Economic analysis

When businesses construct a business plan part of the analysis required is undertaking an overview of the most important factors that relate to their business. To make this easier some people use PEST or PESTLE or STEEP.

This stands for:

Social
Technological
Environmental
Economic
Political

Looking at the economic and political for a local area:

There is a new government in the UK and their clear mission is to adjust the GDP balance between public and private sectors. Locally this will affect some areas more than others.

Since 2000 public spending has risen from 34% to 46%.  During the same time about 0.5m jobs have been created in the public sector. In the South West there are about 2 million people in employment of which over 50% of women in employment work in the public sector.

Within Devizes - as a small market town - where 46 thousand people live (Constituency). Employment in public service e.g. Police, Health, Education, Local government is higher than the national average due to the location of PCT, Police Headquarters, Kennet Local Authority (now part of Wiltshire) and Fire Brigade all being locally located. Over 40% of jobs are in the public sector (35.5% in Wiltshire) compared to a national figure of 29.7%.

The government has not concluded its review of government spending but figures of 20-25% have been banded about a lot. Whilst local authority spending represents only 25% of the national budget, funds for local services are raised through a mixture of direct government provision and administered from central government. It may be quite likely that this 20-25% figure hits the regions. Whilst it may not be for direct provision ie doctors, nurses, teachers etc, there is no doubt that non core services will be hit.

How this affects Devizes is not known - but a 20% figure represents 9 thousand jobs of which the vast majority may well be women e.g. 6-7 thousand.

All things have checks and balances. Devizes is a Conservative constituency and a recently elected "new" MP will fight hard for jobs. Wiltshire Council has not prioritised Devizes as a "Vision" town, so perhaps their cuts may be less severe than other prioritised towns. Devizes does not have space for a corporate business to move in and employ thousands of people. Devizes does have a good base for small businesses. There are notable entrepreneurs who have managed to grow good "Middle England" businesses e.g. Mark Wilkinson, Smallbone, Wadworth, and  Omitec.

The expectation of central government is to let markets decide rather than government interference. In this situation it will be up to some of the people displaced by the cuts to set up businesses. Whilst many of these may be micro or self employed businesses, some of them may well grow and fill the void left by the cuts.

Alternatively there may be other affects:

Higher unemployment
More out-commuting
Migration out of the area
House price falls
Local recession
Secondary business closure e.g. retail

Other noticeable cuts may be regional development support for Salisbury Plain as the Military prepare to move out. Stonehenge has had its visitor centre cut (again). Yet within this in the UK people may choose to holiday more in the UK as foreign holidays become more expensive and overtly less environmentally friendly. It may be that the Devizes area has lots to offer the leisure and tourism market if it can keep its major assets such as the Kennet and Avon Canal, the Caen Hill Locks and its visitor centre in tact. Smaller employers may find the location attractive in terms of affordable housing, landscape, affordable labour, lifestyle and still in easy reach of London.

Support services such as Business Link may be phased out during the next 5 years. Generally during "turmoil" in the public sector the result is confusion. Support and direction locally may well be lacking and it may have to be up to individuals to take responsibility for what they want to achieve. (There wont be any help)

Does all of this matter?

It does depend on your business (or your future business). Some businesses are more tied into local economies than others. Most businesses have to employ people, and many sell locally. A secondary analysis of an area and looking ahead helps identify possible issues going forward. This then helps identify areas for further investigation - where some primary research is needed. For instance you may like to know "how certain" something is. e.g. Will the Police Headquarters in Devizes close? It may help you to listen to relevant conversations.

Every business needs to know what is going on. Particularly at the moment. There are a lot of changes and tomorrow will probably not be the same as last year. Those businesses that plan and take action have always been better placed for survival and growth.

Most statistical information can be mined online. When you look for it it can often be "hiding"! A clear focus and intent is often the key to success.