Traditionally the month of February brings with it the first signs of spring, with the promise of new growth, new life, pollination and aspirations for the future. Yet the first two months of 2023 have been far bleaker than some would have predicted, with little respite in sight.
Reports are emerging that insolvency practitioners are seeing an influx of enquiries. It is clear that businesses are trying to balance the ongoing impact of the increases in fuel costs over the last year as well as those of food and raw materials. A balancing act not helped by the sluggish economic growth seen across the British economy as the UK narrowly avoided going into recession.
Across the region, jobs are at risk, and companies and businesses in various sectors are closing as a consequence of events that have been brewing for some time. Each case is different but there are some recurring themes: recruitment difficulties, the cost of fuel, and the sluggish economy. Either consumers are choosing not to spend their way out of the financial downturn, or, in many cases, they cannot afford to.
Retail: In Bedford, the oldest shop in the town, John Bull Jewellers, which opened in 1817, closed for the last time. The owner has chosen to retire yet there is no one from a younger generation to take over or buy the business. Whilst large shopping complexes have seen chains expand, business in the high street continues to decline, and it is independent traders who are bearing the brunt.
M & Co announced that all of its stores will close. The brand name was acquired by Peterborough based AK Holdings, which also owns Your Clothing, menswear line Bad Rhino, womenswear retailer Long Tall Sally and maternity brand Bump It Up Maternity, but not the physical stores. As a result, all associated jobs will be lost in Sudbury, Stowmarket, Woodbridge, Beccles and Haverhill, as well as in elsewhere in East Anglia and across the nation.
Hospitality: Wymondham’s Green Dragon Pub, a venue that has over 600 years of history and can be traced back to the medieval period, has closed its doors, citing the crisis in the hospitality sector. It is reported that over 90% of hospitality businesses are struggling to recruit. A similar crisis hit the Waggon and Horses in Milton, near Cambridge, which struggled with energy and staffing costs. The British Beer and Pub Association is calling on Jeremy Hunt, the Chancellor of the Exchequer, to introduce measures in his forthcoming Spring Budget to support them.
The harsh reality about energy and logistics
The energy market alone has been so volatile that, between January 2021 and December 2022, 32 energy companies in the UK, including Simplicity Energy, Symbio Energy, Igloo Energy, and, Zog Energy, all of which have at some point been based in East Anglia, have closed. Their customers have been transferred to other companies, and everyone is facing new tariffs and higher costs.
The government is keen to attribute the high cost of energy to the war in Ukraine and the Covid-19 pandemic. However, the haulage industry was hit hard by the shortage of drivers after Brexit. Moreover, lorries continue to be affected by disruptions at customs resulting from our changed trading relationship with the EU, where paperwork adds administrative cost and delays can compromise whole shipments.
Is there another harsh reality here?
Ford’s official statement about Dunton did not specifically mentioned Brexit. However, prior to the referendum, Ford warned that Brexit posed a threat to its UK business. More recently, experts have highlighted the specific risks faced by the British motor industry as a result not only of Brexit but also of the electrification of vehicles.
Elsewhere, based on November 2022 data, 13% of businesses were struggling to recruit workers. The industries with the highest percentage of businesses experiencing worker shortages were Accommodation and food services (35.5%) and Construction (20.7%)
For East Anglia, where agriculture, tourism and food play a large part in the economy of the region, these shortages are concerning. Across the nation, 78% of small and medium businesses are struggling to recruit staff. The ONS report also highlighted the reliance of businesses on foreign markets. In this post-Brexit, post-Covid world, our region, and the country as a whole, are struggling to recover.
There is a common thread here. Sure, businesses can fail, owners can retire, and individuals can change careers and find new jobs in different industries. It is becoming clear, however, that for many years there had been a lack of home-grown skills in key industries. This has been starkly exposed by the departure of the United Kingdom from the European Union, with the loss of free movement of people, goods and services. It will take a while to make up for this lack. So it’s very disappointing that the government has recently kicked into the long grass the work of the Migration Advisory Committee to address visas for workers in shortage occupations.