For small and medium-sized businesses, the economic outlook has changed since 2021

Payroll and HR | 14.11.2022

by Tor André Wigmostad

A lot has happened in one year, and our SME Barometer report of SMEs across the Nordics and the UK shows just how much the economic outlook, as well as the focus on employee wellbeing and investment in green solutions, has changed.


The economic outlook

The general economic outlook is down from 66% in 2021 to 51% in 2022. A lot can change in a year, and while this change isn’t particularly surprising, it puts into perspective what the world has been through in a short amount of time. 

During the height of covid, we had the promise of a vaccine and swift action to hold on to, but with the war in Ukraine and gas and electricity prices going up, it gets harder to see when the end of this conflict could be on the horizon. 

Further, 29% of all SMEs expect this outlook to worsen by the end of the year.

Turnover expectations have been stable since last year, with just a slight decrease, but one of the biggest concerns are about skill shortages. Recruiting to find the best fit for a position may become a drawn out process, as businesses work to rebuild what’s lost since last year. Other concerns, like cost inflation, cyber security threats, supply chain risks, and general unpredictability are contributing factors to the souring economic outlook.

That being said, while this is the outlook for the general economy, business owners are staunchly optimistic about their own business plans and the paths they are taking going forward, and 53% of SMEs are now forecasting improved profits for their own business in the coming year. AI and digitisation is a huge investment all SMEs seem to agree on going forward.


Employee wellbeing is a top priority

Employee wellbeing ranked high in importance in 2021, but even more so in 2022, where it now ranks 2nd, after securing financial health. 

Covid caught a lot of businesses unprepared for the amount of flexibility and care needed to ensure this wellbeing, and it seems that we all made a very important note of this. Investing in a comfortable workday for all employees brings benefits and trust that carry over to the harsher times. Seeing that employers want to create the best possible environment for their employees is a wonderful outcome of past struggles.


Carbon emissions

With many businesses requiring government assistance to get through 2021, no one could expect anyone to be able to invest in greener solutions. This was generally balanced by allowing work from home, which very much resulted in lower carbon emissions, but now there are simply too many other things to rebuild first. 

While lots of employees are still working from home, and plenty of businesses are making this a permanent arrangement, worries of lack of expertise, time, cost, and supplies, are obstacles in relation to Environmental, Social and Governance (ESG). 71% of SMEs are currently not focusing on reducing carbon emissions, and 85% are not measuring the carbon footprint of their business. 

The SME Barometer has given us a tool to measure both the current state of the economy and the general outlook for the coming year. Over time, these reports will allow us to better understand what is needed in order to adapt to the economic trajectory. This year, we see some clear differences between last year’s report, but we can also see that business owners are still confident in their plans for the future.

For more information, read this year’s SME report.

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About Tor André Wigmostad

Tor André's fate in life was set after growing up playing Pong and programming on computers with punch cards as storage method. Previous to working as Corporate Web Editor in Azets, he came from a similar position in Visma. He also worked with web pages, portals, e-learning and blogging in NetCom. His first real job was as a game designer in FunCom.