Unemployment in the UK is at its highest point in four years and currently sits at around 5%. We all know that increases in unemployment generally result in decreased economic activity overall. However, how will we recover? It’s really impossible to tell exactly how things will pan out overall, as events such as pandemics don’t happen in vacuums and are shaped by a range of ever changing interrelating factors such as government intervention and social response. However, I like to feel that we can be sure that the UK will find a way.
The UK has always been a world-leading hotbed for entrepreneurship. Napoleon Bonaparte famously said that the UK was a ‘nation of shopkeepers’, and whether this was meant derogatorily or not, it is certainly true. In the 2018/2019 tax year, there were on average, 1,843 businesses created every day. Private sector SMEs historically account for three fifths of the workforce, with 96% being micro-businesses (9 or fewer employees). In a study by SME Loans in 2020, they found that 83% of 18-24 year olds aspired to start their own business. I appreciate that these statistics where collected before the COVID pandemic, however recessions and disasters aren’t necessarily an entirely negative thing for entrepreneurship.
Anecdotally, you only have to switch on your social media to see a range of small-scale local startups vying for your business (speaking of social media, Instragram, Whatsapp and Pinterest where all started between 2008-2010 following the last global recession). Globally, Uber, Airbnb, FedEx and more locally – Puregym, were all started in or around downturns. So were countless other less well-known companies.
Whilst many recession era startups are caused by necessity, it shows that pain and scarcity often causes an increase in resourcefulness and creativity. Any time there are fractures, there are those who spot the opportunities in the cracks. The obvious ones at the moment are PPE/hygiene companies, delivery based businesses, home improvement/DIY firms and work-from-home focused enterprises such as Zoom. Those working in real estate will attest to the ever-increasing demand for last mile logistics hubs to service local communities and their growing demand for convenience. Many more will be sure to follow as new trends emerge. All industries will be affected in one way or another. Some might fizzle out, but they will be altered or replaced.
Likewise, there have been a slew of real estate start-ups during the pandemic, likely caused by redundancies. Us Brits generally get back on our feet and get back at it. I don’t want to downplay the very real economic pain that much of the UK is going through, but it is important to have a positive mindset – we’ve recovered before and we’ll do it again.
So whilst some industries might suffer, new ones will spring up and professions will materialise that currently don’t exist. With the UK set to be in recovery mood, it is likely we will see the government foster a growth-friendly business environment, including grants and tax-relief initiatives. Although it often takes a few years to see the effects of increased entrepreneurship, it will be interesting to see how the pandemic shapes the UK’s economy for the future. As Churchill said, ‘’the maxim of the British people is ‘business as usual’’’.