6 Weeks into 2024 🤯
Updated thoughts for entrepreneurial survival in the upcoming financial year
Six weeks into 2024. How we doing?
On my side, some thoughts to share, largely that 2024 has not been off to the start that I was quite hoping for / expecting. The news about the UK entering into a recession hit home hard, and the impact is certainly felt, and it’s no news to anyone that our economy is struggling to grow. Moreover, I actually feel that there are structural underlying challenges that the UK is currently facing which scare me on a more mid/long-term perspective. I’m not planning to get too depressing with this stuff, but I do have a few thoughts that I wanted to share that I think entrepreneurs today need to be thinking about.
But first, a quick summary of the current economic situation:
Economic Growth
The UK's GDP is expected to grow at a modest pace of 0.5% in 2024, with a forecast to pick up towards a rate of around 1% in 2025 🙄
The UK economy performed better than expected in 2023, with business investment growing by 6.3% in Q3 2023 and household consumption up by 0.3%. These figures are still below pre-pandemic levels. ↓
The UK entered a recession with the economy contracting by 0.3% in Q4 2023, following a 0.1% decline in Q3. 🤬
Inflation
Headline CPI inflation dropped to 4.0% in December 2023 👍🏼
CPI rose by 4.0% in the 12 months to January 2024, maintaining the same rate as in December 2023 🙄
Job Market
Slow growth and recessionary pressure are causing the labour market to soften after 24 months of growing, post-COVID demand. 💼
The unemployment rate decreased to 3.8% in December from 3.9% in November of 2023. Some are predicting that this might increase to close to 5% during 2024… 😱
In the quarter ending December 2023, the number of people reporting redundancy in the three months prior to interview increased by 1.4 per thousand employees to 4.0 per thousand employees. This is also an increase compared with a year ago.🚶🏻
Monetary Policy
The Bank of England's current level of interest rates is at 5.25%, which is above the estimated equilibrium rate of around 3%. The Bank of England is cautious about adjusting interest rates until inflation targets are confidently met, which is unlikely to happen before the latter part of 2024. 🤯
In summary: It’s shit
Speaking optimistically, I’d say that the UK economy is showing signs of modest growth and that 2024 will give way to a stronger 2025. However the last few years have ripped the optimist out of me so here is what I really think:
We’re unlikely to see any noticeable improvements until the end of 2024 (and entrepreneurs should be planning as such, see below).
The outlook is bleak and we are exposed to shocks. Inflation is a persistent little fucker and the BoE’s strategy is delaying our relief.
I think that many businesses will find it hard to continue raising prices to grow their margins so will need to radically cut back on costs if demand remains weak, the latter would of course impact household real incomes and the spiral will continue…
The current government is not implementing the right measures to incentivise/ support innovation and this is having a detrimental impact on our tech sector and on the UK as a whole. I’ve been screaming about this for years now. They need to come up with fresh measures to keep the UK at the forefront of global innovation (or just copy some of Macron’s if they are short of ideas but like, do something). Currently feeling like London’s innovation and tech sectors are drying up. Is this still the place?
So yep I guess I’m not overly optimistic about this year. Read on to learn how this is impacting my 24-25 planning and and the 3 things I think all entrepreneurs should be thinking about right now.