Business News Round Up (05/10/2021)
UK economic recovery steadies in September, price pressures mount – PMI
Britain’s post-lockdown economic recovery avoided losing further momentum in September, but companies increased prices at the fastest pace on record, adding to signs of rising inflation, a survey showed on Tuesday. The final reading of the IHS Markit/CIPS composite Purchasing Managers’ Index (PMI), which combines Britain’s services and manufacturing sectors, edged up to 54.9 from 54.8 in August, the first time it did not fall since May. The reading was also higher than the preliminary estimate for September of 54.1. While the figure represented strong overall growth for companies, shortages of staff, raw materials and transport led to the slowest growth in new orders since shortly before the lifting of coronavirus lockdowns in early 2021. Some companies said the scheduled end on Sept. 30 of a tax break for home-buyers contributed to the slowdown in new orders.
Family businesses will emerge even stronger from challenges of pandemic
Scotland’s family firms have been among the most impacted in the world, according to KPMG’s Global Family Business Report which looked at how Covid-19 hit revenues and growth plans. 80 per cent of Scottish firms said the pandemic had affected revenues – 11 per cent higher than the global average. Family-owned businesses truly are the backbone of our economy and contribute billions to Scotland’s finances. The top 100 alone employ more than 112,000 people and generate turnover of more than £20bn. The last few years have taken their toll, but family business leaders have the luxury of using generational insight and history to look back at past challenges and learn. Despite the turmoil brought by the pandemic, most family firms have weathered the storm, proving their resilience and experience in dealing with economic adversity. There are several financial and non-financial actions that Scottish families took to steady their businesses while simultaneously laying the foundation for their companies’ longer-term growth prospects. For some, this led to a complete transformation of their operating models and the launch of new product offerings, often with the goal of making the business fit for purpose in a rapidly accelerating digital age.
New report reveals strength and depth of technology sector
A new report has revealed Lancashire’s major strengths and its significant growth potential within the digital and technology sectors. Produced by Lancashire County Council, and supported by the Lancashire Enterprise Partnership, the Lancashire’s Digital Economy report was launched at Fraser House in Lancaster as part of the Lancashire Innovation Festival. The report’s key findings include the overall economic value of county’s digital and technology sector being more than £1bn. It also found the number of digital and technology businesses based in Lancashire was more than 4,000. It also noted that more than 30,000 digital and technology professionals were employed across the sector. The research further shows that Lancashire’s technology economy has grown by 28 per cent over the last five years. It is also expected to grow three times faster than the county’s overall economic growth between now and 2028. The study also looks at specific sectors including telecoms and computing and reveals that wireless communications has increased by 30 per cent in the last five years while the computing sector grew by 20 per cent.
Shortages, inflation, and slow growth fog UK economy
Britain’s economic bounce-back after coronavirus lockdowns is being hampered by problems in supply chains, a jump in inflation and the risk of a rise in unemployment, complicating the task for policymakers of steering the recovery. Former Bank of England chief economist Andy Haldane says Britain is in a VILE era of volatile inflation, low expansion. Financial markets now think the BoE is all but certain to raise interest rates by February but some economists, worried by signs of a flagging recovery, aren’t so sure. Below are some of the gauges of Britain’s economy that are likely to be on the minds of economic policymakers. Britain’s inflation rate hit 3.2% in August, its highest in almost a decade. Some one-off factors accounted for the record jump from July, but the BoE thinks inflation is heading above 4%, more than double its 2% target. The BoE is watching for any signs that consumers are losing confidence that inflation will be contained in the longer run. Public expectations for inflation in the year ahead rose sharply in September, according to a Citi/YouGov survey which may have weighed on the minds of BoE rate-setters. They said last month that the case for raising rates was strengthening.