The United Kingdom has been through some turbulent economic times of late. Ironically, departing from the EU caused far less in the way of disruption than many expected, with only a sharp decline in the exchange rate as an immediate major consequence. However, the black swan of Russia invading Ukraine has affected the global economy, with implications for businesses in Essex struggling beneath the burden of a prolonged spike in inflation and interest rates. Food price rises have eroded consumer spending power, and this change has particularly struck restaurants as it also means higher costs. And every sector faces the double-edged sword of the internet.
The Internet: Challenges and Opportunities
The internet has changed the game of business since its inception, and as the years have passed by, more and more transactions occur online. Similarly, more people work online, whether in entirely new jobs or working from home (WFH). The latter was a lifeline during the recent COVID-19 pandemic and showed many businesses and workers both the potential and pitfalls of WFH.
However, the internet is not just a threat to doing business in Essex, it also represents an opportunity that can make profits more lucrative and broaden business possibilities. Word of mouth has long been the most trusted form of ‘marketing’ (builders might fake reviews online, but if one neighbour tells another of a great experience with a builder, that’s a recommendation with a huge amount of credibility behind it). Reviews from trusted third party sources such as independent UK casino reviews or Trustpilot, or from an individual’s online acquaintances, whether via social media or e-mail, can be great ways of finding reliable help. For good businesses, this has a perk over traditional word of mouth, as the latter is limited to those who live in a given geographical area, whereas online word of mouth can cover much larger areas. Restaurants have a limited benefit from this, depending upon the type of food and whether it’s hot or cold, but are aided by the current popularity of ordering takeout online.
Businesses That Showed Resiliance
A few types of high street shops have proven resilient despite the crisis facing businesses nationwide, including in Essex. Charity shops and betting shops are both on the rise, but their presence cannot mask the tough times the high street generally is facing. Both types of businesses also have their online counterparts, which mean more sales opportunities and the potential for more business rivals reducing custom. When it comes to selecting an online alternative Amanda Evans recommends 888 Casino UK thanks to its combination of a dedicated mobile app, bonuses, and long-established positive reputation. Collectively, this makes 888 Casino stand out from the crowd. Businesses in Essex face the difficulty of competing against such online entities in that the latter will always be accessible at the convenience of the shopper, whereas the former are subject to set opening times and additional costs (rent, heating, lighting and so on) which makes competing against internet firms very tough. And that was before the cost of living crisis, which is also a crisis for businesses, got going.
Evolution and Downturn of the High Street
The high street has been evolving ever since its inception, and recent turns have been some of the swiftest and most remarkable. The creation and then proliferation of the internet provided a rival to businesses and a rival which required no geographical footprint in city centres, neatly sidestepping a lot of costs that brick-and-mortar firms cannot avoid. The pandemic, especially in 2020, saw city centres briefly become ghost towns during lockdowns, which substantially altered shopping habits. While many have returned to pre-COVID-19 shopping ways, others have stuck with online shopping to the detriment of retail in Essex and elsewhere.
Many shops and restaurants have either vanished entirely or relocated to out-of-town shopping centres. However, there are some types that are on the rise. In addition to the aforementioned charity and betting shops, there’s an increasing number of gaming shops on the high street, offering board games and RPGs (thanks in part to major pop culture successes such as Critical Role and, more recently, Baldur’s Gate 3).
Cost of Living Crisis
Inflation within the United Kingdom had been very low for years, just like interest rates, but the economic consequences of Russia’s invasion of Ukraine were profoundly felt with the cost of living crisis. This came into being late in 2021 and saw rising inflation hit double digits, driven by the loss of Ukrainian agricultural products reaching the market. At the same time, the cost of oil rose dramatically as one of the three big oil producers, Russia, was no longer desired as a trading partner, exacerbating inflation even more. To counter this, the Bank of England (having been sluggish to act early) increased interest rates from their long-term low, piling up the costs of mortgage repayments. Meanwhile, pay rises languished far behind the rises in inflation, reducing income in real terms while costs (such as mortgage repayments, food, and fuel) were all on the increase. Even with declines in food inflation month-on-month, the annual rate was still 12.2% in early September 2023. This has proven especially difficult for restaurants, who have to absorb substantial rises in the costs of ingredients while diners have less to spend.
Although often described by the media in a mostly personal way, this is also a cost of business crisis. Higher costs put businesses in the invidious position of either absorbing them and reducing profits (or even suffering losses) or passing them along to customers who have less disposable income and plenty of online alternatives. Across the UK, this squeeze has led to the closure of major retailer Wilko, with over 12,000 jobs lost.
Particular Challenges in Essex
Ann Scott of the FSB (Federation of Small Businesses) said last November, in response to the Autumn Statement of the Chancellor, that its impact was to increase pressure on small businesses in Essex. Scott singled out the reduction in dividend tax allowances as an ill-considered measure as it would hit the owners of small limited companies (a group that was also unable to claim direct support during the pandemic’s height).
In addition, 13 of the Wilko stores closing are located in Essex, which will increase local unemployment significantly.
The cost of living crisis, the loss of multiple Wilko stores, and fiscal measures by the Government aiming to balance the national books but hitting small businesses in Essex hard are combining to make life a challenge for firms in the county.