There’s no doubt that the UK, and rest of the world, is experiencing an economic crisis that has dominated 2022. Whilst hopes for a promising economic upturn hang in limbo, there are lessons to take away on the impact of the cost of living crisis on the exporting industry. Here, we’ll break down the possible implications that this could have on your business, and some things to consider.
Peaking shopper wealth
Consumer behaviour is massively impacted by the current economic climate. From higher interest rates to increasing energy prices, consumers are tightening their belts to keep up with the soaring cost of living. Although consumer spending may peak at Christmas, the new year is set to see disposable incomes shrink even more. Industry will have to contend with this when it comes to supply and demand.
The number of people out of work is on the rise. For example, the number of people who have left the workforce due to long term sickness has reached a record level of 2.5 million. the Ukrainian crisis, combined with Brexit, is impacting the availability of labour across all industries, but particularly the food and drink industry. It is important for businesses to consider investing in the people on the ground, to build a more resilient charge in response to the ongoing labour challenges.
The pound has considerably weakened over recent years, in response to large tax cuts and this has a domino effect on how attractive UK-based companies are. Foreign investors are particularly keen to work with the UK food industry over the coming years, which opens up opportunity for exporting prosperity. Despite the looming pressures caused by the economy, the currency changes are a rare silver lining for businesses.
End to low interest rates
As we know, widespread inflation across multiple markets has brought a period of low interest rates to an end. Particularly this past November, the Bank of England raised interest rates by 0.75% to 3%, to curb high inflation. This will have an effect on businesses who are already burdened with debt and also deter investments from external figures.
Poorly performing businesses will struggle
The economic downfall will be a difficult period for everyone, particularly businesses who are reliant on low interest rates. The added pressure will see some businesses back down from the economic fight, and ultimately the businesses that we know and love will struggle to thrive.
We can help make exporting smooth and simple. If you’re looking to export and need advice or guidance to help deal with the challenges facing your industry, get in touch with our team of experts.