The global pandemic has not just affected health, it has hit the global economy, causing trouble for countries across the world—including the UK, which has entered its second recession in only 12 years.
Before Covid-19 caused a global pandemic, we were already close to another recession. Here, economist David Blanchflower compares the pre-banking crash of 2008 to the pre-covid world. Blanchflower’s comparisons give us an insight into how the 2008 recession can become a how-to guide for how businesses can survive the 2020 recession. If this pandemic has taught business owners anything it would be that they need to take extra measures to protect their businesses.
Andrew Millet from Wisteria, created the business in 2002 after operating as a CEO and CFO in a number of companies in biotech, recruitment, media, technology and marketing. Here Andrew looks at how you can safeguard your business through turbulent times.
In the first months of 2020 before Covid-19 had impacted half of the globe, the UN had already warned us that a global recession could be coming. Factors including trade wars, currency fluctuations, and Brexit were all amounting to an uncertain global economy, and according to the Unctad report, “global growth will fall from 3% in 2018 to 2.3% this year—its weakest since the 1.7% contraction in 2009.”
The result Covid-19 has had on the global economy combined with the pre-Covid situation could create a bigger recession than the Great Depression. As of June, the global growth projection for 2020 had fallen to -4.9 per cent (1.9 per cent below the forecast made by the World Economic Outlook (WEO) in April). In addition, the WEO initially predicted a faster recovery period, but now they are only forecasting a 5.4% global growth for 2021, 6.5% lower than the predictions before Covid-19.
The situation with the global economy suggests that the debt level will rise across developing and advanced countries, which will lead to more redundancies and less jobs available. Not only that, but a “global downturn that could increase unemployment and inequality” may be on the cards, as stated by Kristalina Georgieva of the International Monetary Fund.
The Organisation for Economic Co-operation and Development’s newest reports suggest the UK is likely to be the worst hit country in Europe— the economy is forecasted to contract by 11.5% and up to 14% if we unfortunately get a second Covid-19 wave. Since our country relies on the service industry for economic growth, the UK is likely to experience a stark economic problem due to the damage done by Covid-19.
The best way to keep your business safe against the effects are the recession is planning. Businesses that plan ahead in times like this are the ones that survive and thrive in the face of adversity. Not implementing a recession strategy could be fatal for your business.
These key strategies will help your business face economic uncertainty:
No one knows what will happen in the next few months. Safeguarding your business is the most important way to support your business through the ‘Covid-19 recession’. The road ahead does not look easy but putting certain measures in place and responding when necessary will help recession-proof your business.