The mild recession in 2023 is expected to end early in the new year, with the UK recovery showing even stronger growth than previously reported. The UK economy grew by 0.7%, 0.1% higher than previously reported.
According to Sky News, this growth is being driven by the services sector, which accounts for 80% of the economy. Financial markets are also expecting interest rates to be cut in August and September.
With this long-awaited growth finally coming to light, it begs the question: How can startups maintain this upward trajectory?
What does this mean for startups?
In the UK, a number of factors are helping to brighten the economic outlook: Taylor Swift’s tour is expected to bring millions of pounds into the economy, while good weather and an increase in sporting events are providing a major stimulus to economic growth.
Indeed, retail sales rose 2.9% in May, beating expectations. The Office for National Statistics reported particularly strong increases in sales of furniture and clothing. Online retailers also reported a 5.9% month-on-month increase in sales.
UK inflation has fallen to 2%, in line with the Bank of England’s target, raising expectations of interest rate cuts in August and September.
Economists point out that falling inflation rates are a major contributing factor in consumers becoming less frugal, and predict that excitement around upcoming elections and sports could also influence spending behavior.
How can startups sustain this growth?
Start-ups and businesses are vital to the sustained growth of the UK economy and with consumer spending on the rise, it’s vital that businesses jump on this societal trend and seize the opportunity to innovate and increase revenue.
There are many ways that new and established businesses can contribute to sustaining economic growth.
Innovation and New Market Entry
Startups often introduce new solutions or ideas into existing markets, thereby disrupting them and sometimes creating new ones. Take the ride-sharing apps that challenged and changed the taxi industry.
Startups and companies can also innovate by improving existing products and services to make them more efficient and easier to use. Developing new product lines and investing in research and development helps companies stay competitive and attract new customers.
Job creation
Startups and corporations can contribute positively to economic growth through job creation. As businesses grow and expand their operations, opening new branches or launching new products, they need to hire talented people to drive the company forward.
Creating job opportunities has an economic ripple effect, because growing businesses contribute to the economy through taxes and other means, and new employees can use their earnings to put resources back into the economy.
Export of products and goods
Companies that export their products make a big contribution to the UK’s trade balance, which compares a country’s exports (foreign currency received) with its imports (money spent) and a positive balance is generally a good sign of a stable economy.
Trading internationally allows start-ups to reach a wider range of customers and diversify their revenue streams, reducing their reliance on the domestic market, while exporting their products enhances the UK’s long-standing reputation for innovation and producing high-quality products and services.
In conclusion, as the UK’s economic outlook brightens and generous consumer behaviour boosts business revenues, it is in start-ups’ best interests to ensure they are positioned to make the most of this opportunity. Start-ups can contribute to sustained economic growth through innovation, job creation, exporting goods and entering new markets.
