See the big picture
Business that prepared themselves for a recession in 2023 that, thankfully, didn't materialise, may be in a strong position to explore opportunities in 2024.
Head of Mid-Corporate, London and South East, Barclays Corporate Banking
Although there is more stability as we head into 2024 compared to this time last year, businesses across London and the South East still face a fair amount of uncertainty stemming from ongoing geopolitical tensions, economic uncertainty – particularly regarding interest rates – and the political upheaval of the upcoming general election.
I get a real sense of ‘wait and see’ from businesses as they look ahead, which is likely to put the brakes on some big investment decisions. I think we’re unlikely to see a substantial increase in M&A activity, with the prospect of an election likely to dampen trade deals, but there could still be interesting acquisition opportunities for some as other business owners re-evaluate their own longer-term plans.
So, 2024 may be a good year for businesses to take the time out to refocus on their fundamental ‘building blocks’ to prepare for future growth, whether that’s rethinking their purpose, vision and values, redoubling their ESG efforts, or creating the right working culture – these things are all so easy to put off.
Despite the high inflation we saw last year pushing up costs across the board, many of the businesses we deal with say they haven’t fully passed them on to customers. Instead, given the tough economic climate and cost-of-living crisis, many have chosen to absorb some of the blow and sacrifice margins rather than lose customers.
Although inflation is falling, it’s still there and one of the big questions for 2024 will be how much longer businesses can sustain this pressure? While many have managed so far, at some stage they’re going to want to rebuild their margins and that could mean yet higher costs for consumers.
At the same time, there will still be opportunities to drive growth and profitability, particularly for those businesses that can find their niche in supporting the transition to a more sustainable, lower carbon economy, of which I know London and the South East has so many great examples.
It’s still pretty tough out there, but the economic data suggests there’s been no significant slowdown. 2024 is set to be a stable year in which businesses aren’t fighting for survival, but where they’re also not growing so rapidly.
Head of Mid-Corporate for London and South East
Throughout 2023, we saw businesses across the region grappling with wages outstripping consumer price inflation as they struggled to recruit staff. I think these challenges are likely to persist into 2024: high employment levels will continue to drive competition for quality candidates, particularly in the professional services sector in London, which has previously benefitted from such a strong inward flow of talent from the EU. Businesses will need to think long and hard about their recruitment and retention strategies this year.
Another trend that I see persisting throughout 2024 is the continued morphing of hybrid working. As the world emerged from the Covid-19 pandemic, many firms scrambled to offload their real estate as it felt like working in the office was a thing of the past. But from what we see now, this is starting to swing back the other way, with many of our clients now expecting staff in the office at least three days a week. It’ll be interesting to see how this unfolds, and whether ‘working from home’ will once again become the exception rather than the norm.
Consolidate those all-important ‘building blocks’ of growth, whether it’s the process, people or places needed to build a sustainable business future.
Focus on costs and margins but always be alert to new market trends or deal possibilities, particularly around the specialist ESG-related business ecosystem.
Given the ever-growing threat of cyber crime, businesses should stay super-alert to scams, and equip employees with appropriate skills to help protect their companies, particularly against the increasing sophistication of social engineering fraud.
Keeping fraud front of mind
Fraudsters are as active as ever, impersonating our colleagues and attempting to defraud our clients. To help protect you and your business we have a wealth of resources available. You can view our quarterly fraud webinars and take a look at our other educational resources on our Fraud Protection Hub.
To discuss your business requirements and how Barclays can support you, contact us today.
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