However, the economy bounced back better than expected in 2021 so can’t the same happen in 2022?
Everything to be constantly in motion. This week, economic forecasters have cut expectations for the UK’s recovery and warned of further setbacks if the new Omnicron variant proves to see case numbers increase. It was only a very short time ago, the same forecasters were noting just how well the UK have bounced back this year.
The Confederation of British Industry noted in June that it expected the economy to expand by 8.2%. This week, that forecast was cut down to 6.9% and its forecast for 2022 was revised down to 5.1%. KPMG stayed on theme with a forecast noting that it expects growth to reach 4.2% in 2022.
However, the economy still bounced back better than expected so couldn’t we see a strong performance also in 2022? In briefings, it was noted that the UK economy recovered far faster from the pandemic than from the financial crash in 2008/9 – so surely there should be more positive thinking? Are forecasters today too gloomy?
The real underlying concern does seem to be Q1 and many are forecasting a cliff edge which will see many companies fall. During the pandemic, the industry lost £104 billion in sales and saw over 9,900 closures; about 8.6% of the market. The concern is that 2022 will see a new wave of closures.
Hospitality has faced another tough week and hearts must go out to all those operators who are seeing Christmas parties cancelled for the second year in a row. It must impact on confidence and belief.
Somehow all need to find the confidence to go again as we enter January. So many companies do possess real plans for 2022 and the hope must be that these can be implemented as the forecasters suggest that the market will soften again in 2023 – so 2022 is the moment which will tell us all how the new landscape will be and which companies will emerge stronger.
Economic growth generally needs certainty and stability. The problem is that no one has this, so the challenge is to find new solutions and answers against an ever-changing backdrop.