Rishi Sunak became the latest UK Prime Minister when the former Chancellor was appointed on the 25th of October. He replaced Liz Truss, who served for just 45 days, making her the shortest-ever serving Prime Minister in the history of the UK. Truss most notably caused a huge drop in confidence in the markets, leading to the pound dropping to new lows against the US dollar and the Euro.
Since the appointment of Sunak, the markets have rebounded somewhat, but it leaves the question of what’s next for the British economy and UK businesses. The general consensus seems to be that the country is heading for further economic problems, with Russia’s aggression in Ukraine as well as the aftereffects of the pandemic being some of the leading causes.
As the Chancellor of the UK, Rishi Sunak left a relatively good impression, despite the difficulties of operating as part of Boris Johnson’s cabinet. He formerly worked in banking and fund management, meaning he’s probably one of the most qualified options to lead the country out of the issues. However, this likely won’t be enough to avoid an economic downturn and eventual recession.
Recession Proofing UK Businesses
The Bank of England recently announced that Britain’s economy has entered a recession as a result of raising interest rates to combat the worst inflation in 40 years. A further 0.1% reduction in GDP is now anticipated in the third quarter due to a decline in consumer expenditure and lower activity in manufacturing and construction. This follows a 0.1% decline in GDP in the three months to June as the economy sputtered into reverse.
While a recession can be damaging for UK businesses, there are ways to recession-proof your business. Taking control of your company’s cash flow and ensuring that there are no unnecessary expenses is one of the most important steps you can take. Aside from this, you can also look into ways to innovate and maximise the potential from the available resources.
Courses on strategic innovation can provide you with the skills and knowledge you need to help your company survive even in the face of economic uncertainty. While most businesses struggle during recessions, it can be a great opportunity to develop your competitive advantage and ensure your company is stronger in the future.
What is the Outlook for the UK Market?
After Liz Truss’ disastrous mini budget crashed the value of the UK market, the appointment of Rishi Sunak thankfully helped to settle things somewhat. After Rishi Sunak was appointed prime minister, U.K. assets increased once more, reversing at least some of the damage done by the former Prime Minister. British stocks were neutral, the 10-year government bond rate in the UK crept lower, and the pound rose versus the dollar.
The tax cuts proposed by Truss have been shelved, and with Jeremy Hunt’s appointment as Chancellor in place of Kwasi Kwarteng, market analysts have forecasted that the pound sterling should stabilise once more. Falling energy prices have also helped to calm the markets and should help reduce the cost of living crisis. It remains to be seen whether the new PM will be able to lead the country out of economic hardship.
Although big economic changes could still be on their way, Sunak hopes to bring a new era for UK financial services. He’s previously spoken positively about cryptocurrency, and there could be plans to focus on making the UK a hub for cryptocurrency development and innovation. The UK crypto industry has struggled under regulations in recent years and relaxing these could help boost the country’s economy.