UK B2B Economic Outlook – Autumn 2021
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“Government support through the pandemic has enabled a rapid restart in activity following the end of mandatory COVID-19 restrictions. Although statistics are distorted on an annual basis, clear signs of…

UK B2B Economic Outlook – Autumn 2021

£ 1,495 (Excl.Tax)


“Government support through the pandemic has enabled a rapid restart in activity following the end of mandatory COVID-19 restrictions. Although statistics are distorted on an annual basis, clear signs of recovery are abundant. In the short and medium term however, growing labour and goods supply issues could slow momentum, and could result in a period of high inflation driven by input costs via rising wage and energy costs.”
– Francesco Salau, B2B Analyst

Table of Contents

  1. Overview

    • Key Takeaways
    • Economic Overview
    • GDP continues to close the gap created by COVID-19
    • Bank of England takes a dovish stance against expectations of transitory inflation
    • Inflationary impact of rising input costs obscured by abnormal 2020 data
    • Record vacancies being driven across all business sizes
    • Business Health
    • Business investment continues growth but is still behind pre-pandemic level
    • Business confidence rises in the face of rising regulatory problems grow
    • Insolvencies remain below 2019 levels despite significant quarterly rise
    • Private sector turnover growth slowed in the run up to 2020
    • Special Focus: B2B Services
    • Rapid growth in travel-related services but output remains behind pre-pandemic level
    • COVID-mitigating strategies has bolstered next-gen security device uptake
    • What’s Next?
    • Acute labour shortages most prominent in healthcare, retail and leisure sectors
    • Decline in migrants in the UK predominantly driven by non-EU citizens
    • HGV driver shortage is affecting supply chains
    • Impact of fuel and gas shortages
    • COVID-19: market context
    • Economic and other assumptions
  2. Economic Overview

    • GDP inches closer to recovering the ground lost since the coronavirus outbreak
    • Significant rise in public debt could mean real-term budget cuts over the next parliamentary term
      • Figure 1: UK annual change in GDP, 2010-20, (% change)
      • Figure 2: UK quarterly change in GDP, Q2 2019 – Q2 2021, (% change)
    • Interest rates to remain at historic lows despite the possibility of above-target inflation
      • Figure 3: Bank rate, by date of adjustment, 2008-20, (%)
    • Record jump in CPI due to pandemic’s impact on prices in 2020
      • Figure 4: Consumer Price Index, August 2019 – August 2021, (12 month rate, %)
      • Figure 5: Contribution to change in CPIH 12-month inflation rate, July 2021 vs August 2021, (%)
    • Wage growth figures driven by compositional effects
      • Figure 6: Annual change in real average weekly earnings, regular and total pay, July 2019 – July 2021, (% change in three months to date)
    • Gap in employment numbers and record high vacancies suggest a smaller post-pandemic labour pool
      • Figure 7: UK vacancies, August 2019 – August 2021, (number of vacancies, thousands)
    • Declining furlough scheme driven positive impact of restrictions easing
      • Figure 8: Coronavirus job retention scheme claims take-up by sector, 31 July 2020 and 2021, (proportion of eligible employers and employments, %)
  3. Business Health

    • Business investment rises thanks to ICT investment
      • Figure 9: UK business investment, Q2 2016 – Q2 2021, (£ billion)
    • Meteoric rise in business confidence driven by rising consumer demand
      • Figure 10: ICAEW Business Confidence MonitorTM index, Q1 2016 – Q3 2021, (index score)
    • Insolvencies rise by a third for Q2 2021 but still sit below 2019 levels
      • Figure 11: Underlying company insolvencies in England and Wales, Q1 2019 – Q2 2021, (number of insolvencies, seasonally adjusted)
    • Turnover growth slows and is expected to be negative for 2020-21 period
    • Impact of coronavirus on services output substantially greater than 2009 recession
      • Figure 12: UK business turnover by business sector, at start of 2019 and 2020, (£ million)
  4. Special Focus: B2B Services

    • Services output remained flat but travel and leisure related services see the largest gains
    • COVID-19 has accelerated technological trends in the security equipment space
      • Figure 13: UK security equipment market size and market forecast, 2016-20, (£ million)
    • As the impact of COVID-19 fades, the true impact of Brexit on trade is being exposed
  5. What’s Next?

    • Employer’s recruitment difficulties reflect record high vacancies
    • Change in non-EU population may be the main driver of reductions in the migrant population
    • Ending of furlough could see unemployment rise
    • A shortage of HGV drivers is stressing supply chains as economy resumes
    • Supply constrains are causing gas and fuel shortages
    • Christmas will test UK supply chain resilience
  6. Appendix – Data Sources, Abbreviations and Supporting Information

    • Abbreviations

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