Business News Round Up (06/04/2023)

UK businesses lack ‘credible’ net-zero plans

As the UK government comes under scrutiny regarding the country’s lagging net-zero plans, new research suggest that only a fraction of top companies have actionable plans to drive down emissions. A study from EY notes that under the government’s Transition Plan Taskforce framework, just 5% of the FTSE 100 have ‘credible’ net-zero plans. Earlier in 2023, internal rifts within the UK state finally came to light over the country’s net-zero pledges. While speculation had mounted for some time that the government might be far behind its net-zero pledges, a leak of official documents in February saw senior civil servants warn cabinet ministers that they faced court action, due to their failure to develop policies tackling climate change – including a lack of clarity over how it would reach net-zero. Indeed, the government has already been forced to rework its plans after a ruling by the UK High Court in July 2022. It found that the government’s net-zero strategy had been unlawful due to a breach of the 2008 Climate Change Act, given the document did not outline how climate policies would meet legally binding carbon budgets. In response to this, the government has reworked its Transition Plan Taskforce framework, in a bid to boost its net-zero credentials. After analysing the new documents, however, EY has suggested that the new TPT will leave businesses well out-of-step with policy. Businesses need to transition to zero-emissions working by 2050 and are a crucial part of the national drive to net-zero as a result. However, while 80% of listed firms in the UK have said they are committed to going net-zero by 2050, 95% of firms have not publicly disclosed detailed or actionable transition schemes.

https://www.consultancy.uk/news/33936/uk-businesses-lack-credible-net-zero-plans

Most Scottish firms report no improvement in finances during first quarter

Most small and medium-sized businesses in Scotland say there has been no improvement to sales, cashflow or investment in the first quarter of 2023. The latest Scottish Chambers of Commerce quarterly economic indicator showed some signs of increased confidence, although this came from a “very weak base”. Many businesses are still struggling in the face of rising cost pressures and high inflation, as well as continuing to face challenges regarding access to the labour market. The chambers has been running the quarterly economic indicator since 1990 – with 320 businesses responding in 2023. Concern over inflation remains high among all firms and has seen little movement over the quarter, with 82% reporting increased concern from it. Three quarters of businesses said they faced increased cost pressures from energy costs, while 70% faced increased costs from labour and salary increases. Some 55% of businesses have experienced higher petrol and diesel costs and half of the businesses surveyed said they had higher costs for raw materials. The manufacturing sector was the only sector to report growth for cashflow and not a contraction. Similarly, the services sector was the only sector to report growth in profits. More businesses reported a fall in cashflow (43%) than reported an increase (31%), reflecting the difficulties faced by notably the retail and tourism sectors.

https://www.insider.co.uk/news/most-scottish-firms-report-no-29634901

FinTech Scotland hails roadmap following year of growth

FinTech Scotland has hailed its Research and Innovation Roadmap as it revealed it is on track to hit its targets for economic growth. The independent cluster body published its strategic roadmap in March 2022, which identified industry priorities for the UK to accelerate its fintech ambition through research and development (R&D) and targeted innovation. Since then, the number of Scottish small and medium businesses increased by 13 per cent, driven by both new fintech start-ups and international firms setting up in Scotland. Over £305m of funding was awarded to Scottish fintechs in 2022, half of which was invested in fintechs aligned with the roadmap’s priorities. The roadmap, which was developed alongside fintech entrepreneurs, the financial services sector, academia, regulators, government bodies and consumer groups, provides a pathway and framework to increase the positive impact of fintech innovation across Scotland and the rest of the UK. It also supports the recommendation in the Kalifa Review of UK fintech for increased R&D investment in innovation to accelerate fintech cluster excellence, and was positively welcomed by Ron Kalifa, the financial services sector, the UK and Scottish Governments and the City of London Corporation.

https://www.holyrood.com/news/view,fintech-scotland-hails-roadmap-following-year-of-growth

Defence spending surges for Scots SMEs

Small Scottish firms supplying the defence sector have enjoyed higher levels of spending by the UK Government, according to a new report. Expenditure by the Ministry of Defence on the Scottish supply chain has increased from 2.5% in 2020/21 to 7% in 2021/22. The rise in spending has been welcomed by MPs on the Scottish Affairs Committee which was concerned that companies north of the border were being overlooked by the MOD and prime contractors. The Government’s confirmation that the share of spending with SMEs has increased has been welcomed by the committee. However, in its report – Defence in Scotland: Military shipbuilding – the committee raised concern that the building of warships is gradually being ‘offshored’, with competition opening up to international companies which could be to the detriment of Scottish shipyards and supply chains. In particular, the committee considered the decision to award the Fleet Solid Support (FSS) ships to an international consortium, Team Resolute, rather than a Team UK bid which would have supported more UK – and in particular Scottish – jobs.

https://dailybusinessgroup.co.uk/2023/04/defence-spending-surges-for-scots-smes/