Five things businesses can expect in 2021




Given everything that’s happened in 2020, it’s anyone’s guess what’s coming down the line in 2021. But there are five main issues we know, that are almost certain to impact businesses across Europe next year.  





While, right now, the headlines are all about Covid-19, before the global pandemic hit, it was all Brexit. And that hasn’t gone away. On January 31st, the UK is set to leave the EU and, as yet, there is still no deal. Anything could happen between now and then, but whether it’s a no-deal or the parties come to some arrangement, there are sure to be serious ramifications for businesses both in the UK and the rest of Europe. Keep abreast of developments and begin putting contingencies in place on what you can plan for. 





As a result of Brexit – the UK leaving EU, means that the EU will lose a major contributor. The remaining 27 states will have to increase how much they pay into the central pot in order to balance the books – which means governments will have to find extra cash somewhere. Making up this shortfall could mean extra taxes on businesses. Again, we still don’t know all of the details and will have to wait and see how the EC reacts, particularly with the ramifications of the current pandemic. 





As the second wave of Covid-19 is here, once again businesses are being locked down all over Europe. Without a doubt, there will be casualties as many go to the wall, despite governments bail out schemes to keep companies operating and employees paid.  

However, when the Covid-19 crisis finally ends, there’ll be a price to pay in terms of the debt left in its wake, along with a high probability of recession. Many businesses will be looking for handouts and funding to get back up-and-running. But, an even worse scenario could await in the early months of next year in the form of a third wave of the disease. 



Work from home is here to stay 


Coronavirus lockdowns saw more companies than ever implement WFH (Work From Home) policies. It’s thought that close to a third of all European worker have now worked from home at some stage during the pandemic and this is set to continue into next year.  

Many of these businesses wouldn’t have considered adopting these policies before the pandemic hitHowever, more significantly, many of these companies are seeing business benefits as a result of WFH and other flexible working policies. WFH will become the norm at many companies once the pandemic has ended.  

And, as we see those laid off during the pandemic re-entering the workforce during 2021, it will be companies that have embraced flexible working practices that will be able to cherry-pick the best of the talent out there.  



Payment technologies will do even more 


Voice technologies such as Alexa and Siri are changing the way consumers interact with technology and with businesses. Along with technologies such as AI (Artificial Intelligence), data analytics, Cloud computing and the Internet of Things, the way we purchase and pay for things is evolving fast.  

To benefit, businesses must make sure they are using the latest technology and partnering with payment solutions providers that will be able to connect them to more customers in new ways. At KoalaPays, we will always push the boundaries of what can be achieved with our payment solutions, offering more value and functionality to businesses that partner with us, as well as helping you to offer more to your own customers too. Get in touch with our team if you’d like to find out more.  

Current challenges small businesses face in Europe



Even pre-Covid-19, setting up and running a small business wasn’t easy. Now it’s even more challenging. But while the current crisis is far from over, Europe is beginning to reopen cautiously and return to some form of normality 

However, many more challenges lie ahead in the wake of the pandemic, not least of all the prospect of a pan-European recession. Here, we take a look at the economic landscape for small businesses over the short to medium term.  



Creating a perfect storm for SMEs 


While Covid-19 is an unprecedented disaster for businesses, it’s important to highlight that economic growth in Europe was already falling before the crisis hit. We were already potentially heading for a downturn with the IMF downgrading forecasts for 2019 from 3.7% to 3.3%. External factors are all still playing their role. The trade war between the US and China was, and still is, severely affecting global growth prospects for European businesses and has created a fall in external demand for EU goods. Relations between the two superpowers are at historic low and the situation is likely to deteriorate further.  

That said, this trade war could potentially create opportunities too. The competitiveness of Chinese and US firms is suffering and EU exporters could benefit. The EU was a key player in the Trans-Pacific Partnership (TPP) strengthening trade links with countries in the Asia-Pacific region. President Trump pulled the US out of this agreement immediately upon taking office, leaving the path clear for the other remaining countries to cement the agreement now known as the Comprehensive and Progressive Agreement on Trans-Pacific Partnership (CPTPP). At least five other Asian economies (Taiwan, Indonesia, Korea, Philippines and Thailand) have expressed an interest in joining the initiative and even China is studying the possibility of membership. This could see the EU doing much more business with its APAC neighbours 



Brexit is drawing closer 


Of course, behind the scenes, Brexit is still there. The UK has already left the EU and the deadline for Brexit transition on the 1st January 2021 is creeping ever closer. On this date the rules for importing and exporting goods to the UK will change. However, as the negotiations are still ongoing, what those new rules might entail is anyone’s guess.  

This continued uncertainty continues to weigh heavily on businesses throughout Europe, and the UK. It’s hard to predict how the relationship between European businesses and their UK partners will change after January 2021. Currency volatility, as well as tariffs, will have a big impact on how much business is still done between European companies and their UK partners. A decline in Sterling, for example, will make exports to the UK more expensive for customers there and directly affect European competitiveness. 



Financing small businesses 


Interest rates are set to stay the same (or even fall further in the event of a recession) as inflation remains low. While, theoretically, this should mean lower interest payments for companies that borrow to invest in the business, many SMEs have reported difficulties in securing finance. This has been a long-running problem for small businesses in Europe with many stating that traditional banks are inflexible and bureaucratic. Given a potential recession in the aftermath of Covid-19, this is not likely to improve as banks and other lenders become more reluctant to lend.  

However, with around €65 billion in funding for small business, the European Regional Development Fund could be a big help to struggling SMEs, helping firms access finance, as well as advice and networking opportunities – all of which will be necessary in order to expand into new markets, especially overseas.  

Besides this, many companies will be looking for more help from state authorities in terms of tax breaks and other financial supports to kick-start their businesses as they emerge from lockdown. Most states are already doing something. After all, these companies represent 99% of all businesses in the EU and are hugely important in powering local economies.  



Do more with digital 


Digitisation will continue to be important in cutting costs and driving efficiencies. Just as SMEs have turned to Fintech companies, such as KoalaPaysto help them be more agile and reduce their dependency on traditional banks, technologies such as Big Data, AI and Cloud Computing applications will provide new solutions to help these companies thrive in what could be a very difficult economic environment. Those that can make the best use of new technologies and online platforms will see the benefits in terms of lower costs, increased efficiencies and improved service for their customers 

Small and medium sized businesses are vital for the European economy and play a big role in employment in their own local markets, accounting for more than two-thirds of private sector jobs. Our economy cannot survive without them. Given their importance in our communities, with state help, technological innovation and networking, despite the challenges ahead, European SMEs should continue to succeed on the global stage. 

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