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Covid-19 has been the most monumental challenge for our society and economy. To mitigate the health crisis, governments around the world sought to keep people apart with the effect being that a large amount of existing economic activity could simply no longer take place, as the ways many of us would meet, work, buy and sell were stopped to bring the virus under control.
As a result, businesses have had to adapt to a period of intense disruption. However, those most adept in their use of digital tools have proven more resilient, finding it easiest to quickly find new ways to organise their business and continue to reach customers in the midst of the pandemic.
Research by Cisco showed that the most digitally capable firms have been able to adapt faster to changing market conditions, seeing revenue growth eight times faster than the least digitally able firms.
In many cases the ability to quickly leverage the use of technology has meant the difference between turning a profit or not. For example, one large retailer saw its monthly sales fall from £650m per month to zero as a result of not having an online store when restrictions hit.
While we look forward to the day that the coronavirus is defeated, new waves of infection across Europe make it clear that we will be living with this virus and its effects for some time yet.
That means we must not just take action to adapt businesses models to a socially distanced economy, but also be prepared to take advantage of emerging consumer trends that are likely to continue even after the pandemic is over.
Already we are seeing these new trends emerging. For example, in the early stages of the pandemic, online grocery shopping doubled its market share; digital-only banking saw a 165% increase since 2019; and the proportion of retail sales made online increased by one-third between January and July 2020.
To build resilience as we continue to battle Covid-19, but also to be prepared to embrace a structurally different economy in the aftermath, we must overhaul our existing business support to help businesses, and in particular small and medium-sized enterprises (SMEs) to adopt innovation and productivity boosting technologies.
Businesses themselves are ready for this opportunity. Polling by TechUK found that 71% of managers and decision-makers across the country believe they will become more dependent on digital technologies as a result of the pandemic, while research by Sage found that 71% of SMEs believe that greater technology use will increase their profitability.
There is a lot to be gained from supporting SMEs to realise their ambitions to invest in tech, with Sage’s research showing that fulfilling these digital ambitions could deliver £325bn in additional SME revenue, increase economic output by £145bn and support 2.7 million jobs across the UK.
However, the economic impacts of Covid-19 threaten to derail this opportunity, with one in two businesses saying that they have no cash to invest.
The upcoming Whitehall spending review presents an opportunity to support businesses, boost economic resilience, and prepare the groundwork for the recovery by overhauling business support to help SMEs adopt the new digital tools they believe will help.
TechUK is therefore calling on the government to reduce the financial barriers to digital adoption, by expanding financial support for SMEs to help reduce the costs of adopting digital technologies as part of their coronavirus recovery.
The government should also seek to create a “chief digital officer credit” – a redeemable tax credit against advice and support for SME leaders to identify and adopt the business technologies that will work for them, potentially increasing the annual revenue of each SME by £262,000 per year.
The reality is that we simply cannot wait - there is a moment now to begin building a better future based around a resilient productive economy that supports sustainable livelihoods. However, if we don’t act fast, we could lose this moment and the benefits that it would bring.