co-operation and Development (OECD), the UK has some of the highest levels of income inequality in the European Union.
The difficulties experienced by British small company entrepreneurs
Small business owners undoubtedly have their own opinions about the status of the economy, molded by their own experiences and their company’s financial statements.
But regardless of how well your company is doing, it’s own to say that the past ten years have faced businesses with a fair number of difficulties, from the bank failures to the Brexit uncertainty.
Consumer spending has decreased as a result of rising consumer price inflation (CPI) and sluggish family real income growth, which has put a strain on small business owners.
Export-oriented companies have been severely hurt by the dilemma of international purchasers getting extra for their money due to a decline in the purchasing power of the pound.
Then there are the difficulties brought on by the epidemic as well as the present costs and energy of living concerns.Although inflation has recently reached a 30-year high, the economy is struggling since the ability to spend is low and salaries have been stagnant for more than ten years.
The UK economy has also been underperforming in comparison with the economies of its European neighbors. The government’s austerity approach has obviously failed, and it finally seems to be realizing that the best way to boost economic growth is to encourage consumer spending and assist small company expansion.
How do small businesses affect the economy?
There are three major ways that small firms may boost the economy, and we believe that they are the foundation of the UK economy:
Make work opportunities available
Encourage inventiveness
Give people the chance to become financially independent
Small business revenue plays a role in forming the UK economy.
Although it is far from the sole statistic, turnover is frequently one of the first to come to mind when assessing the financial impact of a small business.
In 2021, the UK’s small and medium-sized firms generated a combined $2.3 trillion in revenue. The largest contribution, or £953 billion, came from microbusinesses, or companies with less than 10 employees. much though this is a big sum in and of itself, it is much more amazing when you realize that it represents a staggering 52% of the total revenue generated by the private sector.
Since SMEs account for 99% of all companies now doing business in the UK and employ millions of people, their combined achievements and failures have a significant impact on the country’s economy.
Statistics on small business employment have an impact on the UK economy.
Despite the fact that the bulk of small firms in the UK are sole proprietorships, which account for 56% of all private sector businesses, there is still a significant contribution made by SMEs to employment creation in the country. The UK has 3.2 million sole proprietors.
Over 16.3 million people are employed by small enterprises nationwide in the UK, which is 60% of all employment in the private sector.
Small business growth affects the UK economy
Between 2000 and 2021, when 2.1 million new firms were founded, the population of businesses expanded by 61%. However, the pandemic reversed this tendency, which contributed to a 6.5% decline in the total number of enterprises that operated in the UK from 2020 and 2021.
Even yet, the UK’s anticipated employment rate is currently 75.5%. This result is 0.2 percentage points higher than the preceding three-month period (June to August 2021) even though it is 1.1 percentage points lower than the period prior to the coronavirus pandemic (December 2019 to February 2020). Therefore, it seems like everything are going in the correct direction.
Our data demonstrate that SMEs are performing well in terms of business growth. Job openings are at an all-time high, and 50% of SMEs want to grow their business this year. Even with the overhanging shadow of Brexit uncertainty, things are looking up.
Manufacturing firm owners are said to have the the most upbeat when comes of business performance and growth.
A staggering 99.5% of all enterprises in every major category are small businesses. Personal services like beauty and health as well as expert services like financial or consulting have the highest concentration of small enterprises.
Small and medium-sized businesses (SME) and the UK’s overall economy benefit from one another; SME contributions are essential to economic wellness, and small business growth is influenced by the UK’s overall economic health.
How Bionic can help grow UK SMEs and the economy
The government is investing £725 million on development and research as part of their Industrial Strategy, with a goal of creating “the world’s most innovative economy” and a challenge to “put the UK at the cutting edge of the artificial intelligence (AI) and data revolution.”
Businesses are now awarded for innovation and urged to investigate the potential applications of AI at work. Smaller businesses will be able to make better judgments and implement hitherto unachievable plans because to this concentration on data and technology.
We also wish to contribute to the UK’s corporate growth story by acting as its catalyst.
Energy is necessary whether you manage a small store, a beauty parlor, a fast-food restaurant chain, or a computer corporation. If you overpay for business energy, money is being unnecessarily diverted from another area of your business.
Regardless of your company’s size or industry, the tech-enabled energy specialists at Bionic can locate a business gas and business electricity package to meet your specific needs fast and could save you hundreds of pounds annually.