Industry reacts as UK falls into recession
Brendan Perring, general manager at the IPIA, is one of many professionals reacting to the news
Shining a spotlight on the industry
Thursday, 15 Feb 2024 15:50 GMT
The Office for National Statistics (ONS) has revealed a 0.3 percent decline in gross domestic product (GDP) between October and December 2023, meaning technically the UK economy entered a recession due to GDP falling for two or more quarters in a row.
In an announcement this morning, Labour shadow chancellor, Rachel Reeves, said: “Rishi Sunak’s promise to grow the economy is now in tatters. The prime minister can no longer credibly claim that his plan is working or that he has turned the corner on more than fourteen years of economic decline…”
The ONS says that in terms of output there were falls in all three main sectors in Quarter 4 of 2023 with declines of 0.2% in services, 1.0% in production, and 1.3% in construction output.
Speaking to SignLink, general manager at the Independent Print Industries Association (IPIA), Brendan Perring, says: “What is currently happening is concerning but I do think there is light at the end of the tunnel… As long as nothing else goes wrong, I think this recession will continue through to the middle of year.”
Perring explains that in the past the print, signage, and wide-format sectors have not always reflected the general economy as often financial turbulence can cause a big amount of competition and marketing from brands and retailers which fight for a “reduced pool of money” which equates to bigger print volumes.
“We always base our IPIA analysis off our constant communication with the grassroots of our members,” says Perring, adding: “Members are saying there’s been a noticeable slowdown and business has gone much quieter recently. This encompasses everything from print procurement to technology and machine investment.”
In November 2023 the British Printing Industries Federation (BPIF) released its Printing Outlook which stated that output and orders remained subdued in Q3, but improved confidence meant expectations were positive for Q4.
Forecasts at the time expected an improvement in output growth, with the caveat that fewer companies would experience declining growth rather than a seasonal boost for all.
Charles Jarrold, chief executive of the BPIF, said: “The survey newly reports on uncertainty levels, thankfully they are now expected to stabilise and, with more than three-fifths of the industry with an excellent, or good, cash flow position, there is well-founded hope for the period ahead. A period in which many companies will be looking to exert further control on their costs and explore what diversification options they are well-place to take advantage of.”
Brendan Perring, general manager at the IPIA
Regarding the reasons for instabilities in the market place and consumer confidence, Perring says the increasing number of global issues are all giving consumers and marketers hesitancy when purchasing or making investments.
“If you are a marketeer sitting in the head of a major brand and looking to do a national print run, you are looking at the world stage and you are seeing the disruption in the US, Europe (with the Russia/Ukraine situation), and now in the Middle East.
“Looking at that disruption and the fear it instils in consumers will make you think twice about going ahead with your new print campaign which tells everyone how wonderful everything is, and that people should invest in your products.”
In regard to the build-up of a recession Perring has explained how the timeline of the pandemic and the industry recovery since has built up to this moment.
“Our overall findings are that during the disruptive Covid period around 40% of print volume was lost as orders were never placed because of the pandemic and then were never placed afterwards.
“There was never a re-spike in demand to make up for that loss. Many companies took out various types of loans and were supported by furlough to make up for that loss but as work never increased past normal levels this put a lot of stress and tension into the market.”
Perring notes that many businesses succeeded during the pandemic and areas like paper packaging and customisation excelled while other businesses and areas never recovered.
“We’re so in touch now with social media now, meaning people are constantly getting bombarded with bad news. If the general consumer isn’t feeling positive or confident (especially with a general election on the way) it affects
their spending as they are uneasy about the future.
“With everyone making those slight cuts and changes to their lifestyle, not purchasing big items, or going shopping as frequently, then we end up in the situation we are in now. Marketers have the same response because consumers aren’t receptive, so it’s just a cycle we have to get through.”
With the pandemic causing a lot of shifts in perceptions around forms of communication, the environment, and print as a whole, Perring remains positive that print and graphics can become stronger than ever.
According to the BBC, chancellor Jeremy Hunt could be set to reduce public spending in order to deliver tax cuts ahead of a bleaker financial situation from forecasts ahead of the Spring Budget.
Speaking to the BBC, Hunt says: "The big picture is that actually since then the economy has been more resilient, unemployment has stayed low, real wages have been rising now for six months. And if we stick to our guns now, we can see light at the end of the tunnel…"
Perring concludes: “My genuine belief is through all the technology we have, the work of associations, and the change in narrative in print I think print and signage can be in as good a place as they have been in decades.”
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