Active Business Series - Economic Update Feb 2012


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Active Business Series - Economic Update Feb 2012

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Active Business Series - Economic Update Feb 2012

  1. 1. Active PrActice UPDATEs FeBrUArY 2012 plummerparsons apfeb2012-euEconomic updateIf there is one topic that continues to dominate the airwaves and thethoughts of many it is the economy – what will happen this year?What impact will result from the woes of other countries? Herewe take a look at some of the factors that continue to impact ourmarketplace. Economic UPDATELooking back 2011 was also the year of the Eurozone sovereign debt crisis, and as we step into Key metrics2011 was the year the UK economic 2012 policy makers continue to grapple with Jobs and unemploymentrecovery ground to a halt. Economists the consequences and solutions, as credit rating downgrades increase the interest paid The most recent Office for Nationalforecasting for the year had underestimated on sovereign debt. Statistics (ONS) unemployment figuresthe damage suffered by the credit crunch, showed that UK unemployment increasedand troubles mounted in the Eurozone, whichmeant a series of continuously downgraded Looking forward to 2.68 million in the three months to November 2011, the highest level sinceor reconfigured forecasts. Unfortunately we can’t wave goodbye to 1994, and a total of 8.4 per cent of theInflation crept up throughout the first three the conditions we face in 2012, and the population.quarters of the year, constricting household’s likelihood is that the situation is going to get Youth unemployment has been the mostalready squeezed budgets, their spending, worse before it gets better. The next twelve worrying statistic though, as it hit 1.04and their ability to pay down debts. months will be important for everyone, and million, and the highest since records while we can’t predict what will happenMeanwhile, businesses struggled to survive, began in 1992. in the Eurozone, we can at least put someas cashflow continued to cause problems, damage limitation measures in place. Common predictions are that the numberand banks restricted their lending to of unemployed people will continue tobusinesses further. Those that have survived Forecasts for the following metrics will rise throughout 2012, particularly asdisplayed a level of ingenuity, flexibility and undoubtedly change as 2012 progresses, private sector job cuts kick in. In fact,grit that will stand them in good stead for the but here are some key economic indicators, the Chartered Institute of Personnelyear to come. how they are faring now, and common Development (CIPD) predicts that predictions over the next few months.November saw the Chancellor’s Autumn unemployment will peak at 2.85 million inStatement measures announced, and while it Read on to find out how we can help you to 2013, before falling back again.was the draft clauses of the Finance Bill that prepare for the coming months.revealed tax changes, the Chancellor didreveal a series of initiatives, predominantlydesigned to ease the pressure on businesses.18 Hyde Gardens BN21 4PT01323 431 200
  2. 2. Economic updateGross Domestic Product (GDP) Meanwhile, the Bank’s quantitative easing Keeping plans up to date (QE) scheme, first introduced in MarchForecasts for UK GDP, which refers to the You should review and revisit your business 2009, has since increased to £275 billion,market value of all final goods and service plans frequently at times like these. the last instalment of which was introducedproduced within a country in a given Circumstances can change suddenly, and in October 2011. Some economists areperiod, were continuously downgraded you may find that what was appropriate at expecting to see a further boost as early asthroughout 2011. And while forecasters the start of the year is no longer relevant six February, a move that has been favoured byseem to have recognised that they were months later. business groups.over-ambitious with their predictions, thosefor 2012 are still being accused of being Flexibility Exportsover-generous. It is also important to remain as flexible as Exports are expected to play an importantIn November the Office for Budget possible; you never know when you may role in our economic recovery. Recent statisticsResponsibility (OBR) forecast 0.7 per have to suddenly change tack and being from the Office for National Statistics (ONS)cent growth in GDP in 2012, which agile means that you may be able to take show that the UK’s trade deficit fell betweenwas viewed as low compared to outside advantage of any sudden opportunities that October and November, meaning exports toforecasts of 1.2 per cent. But more recent arise. non-EU countries fell and imports from non-EUforecasts claim that any growth at all countries rose. Contact us to find out how we can help youover the next 12 months would be an to mitigate damage done to you and yourachievement. But on a positive note the Government is business. recognising this, with new initiatives to helpInflation medium-sized businesses to export into new markets. Business groups are calling for a Business opportunitiesInflation began to fall back in October national export drive this year, and economists2011, and has been falling ever since. Marketing exposure claim that exporters must look to new marketsThe Consumer Price Index (CPI) now stands in order to give the UK economy the export Opportunities could be as simple asat 4.2 per cent, and this falling streak is boost that it needs. making the most of the fact that yourexpected to continue, and act as a platform business has survived your competitors byfor consumer confidence and recovery. Protecting your business shouting about it through your marketingJanuary saw the UK’s leading energy channels. In particular, making the most of While the overall outlook for the next 12 the cost effective, and successful marketingproviders reduce their gas and electricity months is, for most, subdued, there are approaches that the internet offers, includingprices, which will also contribute to this. always ways that you can mitigate any social media and blogs.This is promising, and the Bank of England potential negative impact or even turn theexpects a sharp fall in inflation during situation into a positive one. The likelihood Learn lessons2012, particularly after factory gate is that if your business survived the last fewprices dropped by 0.2 per cent between You can learn lessons from those that have years, you are in a good position to takeNovember and December in 2011. been less successful during the current advantage of the opportunities that arise at economic climate. Observe what wentInterest rates and Quantitative Easing times like these. wrong for them and ensure that you do notThe Bank of England’s Monetary Policy Damage limitation make the same mistakes.Committee (MPC) reduced the base interest As the economy remains at a standstill, there Buying new businessesrate to a record low of 0.5 per cent back are measures that you can take to limit anyin March 2009. It has stayed there ever The downturn could provide you with the damage caused to you and your business.since, despite various speculation, and perfect opportunity to expand through the Suggestions include:some forecasters claim the rate will remain acquisition of a business. You have obviouslythat low until 2016. Cashflow led a successful business through hard times, and there is no reason why you could not doThe fact that inflation is falling back means Keeping on top of your debtors is vital, the same for a new business.that the MPC is under less pressure to push particularly as many businesses are strugglingrates up, and while savers are losing out, to keep afloat. But it is also important tothe threat is that pushing the rate up could remember that this works both ways, and that We can help you to identify and grasppush home owners into trouble and result in your creditors will need to be paid on time any opportunities that could help you tomore repossessions. too. prosper over the coming months. Please contact us to find out how.