Where has 2021 gone already? The pace has been brisk all year and now we’re staring at Christmas and the end of the year… and proposed Bank of England base rate rises due to inflation that keeps on rising after the excesses of borrowing due to Brexit and the UK pandemic crisis. There is no doubt that the cost of living is on the rise, with energy prices rising, tax rates being hiked up and some serious infrastructure issues that have frequently seen shortages in stores… and at the pumps!
Following the Office of National Statistics revising their initial estimations that the growth they reported for July 2021 was miscalculated and was actually a contraction, they have now reported that August saw a 0.4% growth. It remains to be seen if the ONS will go on to redact this growth statement later down the line, but Destination Digital’s Debbie Porter had this to offer in a piece run on the Business Matters website when asked for the small business owner view of the economy,“The number of financial burdens being rested on the shoulders of ordinary citizens post-lockdown and post-Brexit gets more unbearable at every turn. Spiralling costs, tax hikes and complete gaps in parts of the economy that once were strong is the biggest concern, coupled with Government leadership that personifies rule from an ivory tower.”
In a piece run by City A.M. the same week, small businesses were asked for their opinions on the expectation by the markets that there would be a rise in the Bank of England base rates before the end of the year. Debbie had this to say, with reference to Boris Johnson’s recent proclamations that he intended the UK becomes a high-wage and high-skill economy, “We need people spending to keep money flowing in the economy, and without consumers consuming, how are we to deliver on Boris Johnson’s promised ‘high wage economy’?”
Startups.co.uk also ran a piece on this subject with our position that, “A rise in interest rates ahead of Christmas runs the risk of curtailing high street spend, pushing consumers to save and not spend, which will further slow economic recovery.”
With High Street spend an indicator, and even a rumour of inflationary increases pushing consumers to save and not spend, it would surely be poor timing to raise rates before the year end. The aim is to revive the economy post-lockdown, and we are still in the throes of tackling Brexit-related challenges too. A rise pre-Christmas whilst the populace is still dealing with a succession of financial blows in recent months could signal a final nail in the coffin.
This week, a report in Business Matters magazine shows that inflation lowered slightly in September but is at risk of rising rapidly again in October due to the huge leap in energy prices, coupled with supply chain issues that have been aggravated by Brexit related issues. Debbie offered comment in response to the question of whether small businesses like Destination Digital would likely be increasing prices to pass on some of the rising costs. She said, “All costs are on the rise but for small businesses the decision to increase their own prices accordingly is a tricky one. At some point there may be no choice, but retaining customers is paramount at this time and it is a decision fraught with danger for small business owners.”
Who knows what the coming weeks will hold, and what the Bank of England’s decision will be, but we are hanging onto hopes that it won’t be another winter of discontent ahead of us.
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