After a bumpy ride in 2021, businesses are looking ahead to what 2022 has in store. From rising inflation to business growth, continued supply chain pressures to tackling climate change, there is a lot happening and plenty to look forward to alongside the challenges to prepare for – so much so in fact that we’ve decided to take two bites of the cherry and deliver our predictions in this and another blog to follow!
So, let’s consider the potential lie of the land in the year ahead.
While the emergence of the Omicron variant pre-Christmas is predicted to hit growth in the first couple of months of the new year, the good news is that UK GDP is virtually back to where it was at its peak just before the pandemic – and even with forecasts predicting slower growth, it is still headed in the right direction.
With the future looking brighter, many businesses are looking forward to growth in the coming 12 months as the uncertainty and turbulence of the pandemic recedes. According to research by Barclays Eagle Labs, the majority of founders of new businesses up to five years old are feeling optimistic and predicting higher turnover in 2022, while surveys of big business leaders by Deloitte and Make UK also reflected optimism and plans to invest and grow to take advantage of the return of consumer demand.
However, it’s also the case that Inflation is at a ten-year high and is predicted to peak at 6% or higher in Spring 2022, putting pressure on businesses and consumers alike, especially with the surging cost of energy set to intensify with the expected rise in the price cap on household gas and electricity bills in April.
With businesses facing increasing costs, smaller profit margins, and customers tightening their belts too, working capital could grow scarce. Seeking financing for any new assets, refinancing to release equity from your current assets or consolidating existing finance agreements can all help plump the cash pillow your business needs to remain robust and agile.
Taught to be adaptable and innovative by the lessons of the pandemic, businesses will want to seize opportunities when they arise – asset finance solutions, with rapid decisions and deals such as DGF can make, will be all important!
Interest rates to rise?
With inflation on the up, further interest rises are not likely to be far behind. Following December’s small lift to the current 0.25% rate – the first increase in three years – further incremental rises seem inevitable. How high rates will rise still depends on how inflation goes as the pandemic disruption dissipates.
But one way you can prepare is reviewing your current finance agreements. But if you’re already with Dawsongroup Finance, fear not – our fixed-rate finance agreements avoid any potential stings from rising interest.
So it’s far from an entirely gloomy picture in our estimation – and that’s just the half of it! Look out for more thoughts on other key themes and factors set to shape businesses in the coming year in our next blog.