Guides & Advice
What does 2021 hold? Our sector predictions
In January 2020, no-one could have predicted the level of change that the UK – and the rest of the world – would have to overcome. Will the same be true for 2021?
Now that the new year is in full swing, some of our sector specialists offer their views on what's to come.
The roll-out of COVID-19 vaccines, as well as the level of stability that has returned following the Brexit deal, means 2021 could be a year of recovery for the business landscape. However, this recovery is unlikely to be quick.
Nevertheless, both of the main areas of deal-making – mergers and acquisitions – are looking promising:
- Mergers – 2020 was very stop-start in its nature, with Q2 seeing a considerable pause in M&A activity. Now that businesses are better prepared to deal with the consequences of the pandemic, 2021 should hold more stability, particularly for the digital and healthcare sectors, which held firm even throughout the turbulence of 2020.
- Acquisitions – International buyers showed a good interest in UK businesses over the last year, and this is likely to continue. Management buy-outs will also provide options for investors, as well as part of a succession strategy for owner-managers – something that has become of greater importance since the news that CGT may increase in the near future. This increase could also cause a short-term deal rush but might come at the cost of failing to maximise value.
A bounce-back is unlikely to happen any time soon, but that doesn’t mean there aren’t opportunities to be taken. By strategising prudently for the year ahead, businesses can make 2021 the year they thrive.
Construction was one of the sectors hit hardest by the pandemic. Change had to come quickly in order for the industry to survive, but will this flexible approach be needed in 2021 too?
There are five main areas to watch for over the coming year:
- The impacts of Brexit – EU labour has been vital to the construction industry for many years, and with EU workers now having to navigate more bureaucracy, a skills gaps is likely to emerge. Supply chain issues could also arise with changes to import tariffs and delays at borders.
- Keeping workers safe – Social distancing continues to be a necessity, meaning smaller teams and staggered shifts will remain a part of the industry for some time.
- Modern Methods of Construction – Modular has been on the increase over the last year, and the trend will likely grow in 2021. Providing long- and short-term solutions to reducing labour costs and worker density, modular is certainly the way forward.
- Cash flow issues – Financial pressure has caused payment to be withheld at times, leading to claims for non-payment being made. This will potentially be the case until the pandemic is over. As such, companies must ensure correct processes are followed to avoid ‘smash and grab’ adjudications, where a party claims the whole amount of the payment applied for because no payment / pay less notice was issued.
- Going green – The Government’s 2050 net zero target calls for further innovation in the construction industry. From turning waste into bricks, to carbon imbedding, the sector is becoming more sustainable each day. Read more about the Department for Business, Energy and Industrial Strategy’s (BEIS) White Paper, published on 14 December.
Rapid transformation is still on the cards for the construction sector, but 2020 has proven that it is not afraid of change.
Further and higher education
The education sector has had a bumpy ride over the last 12 months but, although 2021 will still have its challenges, the future is looking bright for the FE and HE sectors.
Positives for the sector
- FE White Paper – An undeniable boost for FE, the White Paper signals a considerable change in attitudes from the Government. For many years, HE has been the priority, however, with a skills gap looming, creating a more productive relationship between employers and education is going to be vital.
- Lifetime Skills Guarantee – Another boost for FE, from April 2021, the Government will be funding technical courses for adults. These will be at the equivalent of A-level and will be for those who have not already got equivalent qualifications.
What challenges might they face?
- Financial difficulties – FE and HE have felt the financial strain of the pandemic, and this will likely continue to be the case during 2021. For institutions that are struggling, it may be time to implement more drastic cost savings and/or staffing restructures in order to cope.
- HR considerations – An Employment Bill is expected to be published in spring. This is expected to cover carers’ leave, enhanced redundancy protection for pregnant employees, and – perhaps most contentious of all – a new provision which enables zero hours employees to request a stable contract after 26 weeks of service.
It may be a mixed bag, but with the right preparation, FE and HE can look forward to better days.
2021 holds plenty of unknowns, but it also promises a more hopeful future for all sectors.
If you have any questions or concerns about the issues your sector faces this year, get in touch and the relevant team will aim to reply to your query within two hours.
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