UK Q4 GDP: "Will the last small business owner please turn off the lights?"

Small charities like ours are weaving our way through extremely challenging times, as this latest GDP data shows. The funding landscape is becoming increasingly challenging, with many regular supporters closing their doors, and others facing an overwhelming number of applications. Despite these obstacles, our commitment to supporting disabled children in Bristol remains unwavering. One family shared with us the transformative impact our play sessions had on their child's development, showing the vital role our charity plays in the community. Jill told us: "The kids want to attend every week, they feel confident, safe and have even made friends". While scarce funding is a significant worry, stories like these make us even more determined to continue making a positive difference.

The fact the economy is in recession is no surprise. The so-called 'Golden Quarter' for retail did not deliver. Sales in this quarter were around 25% down versus 2022. As a boutique owner, we rely on this quarter to put us in a strong position for the following year. As we had such a downturn, we have made the sad decision to close our business. Since we announced our closure, we have had a better January versus December and never had so many people pop by. We are still facing challenges though. Our energy bill is at a all time high and with the impending increase in minimum wage we are pleased that we have made the decision to close. Other boutique owners have since shared that they face closure too and are encouraging customers in by going into big sales. We believe this year is going to be another tricky one for retailers so we hope the Government can help reduce energy bills, decrease car parking charges, implement online sales tax for large businesses and more.

More small businesses closed their doors in 2023 than at any point since the Global Financial Crisis so the fact the UK is now in recession will surprise few. 30,199 UK businesses took insolvency action last year, a 52% increase since 2021. Small businesses are not struggling, they're dying. And neither the Bank of England nor the government seem willing or able to do anything about it. Our once famous 'nation of shopkeepers' is in danger of becoming a 'nation of ghost towns, chain stores and closing-down-sales'. Will the last small business owner in the country please turn off the lights?

We had a very respectable October and November 2023, although December was naturally a quieter month, so it certainly didn't feel like a recession, technical or otherwise. The biggest challenge right now regarding mortgages is people confusing talk of base rate reductions with reductions in fixed rate mortgages, whereas these expected base rate reductions have already been priced into the fixed rates currently available. In terms of insurance, and personal protection (such as life insurance, critical illness cover and income protection) specifically, the issue is NHS backlogs and waiting lists. We have a large number of clients wanting to protect themselves and their families, but their applications are help up due to the insurer waiting for information from their GP, or hospital consultants, or becuase they are on a waiting list for a procedure or tests and the insurer can't offer cover until that has been concluded; however waiting lists can be well over 12 months long.

2023 was sluggish for us, but started to pick up in Q4 and this has been maintained into January. However, it's not a game-changing improvement yet. Our clients in hospitality are struggling with soaring utility costs and inflation, while many potential hotel guests, both business and leisure, are cutting back on travel as they feel the squeeze themselves. Thousands of hospitality businesses closed last year. The 75% relief freeze on business rates for hospitality for a 4th consecutive year has undoubtedly helped our customers, and therefore by extension our own business, but we could really do with seeing inflation and living costs reducing so both hospitality venues and the travelling public are less squeezed financially.

The last quarter of 2023 was good for us from a consumer point of view, but then we are counter-cyclical by nature. People are turning more to refurbished tech, pre-loved clothes and homeware as household budgets are still being squeezed. From a B2B aspect we have seen a slow down in ad spend, which is the flip side to wary customers and reduced margins on goods. Until the economy takes a turn for the better I think consumers will continue to watch the pennies. We are still seeing a rise in people searching for things being given away for free.

Things were better in 2024, I suspect only because I work in a growth area of the economy. Working as a growth consultant for 18 UK SMEs, I can say that most SMEs are feeling the pinch. It's hard to grow sales, due to people spending more money on their mortgages and other food and utility bills. I see SMEs that are embracing AI are finding efficiencies as this is counteracting the economic environment. I'm optimistic for 2024 as the UK is driven by SMEs and SMEs are moving from AI as an experiment to an AI driver of growth. It would be good if the Bank of England started to ease rates to stimulate the economy.