State of the (business) nation

Since 2020, Moore UK Chartered Accountants in Peterborough have been publishing a bi-annual business survey – the Owner-Managed Business (OMB) Report – that aims to take the financial (and emotional) temperature of the UK economy and the people who drive it. We spoke to Rachel Thomas from Moore UK Peterborough to find out how the report can give valuable insight to both consumers and suppliers...

Tell us a bit about how and why Moore UK started producing the OMB Report?
We started it in 2020 during the pandemic, when we sensed that businesses were struggling. We wanted to understand business confidence and how the pandemic was affecting them, so it began as a way to assess how businesses were coping, identify their main challenges, and tracking changes in that business confidence. We now conduct the survey twice a year, every six months, allowing us to observe the impact of external factors – such as government actions – on business confidence. We time the survey soon after important government announcements, like the autumn and spring statements, to assess their influence on confidence.

What are the key trends now that the pandemic seems to be largely in our rear-view mirror?
As people have emerged from the pandemic, we’ve definitely noticed a shift. During the pandemic, confidence was at an all-time low due to the uncertainty surrounding the situation, but as restrictions eased, confidence began to rise. Recently, the challenge of rising costs of living has affected businesses, making it difficult for them to navigate the market and we’ve been closely monitoring how businesses are coping with these challenges, including price increases, supply chain disruptions, and the impact of events such as the Ukraine conflict.

One issue we’ve found is that businesses are struggling to recruit enough staff due to the effects of Brexit. Many European workers have left the UK, making the job market difficult for businesses, especially those reliant on seasonal workers from overseas. This includes farms and businesses in the hospitality sector that need more summer workers.

How are businesses addressing these challenges?
What I’ve discovered is – businesses are realising that recruitment challenges are not going away anytime soon. They are here to stay. It’s no longer a temporary problem to be dealt with until it’s over, this is the new reality – these workers are not coming back. So, now businesses are exploring technology and AI as potential solutions – if they can’t recruit staff, they’re looking to become more efficient, exploring the use of chatbots, for example.

What’s interesting about this survey is that it focuses on more than just figures on a balance sheet. It delves into confidence, which includes an emotional aspect that people often overlook in favour of practical details like ‘credit and debit.’ However, much of our business is built on feelings such as trust, confidence, and relationship networks…

Even if a business is currently doing well, if there’s a sense of trouble on the horizon confidence can decline, or it can go up – for example, people are currently speculating about an upcoming general election and what that might mean for their businesses.

In our latest survey, people are feeling more confident than they have in the past, in fact this is the most confident they’ve felt since we started. It’s a positive turn of events, considering the numerous challenges we’ve reported on in the past.

Does it suggest that people are finally emerging from the emotional effects of the pandemic?
Yes, I believe so – they’re gradually recovering from the pandemic and the economic crisis that came with it. Interest rates are falling, and people are starting to believe we can get back on track.

So, it’s reassuring to see that this survey recorded the highest levels of confidence since we started in 2020. It will be interesting to see if this trend continues and how it might be influenced by a general election and potential changes in government, but for now it’s a positive outcome.

Have any notable trends been identified in this recent survey?
Well, the recruitment and retention of staff continues to be a major issue, which is hampering their ability to grow. According to the survey, many businesses have to turn down work due to a lack of staff, leading to increased workload, decreased morale and stagnation in job positions – this all has a significant impact on the business. The reasons for this struggle could
be attributed to wages, rent, and the scarcity of workers post-Brexit, but it’s likely to be a combination of these factors, and the difficulty in finding qualified and skilled staff. We think businesses will inevitably make lasting changes as a result, across various sectors – in the field of accountancy, for instance, automation software has reduced the need for number crunching, allowing accountants to focus on problem-solving and utilising soft skills, or helping businesses by coming up with solutions for their cash flow problems. Currently, there isn’t a machine that can handle this kind of task, but there are tools available that can easily capture receipts, for example, eliminating the need for manual data input. It’s great that this tedious part has been taken care of! Manufacturers are increasingly automating their processes, too, relying less and less on human labour.

You can read and download the latest OMB Report from Moore Chartered Accountants UK by visiting moore.co.uk