In the midst of the cost of living crisis, what do businesses need to consider?
Few things are as depressing as the end of the summer holidays. Unpacking suitcases after a long flight home is never as exciting as packing before departure and the approach of September means getting back to the familiar routines of work, the trepidation of a new school year and a welcome return to cooler temperatures.
However, this particular autumn is likely to look a little different to usual. Rather than dissipating, the cost of living crisis has only intensified. As new Cabinet ministers are mulling over ways to support households through the winter months, their colleagues at Threadneedle Street have embarked on a programme of interest rate rises.
For savers of course, rates have remained too low for too long but for many the spiralling costs of mortgage repayments is bad news at the worst time.
Businesses are clearly not immune. The cost of business borrowing will go up and firms concerned about declining consumer confidence and increases in borrowing costs should start to consider their financial options sooner rather than later.
Restructuring, refinancing and renegotiating with supply chain partners are some of the possibilities to consider but these are complex decisions which should not be rushed.
Business leaders should take time to explore all available avenues before making long term commitments and it is certainly worthwhile engaging with external experts when exploring the options, particularly at a time when market conditions are so unpredictable.
However, the UK is not in recession yet and securing appropriate financial arrangements is not the only challenge facing firms. The now familiar problem of labour shortages is still widespread with the numbers of job vacancies hovering around historic highs.
What specific set of circumstances were at fault for this is still hotly debated, with the blame seemingly being shared between a combination of Brexit, government immigration reforms, COVID-19, early retirement or a generation of Britons just unwilling to do tough jobs in hospitality, healthcare or agriculture.
One unforeseen result of the cost of living crisis may be the forcing back to work of the recently retired. Hopes that the 'Great Resignation' will come to an end are high, with employers such as McDonald’s and the boss of John Lewis, Dame Sharon White, calling on experienced workers to come out of retirement and re-join the workforce.
With many retirees worrying about the impact of inflation on their pensions, it may be that returning to employment is now an unwelcome necessity.
Businesses will be keen to appeal to highly experienced employees and with flexible working policies already in place the ‘Great Return’ could offer some respite to overstretched businesses this autumn.
Irwin Mitchell has extensive experience in advising businesses on banking, finance, recruitment and employment issues.
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