Business News Round Up (06/10/2022)
Highlands and Islands businesses show some recovery from pandemic impacts, but exports and confidence are down
A survey carried out in June and July this year, indicated that most businesses in the Highlands and Islands were operating at either the same or above their pre-pandemic levels. However, it also showed a significant decline in exporting activity and in the level of confidence in Scotland’s economic outlook. The Highlands and Island Enterprise (HIE) Business Panel survey forms part of a wider rural Scotland study in partnership with the Scottish Government and South of Scotland Enterprise. Interviews were conducted with 2,719 businesses and social enterprises; 1,043 of which were in the Highlands and Islands region. The survey tracked business confidence, performance, operating status, and optimism. It explored how companies are responding to the wide range of challenges associated with Covid-19, Brexit and the Russia-Ukraine conflict, and their attitude to growth. Around half (49%) of respondents expressed confidence in the economic outlook for Scotland, down from 60% in the previous survey in February and March this year. Two-thirds (67%) said they were operating at either the same (46%) or above (21%) their pre-pandemic level. Around a third (32%) were still operating below. This is more common among smaller businesses with fewer than five employees, and among businesses in the tourism sector.
UK business activity slides in September by most since early 2021
Britain’s private-sector economy last month suffered the sharpest contraction in activity since a COVID lockdown early last year, underlining the challenge facing Prime Minister Liz Truss who on Wednesday emphasised her push for economic growth. The final version of the S&P Global UK Composite Purchasing Managers’ Index fell to 49.1 in September from 49.6 in August, the lowest reading since January 2021. Any reading below 50 means a contraction in activity. While the reading was an improvement on a preliminary “flash” reading of 48.4, services companies that comprise the bulk of the private-sector economy were the least positive about the outlook since May 2020, early in the pandemic. A trading update from Tesco (TSCO.L), Britain’s biggest retailer, added to the sense of unease hanging over the economy which is flirting with recession. The supermarket chain forecast full-year profit at the lower end of its previous guidance, blaming uncertainty over how a worsening cost-of-living crisis would affect consumer spending. With consumer confidence at record low levels, new car registrations by private buyers in September were 3.6% lower than a year earlier, according to industry data on Wednesday.
Foreign Investment in the Northern Powerhouse rockets despite dropping in rest of UK
Foreign direct investment (FDI) into the Northern Powerhouse has rocketed 72% in the last five years despite dropping across the rest of the UK, according to new analysis of fDi markets data by the Northern Powerhouse Partnership (NPP). FDI into the North rose from $25.4bn between 2012-16 to $43.7bn between 2017-21. By contrast, FDI into Greater London dropped 23% over the same time period, from $43.4bn to $33.4bn. Their new report ‘The Internationalisation of the Northern Powerhouse’ also found that the North increased its share of overall FDI into England, from 19% in 2012-16 to 33% in 2017-21. This rise means that the region – which makes up roughly 28% of England’s population – is now punching above its weight and drawing in more inward investment on a per capita basis. Data showed this growth is supporting employment opportunities in the region, with the number of jobs created in the North from inward investment rising from roughly 52,600 in 2012-16 to 62,100 in 2017-21 – an 18% uplift. The rest of England saw a rise of just 1% over the same time period, while Scotland, Wales and Northern Ireland all saw drops of -19%, -41% and -37% respectively.
Scotland’s economy likely to be in recession – report
Scotland’s economy is likely to be already in recession, according to figures from an economics think tank. The Fraser of Allander Institute said economic output was falling for a second quarter and forecast it would continue until the end of 2023. A recession is at least two consecutive three-month periods of falling output, or gross domestic product (GDP). The second quarter of 2022, covering April, May, and June, is reckoned to have seen no growth or contraction. The most recent Scottish government reports show declines of 0.8% in June this year, and 0.2% in July. The institute’s figures have been revised downwards since their last forecast issued in June. Its researchers point to three consecutive quarters of falling output – starting in July this year and ending in March 2023. Strathclyde University’s Fraser of Allander forecast reflects subdued consumer spending and confidence levels, with expectations of household finance going negative for the first time since the institute’s quarterly Economic Commentary report began.
https://www.bbc.co.uk/news/uk-scotland-scotland-business-63147497