As we head towards the end of 2024, UK businesses are grappling with the combined pressures of ongoing strikes and the lingering effects of the cost of living crisis. With inflation easing slightly, the economy remains vulnerable, especially for industries directly impacted by labour shortages and strikes in sectors like transport, education, and healthcare.
1. Strikes Affecting Key Industries
Strikes in essential sectors such as transport, healthcare, and education have put additional strain on businesses across the country. Industrial actions in rail and postal services disrupt supply chains and delay deliveries, which leads to higher costs and missed revenue for retailers and manufacturers. Service delays, alongside staff shortages, force businesses to find costly alternatives to keep operations running smoothly.
Key takeaway: Businesses dependent on reliable delivery and logistics should explore diversifying suppliers and strengthening contingency plans to minimise disruptions.
2. Cost of Living Challenges for Employers
The cost of living crisis continues to squeeze household incomes, directly impacting consumer spending. With inflation, though lower than in 2022, still hovering around 6%, businesses are seeing less consumer demand, especially in retail, hospitality, and non-essential sectors. Moreover, businesses face rising operational costs, including wages, energy prices, and goods, as inflation continues to affect the cost of running businesses.
Employers are also being asked to raise wages to keep pace with inflation, but this can create significant financial strain, particularly for SMEs. Many are exploring ways to increase operational efficiency or offer non-monetary benefits to retain staff without drastically raising costs.
Key takeaway: Businesses should review their budgeting and consider diversifying revenue streams to remain resilient in uncertain times.
3. Adapting to the New Reality
With labour shortages exacerbated by Brexit and reduced immigration, businesses are under pressure to find innovative solutions. Many companies are turning to automation and technology to reduce reliance on manual labour, while also exploring ways to build stronger relationships with local suppliers and customers. Building resilience is essential as businesses face continued volatility.
Key takeaway: Investing in digital transformation can help businesses manage costs while preparing for the challenges ahead.
UK businesses must navigate an increasingly challenging landscape, balancing the effects of strikes, rising costs, and lower consumer spending. By focusing on contingency planning, operational efficiency, and adapting to new technologies, businesses can strengthen their resilience and position themselves to weather these ongoing challenges.
