Due to recent global situations which have caused increased economic uncertainties for what the future state of the country’s economy will hold. Past policies implemented combined with current sanctions caused by Russia and Ukraine have increased the cost of living causing inflation levels to rise. This is due to rising household bills and issues with global supply chains. This has not only affected consumers but also businesses, increased fuel and food prices began to rise while consumer and business spending power has declined .
These variables have caused increased levels of uncertainty raising questions on what is to come, as many business decisions are made through expected outcomes with most economic analysis predicting an all-time high inflation rate of 17% in 2023 many businesses are questioning the validity of investing in future digital transformation efforts. With all this negative talk about the future state of the UK’s economy a question raised is will this uncertainty cause businesses to delay in digital transformation efforts? And if so, what are the positive and negative impacts caused on this decision.
Digital transformation essentially is the process of using digital technologies to create new or modify existing business processes, culture, and customer experiences to meet changing business and market demands. This reimagining of business in the digital age is called digital transformation. Therefore if a company invests in a form of digital transformation this will lead to an increased and more streamline business process, future proofing your company and making it more efficient. This process requires high amounts of investment therefore raising the concern on the future state of the economy. As seen on the graph below digital transformation trends interest over time has increased rapidly showing its popularity through the benefits that it delivers.
An Economic uncertainty causing delayed efforts
Economic uncertainties can cause many delays in businesses as they are caused through negative predictions of the economic future. There are many reasons in which economic uncertainties may arise from a recession, a decreasing GDP and inflation. So, what is the main current reason for economic uncertainty, and will this lead to a delay in Digital Transformation?
The UK is likely already in a mild recession, with growth leading towards a negative end of year, the British Pound is declining rapidly, with rising borrowing costs exposing vulnerabilities. From Q1-Q4 the UK has already fallen over 1% in their GDP with predictions confirming a continuing declining trend. If there is no government intervention at the start of 2023 to freeze energy bills it is predicted that inflation will increase to 17% compared to 10-13% if the government intervenes. This combined with the fact that the UK economy has shrank 0.6% in the span of only one month in June creates high levels of uncertainty as there are still no strong indicating factors that the economy will improve.
It is also possible that the UK will experience 0% GDP growth in 2023 leading to a 15-month long recession beginning later this year decreasing our GDP by 2% over the 1% already lost. These harsh hits to the UK economy and the timing of the elections means that the future of the UK economy lies in the hands of the prime ministers’ decisions. Investors showed a slight preference to Rishi Sunak whose approach to the monetary policy suggests that it is possible that the Bank of England mandate will be maintained. Although now, Liz Truss has taken the position therefore more uncertainty has risen on the future economic health of the country.
This is also ties into decreasing hiring rates with July showing the slowest increase in the number of permanent jobs filled for 17 months, recruiters have also shown being more tentative over hiring new staff. This going back to Rishi Sunak’s plea to maintain the Bank of England’s mandate as the decreased in hiring is primarily caused by the predicted recession coming later this year with banks raising their interest rates from 1.25% to 1.75% in a bid to curb soaring prices .
Due to current circumstances shown in the analysis it may seem beneficial to delay in digital transformation efforts through uncertainty on what the future might hold creating a high-risk situation for businesses interested in this venture.
A Low/moderate economic uncertainty prompting no delay
Through the uncertainties shown which may lead to high-risk investments into Digital Transformation there are many positive outcomes that come when investing into this venture as causing more good than harm in long term rather than short term. Due to there being more long-term changes within digital transformation it may be in question that even with this high uncertainty, investing into Digital Transformation may be favourable. So, is it worth ignoring current uncertainties, look at positive aspects of our economy and invest in Digital Transformation as soon as possible?
Recent productivity changes in UK businesses may be one of the great reasons why future uncertainty may not affect current transformation within businesses. As of late, through the improvement of the sectoral productivity in some regions to at least the industry’s median levels have added a total of £71.6bn into UK’s output. This combined with a 3.1 to 3.6% increase in UK’s GDP growth this year shows that there is a possible positive outcome to UK’s economy. With this increase surrounded by all the negative uncertainties how will this future growth happen?
One of the main ways in which this can be done is by embracing the full benefits of the digital age. By embracing this digital age to its fullest businesses can implement digital transformations that streamline business processes such as:
- Upgrading internet connectivity speeds – Improving cloud services within businesses
- Backup internet connections – For Disaster Recovery
- Upgrade internal network equipment
- Invest in Cybersecurity – Using IT Support services
- Outsource IT Consultancy to educate employees to increase security
- Attain Cybersecurity accreditations
- Use Cybersecurity Software – Mail filtering and Antivirus
- Upgrade Servers
- Upgrade Software in Computers to increase efficiency
- Cloud migration for data backup
- Microsoft Teams Optimization – For a more streamline process during meetings
There is no quick fix for these tough times that the UK is facing leading to high levels of uncertainty not only in a national level but also global. By fully embracing these benefits given through this digital age that we are in this can lead to a more sustainable economy and a brighter future.
At Texaport, we understand the importance of these advancements, and we work with our clients to put a reliable system in place to improve their business efficiency. Our team has a wide range of IT knowledge and remains acquainted with the movements in the IT industry. Find out more here.
