The UK won the vaccine race and is leading the world in rollouts. As such, the country’s economy is improving. The UK boasts the world’s sixth largest GDP at $2.64tn and is expected to experience its fastest economic growth since 1948.
There are now “upside risks”. As interest rates continue to rise, there is optimism as outputs are expected to return to pre-pandemic levels by the end of the year. This is happening, in part, due to companies’ ability to adapt.
The other macro trend impacting the UK – Brexit – has also started to provide rewards. Reduced regulation and red tape have precipitated the rollout of the Covid-19 vaccines, while the end of the Brexit transition period has allowed companies to gather momentum. Other opportunities for businesses are in the potential for international trade and healthy competition, reduced costs in compliance, labour and EU membership, as well as enhanced speed-to-market and the support of domestic businesses and SMEs.
This focus on national business is a significant part of the Chancellor of the Exchequer, Rishi Sunak’s, borrowing of £355bn this financial year with an expected £243bn in addition next year. To support this, he announced that corporation tax would increase from 19% to 25% in 2023, which could cause a worrying signal to investors.
1.Fell to 9% below pre-pandemic levels
2.1. Q1: GDP downturn – pandemic restrictions to cause contraction; fiscal and monetary support
2.2. Q2: GDP improvement – continued vaccine rollout, warmer weather to ease restrictions
2.3. Q3: GDP bounce – vaccine coverage will exceed 50% of the population
3.1. Expected to rise from $2,855.67bn (2021) to $3,356.79bn by 2025
3.2. Share for Purchasing Power Parity will drop 0.15% (2021-2025)
3.3. $6,498.1bn increase in GDP per capita
4. UK expected to have slower Real GDP growth rate than EU in 2021
5. Services 71.26%, Industry 32.17%, 3.45% Agriculture of UK GDP
Sunak’s bullish approach is placed on consumer confidence, which peaked in February 2021. During this period, retail sales, for example, returned to year-on-year growth levels. In fact, inflation rates of the Retail Price Index are expected to rise to 2.5% this year.
It is in such industries (along with the likes of packaging, home improvement, waste management, and pharmaceuticals), where the UK market has witnessed growth and where the Government are directing public traffic.
One common denominator among these industries, utilised to stay abreast of consumer demands, has been the management of supplier demands and speed-to-market, operating costs vs. quality, and resource management, not to mention their online presence. These elements have forced organisations to adapt their strategies and deploy stringent methods of continuous improvement.
The Ocado Example
Ocado was struggling with online demand during the first lockdown, but they realised that by removing water (a cumbersome product not in high demand) from its product base, that they could ensure a faster, more efficient delivery service. Meanwhile, as lockdowns pushed Ocado’s YoY sales up 39% in Q1 they are now better placed to manage high demand. Expecting the shift to online to maintain, Ocado is opening three new fulfilment centres creating 40% more capacity, and keen for more.
A Strategy is not Enough
You need a process that delivers that strategy.
In the absence of a well-deployed process, different departments will fail to align, friction will develop, resources will be wasted, opportunities will be lost and, ultimately, your strategy will fail.
For an effective deployment of your strategy, you must first improve your processes. This means a review and breakdown of departmental objectives and a value stream analysis. This will accelerate performance by engaging employees at all levels and empowering them to identify high-priority improvement opportunities.
An alliance between strategy and process must be met to ensure the design, implementation and deployment of your objectives.
The top opportunities for UK businesses this year include: