All of these external factors can have a significant influence on the pressures within organisations.
Whilst the UK did not suffer an immediate post-Brexit slump of the sort some were warning of, commentators are concerned that the signs are now there.
- 16% devaluation of Sterling vs. US Dollar and Euro since Nov ‘15 high
- Inflation up to 2.9% in May 2017 – the highest level of inflation since June 2013
- A forecasted 6% increase in input costs year-on-year
- Retail sales shrink 1.2% in May, wiping 6% from Next and 4.5% off M&S share values, whilst DFS issued a profit warning and the FTSE fell at its sharpest since last summer’s referendum
- BoE MPC: 3 members vote to increase interest rates for the first time since 2011
- Despite this, RBC’s Chief Economist is arguing the next UK interest rate move should be down, because consumer spending has slowed and growing uncertainty will mean business spending will slow
There is now increased uncertainty following an inconclusive UK general election. The election was called after the clock started ticking on Article 50 negotiations, meaning months have been lost in an already tight time-frame. Far from delivering a mandate and more surety, the election has in fact generated uncertainty and neither we as businesspeople, nor the markets like it.
We may very well be entering a phase whereby UK organisations are starting to think more about cost management and effective procurement, right across the entire business.
The trick is to ensure it receives genuine priority; in our experience only with proper strategic intent are these programmes successful. In order to realise their aims and deliver for shareholders, or investors, there must be cross-organisational buy-in.
It’s time to have much more strategic conversations about how your business operates and what it buys from whom. Proactive management of all your costs, by experienced experts, is the only way to do deal with it.
Responsible stewardship of an organisation brings with it an inherent responsibility to staff, fellow directors, shareholders and investors – as well as pupils, parents and patients for that matter – to ensure you are doing the best you possibly can to maximise margin and deliver funds to where they are needed the most.
KPMG’s ‘Expect the Unexpected’ and Brexit reports both warn of increasing costs for organisations and the need to review supply chains.