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Despite a turbulent start to the year, we’re pleased to report that many businesses find themselves in a more favourable position than expected. In our latest Economic report, conducted last month, we found that nearly half of UK businesses outperformed their initial predictions for this year.
In April of this year, we conducted our first Economic Report, which gauged overall business confidence and initial business predictions as leaders prepared to head into the eye of the storm of the pandemic. As expected, due to the unknown nature of the virus and plummeting rate of business confidence, the overall picture at the start of the year was bleak:
- 71 per cent of businesses expected that they would have to reduce their staff numbers
- Only a third of businesses felt it likely they would recruit
- 50 per cent of leaders predicted it would take at least two years for the economy to recover
However, as the country began to learn more about the virus and businesses started to flex and adapt their offerings in order to survive the pandemic, it appeared that outlooks were beginning to shift. To explore this notion further, we re-surveyed our clients to find out if their initial predictions had been correct or, indeed, whether trading conditions had been better, or worse than they had feared. Thankfully, November’s research shows that the overall picture is far less distressing than anticipated.
Companies have been a lot more resilient than first expected. While half are down on last year’s figures, over a third have outperformed their 2019 results, with a further 14 per cent remaining stable. Encouragingly, this upward trajectory is expected to carry on into 2021 with nearly half of businesses expecting to grow by up to 25 per cent.
Redundancies – expectations vs reality
In April, business leaders were extremely concerned about the high risk of redundancies. Nearly three-quarters expected that they would have to reduce their staff numbers during 2020. While a large amount of staffing cuts were made, the numbers were not as extreme as forecasted. 64 per cent of leaders decreased team numbers but 36 per cent of leaders reported they had grown headcount since the beginning of the pandemic.
The saviour of many jobs, according to the research, was the furlough scheme introduced by the Government, which 70 per cent of respondents used to help prevent the levels of redundancy expected in April 2020.
When asked in April, just one-third of businesses were expecting to actively recruit over the coming year. However, this number grew exponentially over the course of the pandemic, with 73 per cent of respondents reporting to have recruited between April and November.
The factors for this unexpected change vary; from outperforming financial expectations, improved candidate confidence and greater understanding and investment in remote working and virtual onboarding, companies were able to work, and recruit, more effectively and efficiently.
Of course, there are still some challenges which businesses will face in the coming months. The first being the end of the furlough scheme which may cause more tragedies for internal teams. Sadly, nearly half of business leaders believe that, without further Government support, there may be another wave of job loss to come.
Second is the expectation of the country’s economic recovery. In April, most businesses had thought that a U-shaped recession would be most likely, with a V shape the second choice, followed by W. In November, we can see that a U is still the most predicted shape, but that a V has dropped from 26 per cent to 11 per cent and that more leaders now fear a ‘double dip’ (W) shaped recession.
Hopefully, the W-shaped recession should be less likely with the recent news of a vaccine. This news should mean that within the first few months of 2021, businesses can hopefully resume at a much steadier, upward pace helping to repair the economy slowly but surely.
Despite being one of the hardest years, economically, physically and mentally, any of us have faced in a long time, businesses have adapted well to the challenges that have come along and although many have suffered, the extent of this suffering appears to be less than first feared. Many of us, thankfully, are now looking to the end of the year and into 2021 with a sense of optimism for repair, recovery and growth.