Austerity, Brexit and COVID-19: the ABC and Reality of 2020 (and 2021)

4th September 2020

An "ABC" of Austerity, Brexit and COVID-19 is the new reality of doing business in the UK for the foreseeable future. How should industrial businesses approach these challenging conditions? 

It is no longer news to say that businesses are operating in complex and unprecedented times. The global coronavirus pandemic has made 2020 one of the most disruptive years in generations, but there are also other ongoing factors that continue to place pressures on societies and economies around the world. Climate change is not going away any time soon, and in the UK in particular there is also a looming Brexit deadline to consider.

All of these combine to create an "ABC" of Austerity, Brexit and COVID-19 that represents the reality of what the UK has to face in 2020 and 2021. But what can industrial businesses do about it?


The COVID-19 situation and its related impacts has hit the UK economy hard. Lockdowns, furloughed workers and redundancies have contributed to a 20.4% contraction in the UK economy between April and June 2020; compare this to an average of 9.8% reduction in productivity in the 37 other OECD countries.

Although there is a general sense of economic gloom and uncertainty, some industries have so far been insulated against the worst impacts of the pandemic, and some are in fact booming. Demand for food and drink is resilient, and many manufacturers, producers and farmers in the agriculture, food processing and beverage industries are performing well.


Lockdowns, furloughed workers and redundancies have contributed to a 20.4% contraction in the UK economy between April and June 2020

The UK’s economic climate is likely to remain inclement for some time, however, and even the businesses that are currently thriving will need to plan for leaner times. Prime Minister Boris Johnson has claimed that the UK will not return to austerity, but the economic contraction is a form of austerity that businesses will have to manage. With this in mind, now is the time to review costs and develop a “recession-proof” plan to weather the economic downturn.

When it comes to ongoing costs, wastewater is an unavoidable factor. Fortunately, wastewater costs are not fixed and there are actions that businesses can take to reduce the cost of water treatment—these should form part of any comprehensive recession plan.


Attention on COVID-19 has understandably overshadowed Brexit in recent weeks and months, but the end of the transition period is fast approaching and a number of changes will come into effect from January 2021—many of which will create complexities and challenges for UK organisations that do business with the EU.

According to the Institute of Directors, nearly half of 978 company directors polled in late June said they were not able to prepare right now, with one in seven distracted by the coronavirus and almost a third saying they needed details of changes to be clear.

Further, a July 2020 report by the Institute for Government states that the coronavirus crisis has left many companies in a worse position to prepare for Brexit than they were ahead of a possible no-deal outcome in 2019.


a July 2020 report states that the coronavirus crisis has left many companies in a worse position to prepare for Brexit than they were in 2019

The UK is not yet out of the transition period, however, and there are still things that you can do now to prepare, or to increase your preparedness:

  • The UK government has created an online test to determine how your business may be affected. To take it visit

  • If you’re based in Scotland, there is also a resource outlining low-cost, low-risk actions that you can do now to prepare:

  • Most local councils are offering support and information specific to their own regions—consider checking with your local council

  • There are also many consultants who are offering specialist services to help business manage the transition


At the time of writing this article, the COVID-19 is still ongoing, and in the UK daily new cases are still rising—though fortunately the number of deaths is decreasing.

This situation is unlikely to change any time soon, so businesses should consider current working practices, market dynamics and economic headwinds to be the new normal for some time to come.

We have written about COVID-19 before, so please see my article Five things industrial businesses should be doing right now to improve COVID-19 viability for recommendations on what you can do to make your business more robust and resilient in the face of this situation.

In summary

The new ABC of Austerity, Brexit and COVID-19 is going to define our reality for the foreseeable future, and although managing through this situation is a big challenge with a number of compounding factors, it is easier to address if you break it up into smaller, more achievable steps.

Many of the activities are unrelated, so they can be run in parallel, or handed to different teams to implement—this will speed progress.

There are also many tools that can help you to review your preparedness, identify cost savings and create business continuity and contingency plans. 

Finally, there are companies that are able to work with you to help you find opportunities to address these challenges. Look for partners that focus on long-term savings, and that are willing to be flexible in terms of capital expenditure in times of budget pressures and uncertainties.