Headlines have been awash with reports of a miraculous escape from recession, but what does this really mean and how will it affect your business?
There is no official definition of a recession. Confusing, we know. The consensus is a recession refers to an extended period of economic decline. A commonly accepted standard is economist Julius Shiskin’s definition: two consecutive quarters of declining GDP. A healthy economy is expected to grow over time, so two quarters in a row of decline would suggest there are serious underlying problems.
The good news is predictions are we won’t experience downturn for too long, however, right now the economy is shrinking*. KPMG predict our economy will shrink 0.3% this year. Unemployment is rising†, and currently stands at 3.9% with predictions for next year being closer to 5%. Forecasts for next year look more positive, with GDP growing 0.6% next year and inflation more than halving. Your focus for now should be preparing for the road ahead and building for long term growth.
It’s not just businesses that will feel the pressure, many of your customers will experience difficulties too. This means the way they spend their money will change, likely having a negative effect on your revenue. Repositioning your products and services is key to holding onto your customers. It’s a big task and we have the expertise to help you take it on.
*KPMG Prediction -0.3% growth Global Economic Outlook – KPMG United Kingdom
†Unemployment 3.9% – Labour market overview, UK – ‡Office for National Statistics (ons.gov.uk)