A new year, a new set of challenges – and a few old ones – for local businesses and consumers to navigate.
The worst of the cost of living crisis may be behind us, but there is no doubt that many businesses and households will continue to struggle.
A General Election is certain to take place, likely in the second half of the year, which means economic manifesto pledges will be high on the agenda as politicians scramble to secure votes and support from business owners and their employees across the country.
The economy is one of the most crucial election battlegrounds, and the economic stability of the Cumbrian business world is intrinsically linked to national and global trends.
Adam Lewis looks at five key economic issues facing businesses in 2024.
Recruitment
Brexit, Covid, the cost of living crisis and higher rates have all contributed to the challenges employers face to recruit the staff they need. Unemployment in the UK is currently 4.2%.
The number one challenge facing most business owners I talk to in Cumbria is recruitment.
Finding staff, training them, retaining them. Across all business sectors – from tourism and hospitality to nuclear engineering, nearly every employer in the county is concerned about recruiting the right people with the skills they need.
BAE Systems plans to recruit and train 6,000 new employees in Barrow by 2030, and the multi-million-pound expansion of the University of Cumbria as part of the Borderlands Growth Deal shows the county has the infrastructure and the opportunities to help address the challenge of recruitment and retention.
There are major employers in Cumbria, offering routes to training, education and employment that will help sustain the county’s future and cement its status as a top destination to work, train, learn and live.
Resilient Cumbria
Cumbria’s resilience to adversity is the stuff of legend. Never mind Romans or Reivers, the last 25 years has seen foot and mouth disease, several major flooding and storm events, a global financial crisis, Brexit, the Covid pandemic, and the cost of multiple wars result in higher taxes, rising inflation, consumer uncertainty, and barriers to growth.
Yet Cumbria’s ability to adapt and the strength of its diverse economy have ensured the county’s economic survival.
Sellafield and BAE Systems are county institutions, critical not just to Cumbria, but the whole nation. Their continued expansion and investment in training and employing local people is the lifeblood of communities in West Cumbria, Barrow and beyond. Their supply chains are a major part of the local economy and business community.
Despite a population of fewer than a million, Cumbria attracts over 40 million visitors a year. The hospitality sector is as critical to the county’s economy as it is to the international profile and attraction of the Lake District.
The ability to recruit and retain the skills and talent that Cumbria needs is vital if it is to achieve its economic, commercial, and cultural potential.
From agriculture to history and tourism to energy, Cumbria’s strength and economic potential has always been the diversity of its business and industrial community.
Lower interest rates
The Bank of England has increased rates 14 times in the last two years. The mortgage market has been particularly impacted by this.
Most property owners of both residential and business premises are on two to five-year fixed rate deals. Millions have already seen a hike in repayments and many more will be affected in 2024.
Economists predict the Bank of England will cut rates in the first half of the year, meaning the cost of fixed rate mortgages will fall as markets grow more confident.
Two major lenders, Barclays and Santander, have announced significant cuts in the first week of 2024.
Inflation
Whilst inflation in the UK is falling – albeit slowly – prices were still 3.9% higher in November 2023 than the previous year.
A spike in prices for energy, fuel and food costs caused by the Ukraine war and sustained by the Israel-Gaza conflict has kept inflation in the UK high.
Consumer spending in the run-up to Christmas was weakened by price rises for food, fuel and goods.
Taxes
Millions of workers will receive a National Insurance cut early this year, but after years of wages failing to rise in line with inflation, many are struggling to meet the challenges of high taxes.
Pledges of tax relief are likely to be high on the political agenda ahead of the General Election.
What are your challenges?
I’d love to hear about the challenges your business is facing in 2024, and how you and your team is responding to them.
Let me know – email me at [email protected]
