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The pandemic has had varying effects on different UK sectors and industries. Some, such as travel, hospitality and aviation have suffered immensely as lockdown measures have lowered customer demand. Others have muddled through – moving more operations online – whilst some have even thrived, such as video games and online meeting platforms (e.g. Zoom) as people find ways to live and work from home.
In this article, our investment team here at Bure Valley Group offers a review of some of the industries and sectors mostly likely to grow later in 2021. This assumes, of course, that the UK vaccination programme shows success by the summer (when all over-18s are projected to have a Pfizer, Astrazeneca or Moderna dose).
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Some of the hardest-hit businesses over the last 10 months include cafes, restaurants and pubs – many of which have been forced to close. Those which have held on, however, could be due a significant bounce by July 2020 if the UK government’s vaccine strategy works. People will want to return to the beer gardens, spending time with long-missed friends and family. With £14bn+ wiped off the sector by the pandemic, the pub sector could expect 104% growth later in 2021. However, it is unlikely that the market’s value will reach pre-covid levels until 2023.
After the UK’s vote to leave the EU in 2016, construction was expected to take a hit as investors feared a shortage in EU labour. However, the sector continued to grow – with 30,000 businesses created in 2016-18 (i.e. 10% growth). COVID-19, however, has largely hurt construction as firms have been strangled by social distancing measures – leading to a 36.4% contraction in Q2. The situation is expected to improve in 2021 as the virus is pushed back. The UK government has made a public commitment to developing the country’s residential and infrastructure sectors. As a result, forecasts anticipate 3.2% industry growth between 2021-2024.
The UK is looking to lead in reducing carbon emissions in the 2020s, with more investment into renewables such as wind and solar. Energy demand is expected to rise as UK lockdowns come to an end (hopefully) in 2021, especially as commuting and international travel pick back up. In his 10-Point Green Recovery Plan, Boris Johnson wants the capacity to power all homes in the UK using low carbon hydrogen production by 2030. With more innovation and funding lined up, sales of electric cars are expected to nearly 4 m in 2021 – up 74% from the previous year.
In January 2020, the government stated that the UK’s cybersecurity sector was worth £8.3bn – representing a 46% increase in profits since 2017. The total number of businesses had also grown from 846 to over 1,200 in the same period, employing 43,000 full-time workers. With cyberattacks up over 1,000% throughout the pandemic, demand for security solutions is only set to rise across the next 12 months, with a CAGR of 10. 53% over the forecast period 2020-25.
Despite some concern that the UK-EU trade deal agreed in December 2020 does not cover UK financial services, forecasts are optimistic about the sector’s outlook for the year ahead. Tech innovations are also expected to bring further disruption to the sector. Monzo, for instance, is a fast-growing challenger bank which saw a 641% change in turnover between 2018-19, and was valued at nearly £1bn in June 2020 after its latest £60m fundraise.
Although many UK industries witnessed a contraction in 2020, biotech was one of the outliers – with a record quarter of £1.9bn raised in the industry by October. This is hardly surprising given that governments across the world desperately needed a vaccine, and investors scrambled to get a piece of the growing pie. In 2021, as the UK continues to battle COVID-19, biotech is still set for a positive year. Since 2016, the sector has witnessed 65% growth in biotechnology research and development companies – with industry PLCs increasing by 40%. At the time of writing London, Cambridge and Oxford now form the ‘Golden Triangle’ of biotech; comprising over a third of the UK’s registered biotech firms.
With remote working set to continue as a defining feature of UK employment in 2021, new tech solutions are springing up to help address the distinctive challenges this presents. Topia, for instance, is a cloud-based HR platform helping employees navigate relocation issues. As more companies seek to manage their remote – often global – workforce, demand is likely to rise in this important sector where over a dozen competitors already operate.
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