2020 to 2021 – year in review
2020 has been a year that most of us would rather forget. It has seen enormous upheaval and heartache that few if anyone could have predicted. Yet even in the depths of a darkest winter there are glimmers of hope of spring. Vaccinations have started and will gather pace, bringing the promise of a return to a more normal way of life that so many of us wish for.
Look to what you can celebrate
As we draw a close to the year, we must look to what we can celebrate as well as hold on to what is precious. Whilst 2020 has been a challenging year, and those challenges will remain with us for some time, there is, I believe, much to look forward to and hope for.
There is a creativity and resilience in each and every one of us that will drive our society forward. The way businesses have collaborated, and the way individuals have rallied together will have a lasting effect. Whilst COVID may have kept us physically apart it has in many ways brought us closer together.
COVID-19 has had a devastating impact on parts of the economy, yet it is a hurdle that businesses will overcome. It may appear at times to be more of a brick wall, but businesses and the people they employ face tough challenges every day and successfully tackle them, emerging wiser and stronger.
Wave of entrepreneurialism
We have seen businesses quickly pivot to meet changing demands, and history tells us that following any crisis a wave of entrepreneurialism follows. In the first nine months of 2020, the Centre for Entrepreneurs reports that 572,882 new businesses were registered in the UK, an increase of nearly 10% on the previous year.
The Institute of Chartered Accountants reports business confidence today to be low, but not as low as confidence following the 2008 financial crash. There is considerable pent-up demand in society and the recovery will be swift. I genuinely believe that we will see a L-shaped recovery in the second half of 2021.
Unlike the shock of the first lockdown in March, businesses have now got to grips with the challenges COVID-19 presents. And whilst the second lockdown and the new tiered systems are an inconvenience to be worked through, businesses have moved from a crisis management stage to an output stage and questioning what adds value.
Businesses and the people they employ recognise the need to adapt and that they cannot simply sit and wait for COVID-19 to pass. People have stepped up in ways that we couldn’t have imagined. We are more flexible and adaptable, embracing change and new ways of working, and that energy is not going to disappear. It will carry us forward into 2021 and beyond and will, I have no doubt, create a stronger economy.
That is not to say challenges won’t remain and we need to balance the investment needed to rebuild the economy with reducing national debt over a period. The shadow of high unemployment is ever-present and high government debt will leave difficult decisions for our political leaders. A swift recovery will, however, see unemployment fall and productivity rise.
Political and economic outlook
Our new relationship with the EU will for many businesses remain a significant challenge. Even today, with just 14 days to go until we leave the transitional arrangements of Brexit, we do not know what the relationship with our largest trading partner will be. A no deal outcome, after four years of negotiation, will be considered by many as the largest failure of statecraft in a generation and one that will hurt businesses as well as the people they employ at a time when it can be least afforded.
Regardless of the outcome, there will be a customs border, with export and import declarations and legal/compliance obligations to meet in order to clear customs and trade effectively. Fundamentally businesses need to understand their supply chains, the terms of shipment, who is responsible for the export and especially the import declaration. There is support available, so we urge businesses with concerns or queries to speak with their advisers for guidance. We have also created a Brexit support hub to help businesses and individuals with their preparations.
Our trading relationship with the EU and the rest of the world will undoubtedly be shaped by the US election result. It is anticipated that walls erected by President Trump in terms of trade tariffs will be dismantled and the polarising politics of the past four years seen in the US and around the world will be pushed into the fringes.
Our desire to trade internationally has never been stronger. Earlier this year, Kreston Reeves surveyed over 1,600 UK businesses to better understand the desire and barriers to trade overseas. The findings were published in a report Trading Internationally – a post COVID-19 perspective.
Over 70% of businesses surveyed trade internationally, and more than half believe international trade will be more important to their long-term success post-COVID. It was interesting to note, that despite COVID-19, 45% of UK business leaders told us that they expect international trade and export markets to return within 12 months – the summer of 2021.
That same survey showed that Europe will remain our closest and most important trading partner. 59% of business leaders believe they will be doing more business in Europe over the next five years despite Brexit.
Our survey told us that businesses need a balanced package of support to facilitate international trade, all of which needs to be underpinned by solid free trade agreements. That is an important message for our political leaders for 2021 – our economy will be better built with outward looking, internationally trading businesses backed up by the policies and support from government.
Importance of purpose
Just as businesses look to grow, they will also explore what their role in society means – business purpose will be a growing theme for the next year.
Why does your company exist?
What are you most passionate about?
Businesses and people in general are now much more conscious of their impact on society and the environment. It is vital for businesses to look for ways to address environmental concerns, fair pay, gender equality, the health and wellbeing of staff and give back to their communities. Paying lip service to these issues will no longer wash.
Focusing on your future
We have also explored what is important to individuals, whether in the workplace accumulating wealth or those approaching, or in, retirement. Research amongst over 1,000 people aged over 35 and published in a report, Planning for your future: financial clarity in an uncertain world, found that despite pressures on finances caused by COVID and Brexit, people are confident that their financial affairs are in order and place increasing importance on investing in a socially responsible way. It was encouraging to see that our goals in retirement are to spend time with family and grandchildren, spurning the more materialistic things.
2021 will inevitably bring new challenges, as every year does, but it will also bring new opportunities. For now, after what has been a relentless year and as we approach what is usually a much more festive season, let’s use this time to relax, ‘take stock’ and recharge. Spend time with family and loved ones and reflect on what we most cherished in 2020 and how we can carry that forward into 2021.
Everyone at Kreston Reeves wishes you a Merry Christmas and a happy and healthy new year.
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