For many charities, their overall financial health continues to be a focus. Having faced many changes and challenges, the summer provided an opportunity to reflect on the past and prepare for the future. This has involved scrutiny of financial performance and delivery of charitable activities, as well as monitoring of the income pipeline, scenario planning to ensure ongoing financial sustainability, and assessing ways to maximise impact.
There are promising signs in the wider economic environment. The Office for National Statistics (ONS) estimated that the UK economy grew by 0.6% between April and June 2024, following an increase in GDP of 0.7% in the previous quarter.
The Consumer Price Index (CPI) rose by 2.2% in the 12 months to July 2024. While this is up from 2.0% in the previous two months, and the first rise since December 2023, it was lower than the Bank of England’s (BofE) forecasts earlier this month (2.4%) and core inflation was down relative to the previous month.
Framework for growth
The economy is improving but to sustain momentum action is required on inactivity, industrial strategy and AI. With the chancellor citing economic growth as a “national mission”, PwC’s Framework for Growth research highlighted, in particular, the importance of an economy-wide industrial strategy, encompassing certainty and longevity, with a well-functioning public sector, inclusive of local strategies and informed by collaboration between the government, businesses, trade unions, local leaders and other stakeholders.
The BofE has reduced interest rates to 5%, and against the backdrop of the cost-of-living crisis, this should be welcome news. However, we will need to see how this translates as consumer behaviour is largely driven by perception, rather than the reality, of the economic outlook.
The annual growth in regular pay from the ONS was 5.4% in the three months to June 2024. The employment rate for April to June 2024, while below estimates of a year ago, increased in the latest quarter, and vacancies for the quarter from May to July 2024 continued to decrease.
PwC’s UK Hopes and Fears Survey 2024 showed that leaders must now strike a careful balance between driving productivity and critical transformation while protecting against change fatigue and burnout, and this applies equally to charities. As transformation efforts are driven across organisations, employees are feeling the toll of unrelenting disruption and many workers are running hard just to stand still. However, their concerns are, surprisingly, more than matched by their optimism, with many excited about new opportunities, and ready to adapt to new ways of working.
Daniel Chan is partner at PwC
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