The UK’s living wage recession
In late January, the International Monetary Fund published its global expansion forecast for 2023. Luckily, for most of the world’s largest economies, the picture looks much better than at the end of 2022, when the global recession seemed unstoppable. The great exception among many countries is Great Britain.
If the IMF’s predictions turn out to be correct, the results will likely be transformative for everyone, including entrepreneurs. The recession will occur in a living wage environment. This effect will be felt even more clearly. However, even amid these challenges, entrepreneurs will have opportunities to spread and expand their businesses.
Some optimism exists that UK entrepreneurs will be able to expand during the recession. This is because they’ve had low growth rates for a long time.
The UK’s economy has had trouble growing by more than 3% since 2000. In fact, it has done this only twice since 2011.
The country’s growth rate in 2014 was 3.23%, with manufacturing and services expansion, strong household spending, and good export performance. The second was in 2021. It happened because of a comeback after COVID-19.
The economy contracted by 11% in 2020, meaning that a 7.54% recovery in 2021 was not enough to return the economy to pre-pandemic levels.
Despite these challenges, several large and successful startups were founded during that period. Deliveroo, GymShark, and What3Words were all founded after 2011, when growth was particularly slow. In other words, under conditions of low growth, it is impossible to revive and scale a successful business.
Cycle of change
While UK entrepreneurs should certainly be doing all they can to identify and seize these opportunities, the coming recession also shows they must advocate for change.
The fact that the UK is the only G7 economy to fall into recession in 2023 shows how much economic decline results from actions taken by those in power.
Although entrepreneurs can’t make policy themselves, they can collectively lobby and pressure government officials at all levels to make conditions easier for entrepreneurs, thereby kick-starting growth. This means making it as easy as possible to export to the country’s closest and largest trading partners, especially the European Union.
But entrepreneurs can also advocate for change, with mutual support, to ensure that failure rates are low and that businesses are better positioned to scale rapidly when the conditions are right.
