CBI: Recession a 'catalyst' for new business

Monday 23rd November 2009

As the CBI (Confederation of British Industry) gathers for its annual conference, a report from the organisation has claimed the recession has become the catalyst for new business.

The report highlights four area of UK business where new ways of working could develop because of the downturn, as business leaders and politicians meet to search for a way out of the recession at the CBI conference.

Speaking at the conference today, prime minister Gordon Brown said, "Britain must be competitive in the global economy," while Liberal Democrat leader Nick Clegg used to micro-blogging site Twitter to say he would be outlining how his party would "fix the British economy".

Launching its report 'The Shape of Business - The Next 10 Years', the CBI said the recession and credit crunch had become "the catalysts for a new era". The report's four areas outlined as places where fresh approaches would develop because of the downturn were:

Businesses do not see credit terms falling back to pre-crunch levels and, having become wary of higher debt levels, firms will look to alternatives to debt-driven growth to protect investment and innovation. More financing options will be created and deployed.

Companies will reorganise and re-examine their approach to working with partners - from suppliers to universities, and even competitors. Ongoing concerns over a 'domino effect' of supply chain failures and issues around trade credit insurance will compel firms to forge more collaborative supplier relationships.

Sustainability and ethics will become more integrated into the business model. Firms will seek to improve accountability and corporate citizenship further to attract and retain customers and staff.

A more flexible workforce will evolve, assisted by developments in technology and training, and building on the spirit of collaboration between employers and staff which has grown over the recession. For some firms that might mean a smaller core workforce and a larger 'flexiforce'.

Richard Lambert, CBI director-general, said: "We may be at the start of a new era for businesses, in which attitudes to finance and to corporate leadership are changed for a generation by the shock of the past two years.

"What we now need is a more balanced, less risky pathway to growth – one in which the short-term returns may be lower, but the long-term rewards for management success will be a lot more sustainable and secure."

While John Connolly, senior partner and chief executive of Deloitte UK, added: "We can recognise that many businesses have proven resilient to the effects of the downturn: profitability has taken a knock but the impact has been less pronounced than might have been expected.

"Corporate insolvencies are running at significantly lower levels than the recession of the early 1990s and unemployment, whilst still growing, is not as high as some people feared. The route to recovery is sure to present challenges, but UK business has shown it has the ability to respond with imagination and flexibility."

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