What does 2010 hold for the UK?

Consultancy

I think with the last 18 months of turbulence and financial crises, not too many people would care to put their reputations on the line predicting what the next 12 months will look like.

For the majority of businesses this kind of analysis is unavoidable and we should try to draw some key threads together. We know that there will be a General Election in the UK and whoever wins it, will need to make huge savings in the public sector and raise tax revenue in order to balance the national deficit.

Although the exact nature of these cuts remains unclear I think we can safely say that 2010 will be an uncomfortable place for many in any part of the public sector (remembering that 1 in 3 people in the UK are directly or indirectly employed by the public sector). As always some departments and services will fare better than others, however, I think that even in the best protected areas, there will be a radical rethink in the way the organisation is structured, funded and maintained. The well-publicised affordability of the public sector pensions provision will become a ‘hot potato’, which will need to be dealt with in the near future.

The second key driver will be the increase in taxation. The new Government will have little choice but to raise more funds through taxation. This may be through a combination of both direct and indirect taxation but inevitably, the UK will become a more expensive place for the individual, and probably for business to exist within.

This kind of balancing of the national finances will prove to be challenging times for many businesses and whilst the corporate strategists are sharpening their pencils and dusting down their flip charts, we know that this challenge will not be the preserve of the large corporate alone.

So with the UK facing a number of challenges, what does this mean for business? Many businesses will report that they have already restructured and rethought their strategy as a consequence of the past 18 months. I think many of these areas will need to be revisited in 2010. I believe that businesses are going to be required too think very carefully about their markets, their competitors and the kind of products and services that are going to allow them to survive and prosper in this unpredictable future. Many businesses will need help in meeting some of these challenges and I think we may well see a different kind of business organisation emerging, with greater connectivity of organic and partnership arrangements, maybe less people directly employed in the traditional sense but more contracted and consultancy services which can be tailored to meet the needs of the organisation and turned on and off as and when required. As an example, I think that the marketing function as an organically owned service will become perhaps unaffordable within the SME sector and an outsourced arrangement may well see organisations being able to reduce spending whilst maintaining or increasing their marketing activity.

Whatever 2010 will bring, I think that most would agree we are facing a tough operating environment. Different businesses will address these challenges with different strategies, but the ones that will survive and prosper will be required to think very differently from the way they have in the past!

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