The world is crazy right now. We all know that. COVID-19 has already had a pretty devastating effect on economies and job markets around the world, and here in Blighty we’re no exception. We’re being warned to prepare for the worst recession in history. And, to put it bluntly, it sucks and nobody really knows what’s going to happen.
The return of lockdown measures means more businesses are being forced to close. That’s on top of the first round of casualties from the first lockdown. Online retail may have boomed, but the majority of other businesses have taken a significant beating financially and emotionally.
With unemployment and bankruptcy rates soaring, what can we expect in the coming months and years? Is there a light at the end of this tunnel of doom and gloom? We take a look at what the impending recession could mean for the UK and our job market.
What is a recession?
Good question. We’ve all heard the term ‘recession’, but what does it really mean? Put simply it means the economy is in decline, and has been for at least six months (or two consecutive financial quarters).
In normal life, a healthy country’s economy is expected to grow and its citizens, on average, get a little richer as the GDP increases. But a recession is the opposite of that. The economy contracts and the GDP falls.
When a recession continues for long enough and the effects worsen, it’s called a depression. You may have heard of the Great Depression, which started in 1929. That was a recession on steroids.
What does a recession mean for me?
A recession isn’t just about the GDP – which, in itself, is often hard to grasp in real-life terms. Recessions cause a structural shift in the economy, causing a reduced demand for goods and services on a national scale.
The results? Businesses collapse, redundancies increase, and salaries fall. With fewer positions available and more people looking for work, unemployment skyrockets and it becomes a lot harder to get a new job. Yeah, it’s pretty rubbish.
2020 job losses in the UK
During the first lockdown in the UK, we would’ve been saying that the good thing is that most people were furloughed so the job ‘loss’ would be temporary and then we’d go back to a vibrant workforce. But things haven’t quite worked out like that.
The furlough scheme has helped, but some businesses just couldn’t survive and have had to make permanent redundancies or shut down completely. We’ve already seen tens of thousands of job losses in the UK and it seems like we’re hearing of more large-scale redundancies on a daily basis.
Big companies like Shell, easyJet and Cineworld have already announced major redundancies and they keep coming. And not to be too depressing, but a study done by the Institute for Social and Economic Research at the University of Essex has predicted we could be facing a total of over 6.5 million jobs lost due to the economic fallout of COVID-19.
The biggest losers
Sadly we’re not talking about weight loss champions. In a recession there are always industries that are worse hit, and true to form economic effects of COVID-19 have certainly been harder for some.
Quarantine and social distancing have drastically changed the way we live and, consequently, massively affected the services we use and products we consume. The biggest sufferers from this shift in behaviour so far have been:
Live music and performance arts
Are there any winners?
Although it might sound like it, not everyone will be facing complete financial ruin because of the recession. In tough economic times, there are always some who will find they flourish.
Despite retail being one of the worst hit, online retail and delivery services saw a huge rise in popularity during lockdown. Being stuck at home we all bombarded Amazon, eBay and other online stores for constant purchases – which led to a huge demand for delivery folks.
Web design and digital support services have also seen a positive impact of the online boom. Many companies who didn’t take their online presence seriously before COVID-19 have realised they need to give their websites and online platforms a bit of TLC and are needing the help of digital professionals.
Some freelancers are also noticing that they’re workload has increased during lockdown. With permanent headcounts being slashed the idea of using freelancers who can work on an ad hoc basis has become much more appealing. Though this effect is sporadic and dependent on industry demands.
Recession-proof jobs (sort of)
OK that title is a little misleading. There are no jobs that are 100% recession-proof. But now that we have your attention, there are some jobs that are generally less affected in a recession.
Medical professionals (including vets)
Teachers and education professionals
IT and digital support teams
Mechanics & vehicle repair
Tips for launching a new business in a recession
We’re not gonna lie, launching a new business is a risk at the best of times so a recession won’t help. But that doesn’t mean you should hide away and not launch your business. You just need to take some extra precautions, do your homework and be extra aware of the economic landscape you’re entering into.
Here are some of our top tips if you’re launching a business or plan to in the near future:
Do lots of research. And then do some more. Understanding your target market, potential customers and the state of the economy is more important than ever. Find your niche and identify the solution you’re offering.
Be ready to pivot. Again, something you could say is always important for a new business. Be ready to react to shifts in customer demands, the economic environment, or social change. Keep up-to-date with the news and make decisions for your core business to adapt to the changing landscape.
Start small. Now isn’t the time to be jumping into huge ambitious ventures or racking up lots of business debt. Take it slow and test the water on a small scale. If things work out then start scaling your business at a moderate pace.
Secure funding. This is always important but even more so in the face of a major recession. Get money in the bank before you start spending it. And when you do spend, make sure every penny is justified for essential business growth.
Be kind to yourself. A global pandemic, a widespread recession and launching a new business are three major events to have to deal with independently, let alone all at the same time. Just getting out of bed is an achievement. So look after yourself. Eat well, get a decent amount of sleep, exercise regularly and make sure you get some ‘you time’ every day. And if it all gets too much, take a breath and meditate – it’s life changing!
If you’re looking for inspiration for a business idea, take a look at our top 5 new business ideas post-COVID. Or if your business has suffered during lockdown and you need financial support, check out our guide to post-COVID financial support for small businesses.