PROFESSOR DYLAN JONES-EVANS

Since the UK’s first Indian-origin Prime Minister was asked to form a government by King Charles III two weeks ago, many are still trying to work out how Rishi Sunak will work with his colleagues to close the massive hole in public finances and reduce the impact of increased energy prices. The forthcoming Autumn Statement has not been made any easier by the Bank of England’s decision to raise interest rates to 3% last Thursday. The rationale for this increase, as has always been the plan from Threadneedle Street, is to bring inflation under control when there are fears, if the issue of rising prices is not addressed, that it may become embedded into the economy with catastrophic results.  However, this decision will not help those many households and businesses that, in the short term, will face a rise in borrowing costs at a time when other financial pressures such as wage costs and energy bills are also increasing. The Government will rightly argue that it is the job of an indepe...

It would be an understatement to say that the last three years have been challenging for businesses in the UK. Brexit, the Covid pandemic and the war in the Ukraine are just three occurrences which have had, and will continue to have, significant long-term implications for those running companies across the country.  These ‘one-off’ events are compounded by other longer-term trends which Chief Executive Officers (CEOs) must build into their company strategies going forward, including climate change, the continuous search for talent and the impact of new technology on the way they do business. Understanding how business leaders are reacting to the changing global economic situation is the focus of the latest 2022 CEO Outlook from global accountants KPMG which examines the perspectives of 1,325 global CEOs to provide a detailed insight into how they view the business and economic landscape changing over the next three years. In terms of the economy, the survey suggests that 85% of gl...

In his sublime 1997 book on the fate of the fishing boat Andrea Gale, the author Sebastian Junger defined a “perfect storm” as a rare combination of events or circumstances that results in an unusually bad situation.  This term would not be out of place in describing what is currently happening to the UK economy which is being battered on so many fronts with little respite in sight. For example, the war in Ukraine has had an unexpected impact on energy bills in Europe due to the curtailing of exports from Russia which, last year, was responsible for supplying 40% of all natural gas to the European Union. Whilst the UK is not dependent on Russia for its energy needs, the scramble by other countries to find alternative sources has resulted in higher prices globally which has impacted on the fuel imported by the UK with normal suppliers struggling to meet demand. There have also been considerable supply constraints globally which have been driven by manufacturers struggling to get the...

  So what are the skills that employers need in the next decade? That was the question posed by the UK Government’s Department for Education and the Skills and Productivity Board to Warwick University’s Institute for Employment Research and the think-tank RAND Europe. Their recent research report is an important read not only for businesses in the UK that are facing a talent shortage but also for those policymakers who seem unable or unwilling to consider new ways of delivering the digital skills that are needed across all industries in order for them to remain competitive. As with other studies examining the future needs of the labour force, the vital importance of digital skills is again highlighted as being key to the competitive advantage of organisations in a range of sectors. These skills include knowledge of artificial Intelligence, automation of processes, 3D printing, cloud-based computing,  information technology and communications systems, and the Internet of Thing...

The importance of family businesses to the UK economy should not be underestimated. In every town and city, family-owned firms are making an impact on wealth creation and employment in their local communities.  The contribution of this important sector is highlighted in the latest “State of the Nation” report from the Institute of Family Business (IFB) Research Foundation. Undertaken in partnership with Oxford Economics, the study presents key insights into the characteristics and challenges facing the family business sector in the UK in 2019, just prior to the Covid pandemic. So what the report tell us? First of all, family owned firms - defined as those companies where a family owns over 25 per cent of equity - made up 86% of the 5.2 million businesses in the UK in 2019, a slight decline on the previous year. Despite this, they remain a key source of jobs accounting for 40 per cent of all employment in the UK economy (or 14.2 million people) and whilst overall private sector empl...

Whilst change is usually a long drawn out process that can take years if not decades to take effect, there is a revolution in the development of innovation that is slowly but surely changing the way that economies achieve competitive advantage in a rapidly changing global business environment. During the late 19th and 20th centuries, the process of innovation was driven by businesses generating product ideas internally which they would then develop, manufacture and sell themselves.  As a result, they gained competitive advantage through  heavy investment in research and development (R&D) and hiring the brightest people to get to market first. Once this was done, companies would then protect their new products through aggressively controlling intellectual property to stop anyone else exploiting it. This would then result in greater profits which could then be reinvested in more R&D and hiring more staff to develop more new products, thus creating a virtuous circle that ...

As the economy emerges from the slowdown caused by the Covid-19 pandemic, there continues to be skills shortages in the UK Economy. That is the message from the latest Business Barometer published recently by the Open University in partnership with the Institute of Directors.  Through surveying 1,500 senior business leaders across the UK last month, it focused on examining a range of issues including recruiting due to skills shortages, recruitment spend, training intent and ability, and future challenges. The results are fascinating and, more importantly, a significant wakeup call to politicians and policymakers at both a national and devolved level on what is needed to ensure that we have the skilled people in place to support future economic growth. For example, the number of business leaders reporting that their organisation is experiencing a skills shortage has increased since last year from 56% to 61%. More relevantly for the UK economy, the majority also believe that these sk...

  As you read this, I will be somewhere in a field on the Glan Usk estate just outside Crickhowell listening to amazing music, drinking Welsh beer and eating incredible street food. Yes, after a postponement last year due to the Covid-19 pandemic, I will be again be making the annual pilgrimage to the Green Man Festival with 25,000 other music lovers to enjoy four days of brilliant bands in the Powys countryside. Given that the last band I saw live was the Selecter at the Tramshed in Cardiff back in October 2019 and I had around fifteen gigs cancelled in 2020 due to the Covid pandemic, this is going to be an experience that I (and many others) have been counting down to over the last few months as Covid restrictions have been slowly relaxed. However, the absence of festivals is not only about the live music that we have all missed but about the economic impact that their closure has had since the shutdown in March 2020.  As the recent report from the House of Commons Digital, ...

Over the last seventeen months, the closure of the UK economy which resulted in the largest economic slump for over 300 years should, by all logical assumptions of the impact of such events, have resulted in massive negative changes in household incomes and unemployment. Yet the annual report from the Institute of Fiscal Studies on “Living Standards, Poverty and Inequality in the UK” shows that contrary to expectations, unemployment, real earnings growth, arrears on household bills and the use of foodbanks were actually at similar overall levels as compared to the pre-pandemic situation for the UK as a whole. As the authors note, this is an “astonishing outcome” given what has happened to national income since March 2020 but also highlights the positive impact of government policies such as the furlough scheme and the uplift in Universal Credit during this period.  For example, there has been very little rise in those out of work with only 300,000 more people being unemployed or ec...

  As the UK and the devolved administrations slowly start to release businesses from the lockdown imposed at the end of last year, it is worth examining the current state of the UK business community and the ongoing impact of the coronavirus pandemic on the economy.  The latest analysis from the Office for National Statistics of responses to their voluntary fortnightly business survey shows that despite restrictions, the proportion of UK businesses currently trading has increased from 71% in early January 2021 to 75% in late March 2021. Whilst this seems positive and is similar to the level seen last July, it is considerably lower than the 84% that were trading back in December 2020 prior to new Covid-19 restrictions. Of course, that varies massively by industry and businesses based in other service activities – such as hairdressers and other beauty treatment activities – had the lowest percentage of businesses currently trading at 17% as a result of the required closures due ...

  As we bid good riddance to 2020 and look forward with optimism to a very different year thanks to the recent approval of the Oxford vaccine, the performance of small and medium sized enterprises (SMEs) will be key to any economic recovery.  That is why the recent report from the Enterprise Research Centre - The State of Small Business Britain – is an important examination of the impact of Covid-19 on businesses but also, more importantly, examines the challenges that policymakers need to focus on in 2021. The first key issue is that of digitisation and it is not surprising that the report notes a shift in the adoption of advanced technologies with around half of SMEs introducing new digital technologies as a priority in the last 12 months. In addition, two out of five stated they had made some changes in their use of digital in response to the pandemic, with many adopting technologies they had never previously used.  Obviously, it could be argued that whilst this trend...

Yesterday morning, I listened to a webinar launching a new report by the National Centre for Universities and Businesses (NCUB) which focused on how the power of research and innovation could be harnessed to develop the UK economy.  With speakers including Anne Glover (co-founder of venture capitalists Amadeus), Lord Bilamoria (President of the CBI) and Louise Richardson (Vice Chancellor of  Oxford University), the hour and half was a tour de force on how the UK can develop a policy approach that will not only help us to recover from the Covid-19 pandemic but also on how universities and businesses can work together to seize the opportunities of the fourth industrial revolution. The report itself made a series of recommendations which need to be taken seriously by the UK Government over the next few months. Not surprisingly perhaps, one of the key proposals was for the refreshment of its Industrial Strategy which, given that it was published in 2017, may not be fit for purpose...

When I undertook the Access to Finance for SMEs review for the Welsh Government seven years ago, the most invaluable source of data for the investigation was the SME Finance Monitor.  The information gathered by the largest study of its kind in the UK not only provided accurate and timely data on how SMEs were accessing funding from a range of different sources but was also a useful predictor of the state of the small firm community. Given this, the latest report from the monitor on how SMEs have been impacted by Covid 19 is an invaluable indicator of what has been happening to entrepreneurs across the UK during the recent pandemic with 4,511 interviews conducted between April and June 2020. Not surprisingly, it found that 87% of SMEs had reported being negatively affected by Covid 19 with the biggest impact being a reduction in sales of more than 50%.  In fact, six out of ten SMEs were expecting this lower turnover to continue over the next few months with the biggest impact ...

This week’s economic data confirmed what everyone already knew several weeks ago namely that the UK economy had entered a recession during the second quarter of 2020, shrinking by over 20 per cent in the period April to June of this year.  Comparisons with other countries suggest that this could be the worst economic hit for any major economy from Covid-19 during this period although it is fair to say that the UK was also one of the last countries in Europe to lockdown its economy. As expected, the biggest impact has been on the accommodation and food services with estimates that output had shrunk by 87% across the three months with other statistics showing that only a quarter of businesses in this sector remained open as compared to four out of five firms in the rest of the economy. In addition, labour market data also showed that over the same period, employment in the UK fell by the largest amount since the last recession with the number of people in work decreasing by 220,000....

As this column has suggested time and time again over the last three months of lockdown, entrepreneurs should be at the heart of any post Covid-19 economic recovery plan developed by both the Welsh and UK Governments. Research has consistently shown that firms less than five years old create all net jobs within an economy, especially at a time of recession when larger firms are shedding tens of thousands of their employees.   They are agile, innovative and will drive the creativity and energy needed to transform an economy that will be struggling to find its way after the Covid-19 pandemic. They are also the glue that keep communities together and, as we have seen during the last twelve weeks, have been able to pivot their businesses to continue to support their customers locally. So what should be done to ensure that our economic recovery is being driven by those talented individuals who take the risk and spot the opportunity to start their new business? More importantly, how...

During the last global recession of 2009, the group of individuals most affected by the labour market conditions at the time were people aged between 16 and 24, with youth unemployment in the UK going above one million during that crisis.  It was a pattern repeated in almost every nation in the world and whilst the global economy recovered, it would seem that young people, as a group, remain a vulnerable part of the jobs market.  According to the International Labour Organisation (ILO), 13.6% of all young people (267 million) were not employed or engaged in education (or classified as NEETs) at the end of 2019, a far higher figure than experienced before the last financial crisis over a decade ago.  The ILO has also estimated that more than one in six of those young people working prior to the Covid-19 outbreak are no longer in jobs and those employed have had a 23% reduction in their working time. Within the UK, data suggests that there is still a significant group of yo...