The experts are warning us not to expect much action in the UK economy over the next year. Does this mean we should continue to batten down the hatches, or is now the time to look at repositioning your business ahead of stronger growth from 2012? HSBC's chief economic adviser Mark Berrisford-Smith offers four tips for business success in 2011 and beyond.

Recent forecasts for 2011 and beyond suggest we can expect the UK economy to remain sluggish in the foreseeable future. The Office of Budget Responsibility said in its November forecast that a combination of January's VAT increase, April's austerity measures, stagnation in the housing market and slowly rising unemployment mean we shouldn't expect growth of more than 2.1 per cent in 2011.

This contrasts with an unexpectedly strong economic performance in the middle of 2010. But this, according to the OBR, was down to "timing" and the inventory cycle, as firms restocked faster than expected.

Other sources have suggested the OBR prediction for 2011 is optimistic. The British Chambers of Commerce's chief economist, David Kern, said of the OBR figures: "The growth forecasts for 2011 onwards appear too ambitious, although we agree with the broad underlying assumption that Britain's medium-term prospects will gradually improve over time."

When asked about 2011, HSBC's Mark Berrisford-Smith pulls no punches: "2011 looks a tougher year than 2010," he stresses. "Next year we get into some serious retrenchment at a time when consumers are not really spending money. It's hard to see the consumer coming to the rescue as in the past.

"What we now fret about is whether that recovery is self-sustaining," he continues.
"But it's not all doom and gloom. The leading economist has plenty of positive messages for medium-sized businesses heading into 2011 with a view to consolidation and growth.

1. Take advantage of gaps left by public sector cuts.
The public sector cuts outlined in last year's Emergency Budget and Comprehensive Spending Review will really start to take effect in April 2011. As the OBR notes, government employment is expected to fall by around 330,000 between now and 2015 as a result.

"There will be significantly less work coming out of government," says Berrisford-Smith. But he adds: "There will still be lots, though, because the level of spending over the five years is still going up."

Socially-conscientious businesses may well find their time has come, particularly if David Cameron's idea of the 'Big Society' begins to take concrete shape. "The big opportunity is to get into the innovative structures that will deliver the services in place of government departments. Social enterprises, for example, will see more opportunities as local authorities are forced to outsource more to cut costs.

"It's not just in the UK either," he continues. "Across Europe, you'll see the state almost forcibly rolled back. There will be a lot of opportunities in these countries."

2. Enter the European export market.
The domestic market may only be recovering gradually in many sectors, and our traditional export markets in Europe and the USA are similarly slow; but there are still opportunities out there.

"There's a hint that export performance is starting to improve," says Berrisford-Smith, cautiously. "Firms have spent the last year or two consolidating and they are now beginning to look for new work. The pound is still at a much more competitive level against the euro and the dollar. So there are opportunities for exporters.

"A number of likely markets have seen good growth in 2010  in particular, Germany, Sweden and Poland," he continues. "Germany's growth is largely driven by exports, Sweden's is a combination of export growth and household demand. In Poland, the retail sector is particularly strong. All these countries are looking for a mixture of consumer goods."

3. Take a look at emerging markets.
Emerging markets offer a "fall-back" that just didn't exist in previous global downturns, says Berrisford-Smith. While our traditionally strong export markets have been struggling, the likes of China and India have been seeing close to double-digit growth. For businesses bold enough to exploit them, there are plenty of gaps in these markets.

"What the emerging markets want is capital goods in particular," Berrisford-Smith asserts. "In time, they'll want increasing amounts of branded and consumer goods."

If you engage in any kind of exporting, Berrisford-Smith recommends that you protect your currency risk. The Dollar and the Euro are particularly volatile at the moment, but you can find out how HSBC can help you manage your foreign exchange risk or speak to your relationship manager. "Make sure the effort you put into that export business isn't frittered away because you've taken hits on the currency market," Berrisford-Smith cautions.

4. Start your expansion now.
"Look at your cash position and whether this is the time to start rebuilding the business," advises Berrisford-Smith. "The austerity at home will run for a couple of years, but if you leave it until 2012/13 to invest, it's probably too late.

"If you are in a position to do so, now may be the time to prepare for the stronger recovery that will start in a couple of years' time."

From 2012/13, the OBR is prediting several years of growth at a solid 2.6-2.9 per cent. They expect employment to rise steadily up to 2015 as private sector job creation offsets falling public sector employment.

The immediate outlook, as Berrisford-Smith says, may well be unspectacular in the UK. But the longer term trend is towards growth and solid recovery. What the economy will actually look like in 2015, no-one can say. But businesses that have looked ahead and planned for growth will be the ones best-positioned to ride the waves of recovery as they build momentum.