Business News Round Up (01/11/2022)

Third of hospitality businesses at risk of going bust

More than a third of the UK’s hospitality sector is at risk of business failure in early 2023 due to the cost of doing business crisis, according to analysis of a new survey by UKHospitality, the British Beer and Pub Association (BBPA), the British Institute of Innkeeping (BII) and Hospitality Ulster. The organisations’ joint Q4 Hospitality Members’ Survey showed that 35% of respondents were expecting to be operating at a loss or be unviable by the end of the year, with 96% experiencing higher energy costs and 93% facing food price inflation. The impact of the cost-of-living crisis on customers is also being felt, with more than three-quarters of operators seeing a decrease in people eating and drinking out and 85% expect this to worsen going forwards.  Almost 9 out of 10 operators are either not confident or pessimistic that the current levels of support offered by government will protect the industry in the next six months. Continued uncertainty about rising inflation, future regulation and staffing is causing a crisis of confidence with business confidence lower than at any point during the pandemic.

Scots exports slump by 13 per cent since Brexit

Exports to the EU from Scotland have slumped by over £2.2bn since Brexit. HM Revenue and Customs data, seen by the Herald show that the value of Scotland’s exports has slumped from £16.741bn in 2019, the year before the UK exited the EU to £14.528bn in 2021 – a drop of over 13% in two years. It reverses a trend that had seen Scotland’s exports to EU countries rise by £420m between 2018 and 2019. Scots businesses have raised concerns about continuing challenges in trading since the UK left the EU at the start of 2020 and has called on the UK government to act to make dealing with Europe easier. The slump has been supported by a £3bn drop in Scotland’s most exported goods, mineral fuel, mainly oil and gas – with sales dropping from £9.139bn to £6.246bn. According to Offshore Energies UK, oil and gas activity supports 90,000 jobs in Scotland – some 42% of the total UK workforce. According to the analysis, exports of food and live animals also dropped – by £67m to £1.099bn. But there were some gains with machinery and transport exports rising by £416m from £1.880bn to £2.297bn.

https://www.heraldscotland.com/news/homenews/23091755.scots-exports-slump-13-per-cent-since-brexit/

Slowly but surely, the north-south divide in UK tech is diminishing

While the UK tech sector is still concentrated in the south-east, new research suggests digital capital is accumulating in northern England. For centuries, politicians of all stripes have attempted to bridge the north-south divide in the British economy. Even though London and the south-east of England are home to roughly one-third of the UK’s population, the region represents upward of 45% of the country’s economy and receives the lion’s share of public investment. That economic imbalance between north and south is also reflected in the UK’s tech industry, too, with more than half of equity deals in the sector since 2011 involving firms based in London. It’s a situation the current government has pledged to change, repeating its commitment to levelling up the UK’s tech sector outside the Home Counties in its most recent Digital Strategy. That challenge remains immense, with northern towns and cities still lagging behind their southern contemporaries in the availability of digital skills, infrastructure, and technology investment. However, it’s not an insurmountable one. Indeed, new data from industry body techUK’s latest Local Digital Capital Index reveals that the divide between north and south is slowly being closed by tech hubs emerging in cities far beyond the capital.

“Perfect storm” as insolvencies surge

Businesses are facing a “perfect storm” as the number of corporate insolvencies reaches the second highest level in a decade, according to the North West chair of insolvency and restructuring trade body R3. Government data shows that there were 5,595 seasonally adjusted corporate insolvencies in the third quarter of the year in England and Wales. The figure represents a fall of 1 per cent on the previous quarter but up 40 per cent on the same quarter last year and 28 per cent higher than in the equivalent period in 2019.  The number of Creditors’ Voluntary Liquidations, where directors choose to close their companies voluntarily, was almost the highest since 1960. Allan Cadman, who is North West chair of R3, said: “Two years of economic turbulence are translating into a rise in corporate insolvencies. Government support paused rather than prevented the economic effects of the pandemic from leading to more businesses entering insolvency, but now that support has ended, we’re starting to see numbers exceed pre-pandemic ones. Although the figures show a quarterly fall in corporate insolvencies – driven mainly by a reduction in Creditors’ Voluntary Liquidations and administrations, as well as the traditional summer slowdown in enquiries and appointments – they are still the second highest quarterly figures for corporate insolvencies in a decade.”

https://www.insidermedia.com/news/north-west/perfect-storm-as-insolvencies-surge