Uncertainty in UK business grows amidst hit from both Covid-19 and Brexit

By - World Infrastructure Journal

Business optimism has declined sharply in the UK and expectations of future revenue growth in the next year are lower than they were in 2019.

More than half of UK businesses however, are adapting to the new environment, with around a quarter deemed as surviving day-to-day which is slightly more than international levels.

Businesses within the UK identified Covid-19 as the single biggest driver of growth and recovery (38 per cent compared with 32 per cent globally) and despite the current challenging environment, six out of ten UK businesses intend to increase investment in their business in 2021.

The drop in optimism which is broadly in line with Europe, was led mainly by businesses in the North West which may be due to the region being one of the hardest hit by Covid-19 related restrictions.

Seven in ten UK businesses however, expect to have returned to pre-Covid-19 levels of profitability by the end of 2022 and a fifth by the end of this year.

Additionally, the report highlighted that most businesses across the UK have already started to make changes for the post-Covid environment with these levels broadly in-line with businessess across Europe. The largest percentage of those studied have undergone short-term changes, with 4 in 10 businesses expecting to return to their previous operations. While a quarter said they have continued the same as before throughout the pandemic, the same amount said they have undergone long-term transformational change. These were mostly driven by changing working models as well as shifts in costs.

Outside of Covid, there are still additional uncertainties which are currently concerning the business sector - namely the outcome of Brexit trade negotiations. This has long been a point of concern for both UK and EU businesses but as negotiations continue to falter, the emerging likelihood of leaving on the 31st December without a trade deal leaves the future more uncertain. Despite this, for the moment, the report has found that trade with Europe still continues to be significant and the US remains to be the top trading partner.

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