Business News Round (13/03/2023)
Sentiment positive as confidence and activity rise
A rise in business activity and confidence among Scottish firms has emerged in two surveys published today. The Royal Bank of Scotland purchasing managers index for February showed an increase in headline business activity for the first time in seven months, the first rise in workforce numbers in three months and continuing diminishing cost pressures. Sentiment was firmly positive and improved further from December’s recent low across Scotland. Expectations were largely pinned on new product launches, increased marketing and projected growth in customers and sales. That said, optimism across Scotland remained muted when compared to the UK as a whole. The latest Accenture / S&P Global Business Outlook survey showed Scottish business confidence rebounded in February to its highest level in more than 12 months and from a record low in October just after the markets crisis sparked by the mini budget. At +35%, the net balance of manufacturing and service sector firms expecting activity to increase over the next 12 months was the strongest recorded in over a year and marked a significant uptick from the +14% registered in October 2022. Scottish companies were more confident than almost all of their European peers, with levels of optimism in the eurozone at +23% but remained lower than the UK average (+43%).
https://dailybusinessgroup.co.uk/2023/03/sentiment-positive-as-confidence-and-activity-rise/
North West’s private sector sees first improvement since August 2022 – NatWest
Business activity across the North West’s private sector increased in February for the first time since August 2022, according to new figures. The latest UK regional PMI data from NatWest shows the upturn came amid signs of a slight pick-up in demand, which was partly driven by improving confidence among customers, the survey found. The headline North West PMI Business Activity Index – a seasonally adjusted index that measures the month-on-month change in the combined output of the region’s manufacturing and service sectors – moved back above the 50.0 no-change threshold in February, registering 52.3 from January’s 47.2. NatWest said it signalled the fastest growth in business activity for nine months. Underlying data showed that the expansion owed exclusively to a rise in services activity, with manufacturing output remaining in decline. Latest data showed an upturn in inflows of new business across the North West private sector, thereby ending a seven-month sequence of contraction. The increase was confined to the region’s service sector, where there were reports of growing client confidence amid hopes of a peaking of interest rates, although the downturn in manufacturing new orders also showed signs of easing.
https://www.business-live.co.uk/economic-development/north-wests-private-sector-sees-26442776
How has Brexit affected business investment in the UK?
Leaving the European Union has undoubtedly had effects on the UK economy. The most obvious ones will be on international trade. But Brexit might also have an impact on business investment, which is crucial for the economy to grow.In the years after the referendum on membership of the European Union (EU) in mid-2016, business investment in the UK was essentially flat. It then took a sharp hit during the Covid-19 pandemic, and has recovered slowly, only just regaining its pre-pandemic level at the end of 2022. A range of analytical approaches suggest that business investment has been subdued partly due to the effects of Brexit, and this will have reduced the size of the economy and future growth. There are two broad ways of growing the economy: using more inputs or using inputs more efficiently. The two main inputs are labour (workers and hours worked) and capital assets (buildings, machines, and ideas). How efficiently labour and capital are combined is productivity (or more formally, total factor productivity).
https://www.economicsobservatory.com/how-has-brexit-affected-business-investment-in-the-uk
Tech sector sweats as Silicon Valley Bank rescued by HSBC
Tech businesses banked by Silicon Valley Bank have had an anxious weekend waiting for a government response to the collapse of the US based bank. HSBC has confirmed it has bought the bank which the Bank of England, which regulates the banking sector, placed into a “Bank Insolvency Procedure” on Friday. SVB UK had loans of around £5.5bn and deposits of around £6.7bn and for the financial year ending 31 December 2022, recorded a profit before tax of £88m. SVB UK’s tangible equity is expected to be around £1.4bn. Final calculation of the gain arising from the acquisition will be provided in due course. The assets and liabilities of the parent companies of SVB UK are excluded from the transaction which completes immediately and has been funded from existing HSBC resources. A government statement said: “Customers of SVB UK will be able to access their deposits and banking services as normal from today. This transaction has been facilitated by the Bank of England, in consultation with the Treasury, using powers granted by the Banking Act 2009. No taxpayer money is involved, and customer deposits have been protected.” Chancellor Jeremy Hunt said: “The UK’s tech sector is genuinely world-leading and of huge importance to the British economy, supporting hundreds of thousands of jobs. I said yesterday that we would look after our tech sector, and we have worked urgently to deliver on that promise and find a solution that will provide SVB UK’s customers with confidence.”