Business News Round Up (03/07/2023)
Boosting SME digital skills is key for UK economic growth
The U.K.’s entrepreneurial ambitions are stronger than ever. Despite the challenging economic times, new analysis by Mastercard and Opinium shows that the number of micro businesses (zero to nine employees) being set up in the U.K. has grown every year in the past decade. However, the U.K.’s smallest businesses are the least optimistic about their future performance, compared with medium and large businesses. It’s hardly surprising when energy costs, staffing shortages, supply chain blockages and liquidity concerns are so prevalent — hampering the ability of small businesses to grow and succeed. This is on top of the already challenging task of running a business and keeping pace with an ever-changing digital environment, and the impact this has on customer demand. Schemes to address the unique challenges that small and medium-sized enterprises (SMEs) face, help them unleash productivity, and build their resiliency are a vital component of the U.K.’s innovation strategy and its economic development. SMEs, after all, represent 99.9 percent of all businesses in the U.K., employ 48% of the population, and account for around 36 percent of turnover in the U.K. private sector. Without a healthy SME ecosystem, an economy runs the risk of dwindling growth, stifling innovation, and drying up its supply of experienced talent.
https://www.politico.eu/sponsored-content/boosting-sme-digital-skills-is-key-for-uk-economic-growth/
Scots still trail in start-ups and female-led firms
Scots continue to lack confidence to start their own businesses, with a survey showing a drop in entrepreneurial activity and a fall in interest in entrepreneurship as a career option. Despite numerous initiatives and reports on the need to close the gender gap, Scotland also lags behind the UK in the number of women creating businesses. Fear of failure remains a key reason among would-be entrepreneurs for not striking out on their own. A minority believe they have the skills, knowledge, and experience to start a business, the second lowest for any part of the UK. The survey for the Global Entrepreneurship Monitor 2022/23, carried out by researchers at the University of Strathclyde, showed that total early-stage entrepreneurial activity (TEA) – the sum of the nascent entrepreneurship rate and the new business owner-manager rate – in Scotland was 8.8% against a UK average of 11% in 2022. The Scottish rate is down from 9.5% in 2021. At the same time, while female to male TEA ratio in Scotland remains unchanged from 2021 at 68%, the UK ratio increased from 73% to 79%, suggesting that more women are starting businesses in the rest of the UK compared to Scotland. Ethnic minorities continue to show a stronger association, with TEA rates double that of the white population at 17% compared to 8.5% in 2022 – and the growth in non-white rate means Scotland is now on a par with the UK non-white average. TEA rates continue to be driven by younger people in the 18-24 age group, despite a three-point drop from 13.3% in 2021 to 10.4% in 2022.
https://dailybusinessgroup.co.uk/2023/07/scots-still-trail-in-start-ups-and-female-led-firms/
UK regions and nations see manufacturing jobs boost
The number of jobs in manufacturing has grown in six of eight English regions along with Wales, highlighting the importance of the sector to hopes of levelling up across the UK by creating highly skilled and better paid jobs.According to Make UK, the figures also counter the long-held narrative of inevitable decline in manufacturing employment and show, as is happening in the US, that growing manufacturing jobs and the sector’s share of the economy is a realistic prospect given a supportive policy framework. The findings come in the Make UK/BDO Annual Manufacturing Outlook Report which provides a comprehensive analysis of the contribution of manufacturing to each English region and devolved Nation. It analyses a number of metrics including industry’s share of regional and national economies, number of jobs and share of regional/national employment, together with sectoral analysis. However, despite the increase in the number of jobs across most English regions, Make UK stressed that substantial labour challenges remain. According to the latest official data, 74,000 vacancies remain unfilled, at a cost in economic output of approximately £6.5bn. Verity Davidge, Director of Policy at Make UK, said: “Industry remains critical to the growth of the economy, providing high value, high skill jobs and aiding the process of levelling up. But, if we are to address the current anaemic growth prospects for the sector and the economy overall we need bold measures at national and regional level. This must include both a national industrial strategy which allies with local growth strategies to fit with the priorities and strengths of each region, including infrastructure, innovation, and skills in particular.”
Business confidence in the UK plummets – IoD report
The confidence of businesses in the UK experienced a decline in June as mounting fears emerged regarding the Bank of England’s efforts to tackle rising inflation, according to a report from the Institute of Directors (IoD). The IoD’s economic confidence index plunged to -31 in June, marking a drop from May’s minus six. The downturn reached its lowest level since December, following the political turmoil of the previous autumn, according to a Bloomberg report. The survey was conducted during the latter half of June, coinciding with a surge in mortgage rates, higher-than-anticipated inflation for the fourth consecutive month, and the unexpected move by the Bank of England to raise interest rates by half a percentage point to 5%. Investors are now anticipating that the Bank of England may further raise its key lending rate to as high as 6.25% by December. This significant jump raises concerns about the possibility of a recession in the UK economy. “The surge in optimism and investment plans that we’ve witnessed in recent months came to a shuddering halt in June as business leaders took stock of worse-than-expected inflation data and what that means for interest rates and prospects for the economy overall,” said Kitty Ussher, chief economist at the IoD, as quoted by Bloomberg.