Business News Round Up (05/12/2024)
Interest rates forecast to be higher for longer due to Budget
UK interest rates will fall more slowly than expected over the next two years due to October’s Budget, according to a think tank’s forecasts. Although Budget measures would boost the economy in the short-term, changes to tax and spending would mean the cost of borrowing would fall more slowly, the Organisation for Economic Co-operation and Development (OECD) said. The measures are also likely to push UK inflation, which measures how prices rise over time, above the rate seen in other major economies. Chancellor Rachel Reeves welcomed the forecast, however, saying “growth is our number one priority”. The OECD now expects the UK economy to grow more slowly this year than it forecast three months ago, before accelerating rapidly next year and slowing again in 2026. It expects 0.9% growth this year, down from 1.1%. It predicts 1.7% next year, up from 1.2%. In 2026, it expects 1.3% growth.
https://www.bbc.co.uk/news/articles/cx2y51ej0pko
Business rates relief confirmed in Scottish Budget
Finance Secretary Shona Robison has unveiled 40% business rates relief for hospitality businesses paying the Basic Property Rate. This means businesses with a rateable value up to £51,000 will be eligible. Income tax rates in Scotland will also be frozen until at least the end of this Parliament, she pledged, while the basic and intermediate rate thresholds will be frozen – pulling more Scots into lower tax bands. Robison said Wednesday’s Budget decision means that most people in Scotland will pay less income tax than those in the rest of the UK. Changes introduced by the Scottish Government in recent years mean people in Scotland begin paying more in tax after earning more than £28,800 a year. The tax difference with England, Wales and Northern Ireland increases significantly on earnings of more than £50,000 a year. The SNP has also introduced additional tax bands since 2017.
https://www.insider.co.uk/news/business-rates-relief-confirmed-scottish-34249393
One third of Scottish businesses have experienced fraud in the last five years, survey finds
More than one third (35%) of Scottish businesses have experienced fraud in the last five years, a new survey from accountancy and business advisory firm BDO has found. Of those businesses, 86% said they had experienced fraud in the last 12 months. Additionally, 29% of respondents have seen multiple fraud incidents in the last year. The results come from a BDO survey of 500 directors and business owners from entities with more than 200 employees, conducted to find out directly from the business community about their experience of fraud. In response to the increased fraud risk, Scottish businesses are taking proactive steps to tackle the issue. According to the BDO survey, 40% of businesses have increased investment in IT security, with the same proportion spending more on fraud detection tools such as AI and data analytics. The survey shows that anti-fraud-related expenditure has increased for 80% of businesses.
Scotland emerging as venture capital hotspot
Venture capital owned businesses now account for 9,000 employees in Scotland, indicating its rise as a VC hotspot outside London. The British Private Equity & Venture Capital Association’s report Venture Capital in the UK found that 7% of the UK’s VC-funded firms are in Scotland. Edinburgh continues to lead the Scottish VC landscape, attracting the bulk of the investment, because of a high number of fintech and health tech startups. Scotland has also been able to leverage the prowess of its world class academic institutions to successfully generate equity deals from university spinouts, with both the University of Edinburgh and the University of Strathclyde in the top 10 of academic institutions by number of equity deals secured by their spinouts in 2023. Scotland’s increasing share of venture capital investment is part of a wider trend of growth outside of London.