Business News Round Up (04/12/2025)
OECD warns of tax and spending headwinds
A global think tank has warned the Chancellor that her tax and spend policies will curb consumer spending and restrict growth, despite forecasting the UK economy to outperform France, Germany and Italy next year. The OECD has upgraded the growth forecast from 1% to 1.2% against just 1% for the three eurozone economies. However, the UK figure is lower than the 1.4% predicted earlier this year. UK inflation will also remain among the highest of the G7 advanced economies, although it is expected to ease. The OECD said the higher taxes and public spending commitments will act as a “headwind” to the UK economy. £26bn worth of tax rises were announced in the Budget, with more people paying higher taxes. The report predicts two more reductions in interest rates, from the current 4% to 3.5% in Q2 2026, but sees no further cuts next year.
UK construction output records steepest fall in five-and-a-half years
The UK construction sector saw its steepest downturn in output for five-and-a-half years in November, according to the latest S&P Global UK Construction PMI. The headline index fell to 39.4, down from 44.1 in October, marking its lowest reading since May 2020 and reflecting the eleventh consecutive month of contraction. Survey respondents pointed to fragile client confidence, delayed project decisions and uncertainty ahead of the Budget as key factors holding back activity. All three sub-sectors recorded accelerated declines. Housing activity fell to 35.4, commercial construction dropped to 43.8 and civil engineering recorded the sharpest fall at 30.0. Companies reported a persistent lack of incoming work, with 44% of firms citing a drop in new orders compared with just 17% reporting an increase. Outside of the pandemic period, the seasonally adjusted New Orders Index signalled the fastest fall in new work since early 2009.
Scottish space sector secures UK Space Agency investment
Scotland’s space sector will receive a major funding boost to accelerate breakthrough technologies and boost commercialisation, the UK Space Agency has announced at Space-Comm Expo Scotland. Scottish universities will collaborate with partners nationwide to receive a share of £3.8 million from the National Space Innovation Programme (NSIP), on technologies for secure communications, environmental monitoring, and navigation. UK government Scotland Office Minister Kirsty McNeill, who is giving a keynote speech at Space-Comm Expo Scotland today (Weds), said: “This UK Government funding is another great example of why it’s such an exciting time for the Scottish space sector – a vitally important industry employing thousands of people across Scotland.” Scotland plays a vital role in the UK space sector, contributing £381m in income and employing 7,120 people (2022/23). It accounts for 13% of total UK space sector employment, making it the third-largest regional employer after London (33%) and the South East (17%).
Scotland launches ambitious digital skills initiative to power future growth
A major new initiative aimed at equipping Scotland’s workforce with cutting-edge digital skills has been unveiled by the Scottish Government in partnership with Skills Development Scotland (SDS) and Business Gateway. The Digital Learning Initiative brings together world-class training resources from leading technology companies including AWS, Cisco, IBM, Microsoft, and Salesforce. As artificial intelligence and advanced technologies reshape industries, the programme seeks to unlock productivity and innovation across Scotland by providing free, accessible online courses in high-demand areas such as AI, Cybersecurity, Software Development, and Data Science. IBM is delighted to collaborate with the Scottish Government on this, and we look forward to continuing our long-term presence and support for Scotland as the initiative progress.