Recently the Office of National Statistics announced that the UK unemployment rate was sitting at 5.6%, increasing for the first time in two years.
Roughly 1.85 million people in the United Kingdom are sitting without jobs whilst the average rate of pay increases are rising at its fastest rate in the last five years.
This is following the announcement by the Bank of England’s Governor, Mark Carney, stating that the point at which interest rates will rise from their record low of 0.5 per cent is “moving closer”. However, with the number of people claiming benefits rising from 7 000 to 804 200 in June, an interest rate hike does not seem imminent. The bank will be keeping an eye on pay increase trends in the upcoming months.
Leading up to the announcement, the unemployment rate had dropped to 5.5 per cent in the three months to March, taking the total of unemployed people to 1.82 million. This was a seven-year low for the UK unemployment rate.
Economic stability is set to be on shaky grounds in the next few months, as survey data predicts an increase in economic strength and a further November pay rate hike. For businesses this instability hinders productivity and growth. As David Kern, chief economist at the British Chambers of Commerce, confirms; “Businesses need a continued period of stability in order to deliver the growth and prosperity that we want to see”.
Such economic uncertainty can have negative effects on the financial integrity of a business leading into 2016. Businesses need to take steps towards securing their financial security and viability through tight controls of financial predictions and calculations. Startups are especially at risk with less capital and expertise, economic changes such as the ones predicted can have harmful effects on their financial forecasts.
Research by Startup Britain revealed that 46 per cent of government-backed start-up loans were given to those who were unemployed. Thus leaving Britain with a much larger amount of newly fledged and growing businesses. LSA Systems, a partner and developer of Sage Software, have seen the benefits of what software such as Sage can have on newly formed businesses who lack the financial knowledge and security of more experienced companies.
By implementing adequate procedures and programmes, new businesses can ensure that during possible economic instability, their business has the right financial support and monitoring. Sage Software allows companies to implement bespoke financial procedures, working towards their goals and objectives. Ensuring a tight control over financial budgets, goals and forecasts.
As Kern states, the current economic situation “is a reminder that our recovery is still fragile and that further measures are needed to nurture economic growth”. It is through maintaining a tight hold on financial budgets and forecast that many UK businesses may see a positive growth during this period.