Business News Round Up (07/02/2023)
Manchester tech companies raised £500m+ in 2022 to take top Northern spot
Tech companies in Manchester raised more than £500m in funding last year, racing past major European cities including Rome, Lisbon and Brussels. Manchester is officially the number one tech hub in the North and saw a 50 per cent increase from 2021 to hit a total of £532m in venture capital funding. There are now more than 1,600 startups and scaleups in the city, employing around 60,000 people according to Dealroom. The companies have collectively raised more than £1.8bn over the past five years. “Manchester’s thriving tech start-up scene is packed with innovation, fuelled by record levels of funding from 2022 and is outperforming much larger cities on the continent,” minister for tech and digital economy Paul Scully said. “There are huge opportunities in this city to forge a high-skilled, high-paid career in tech, and my discussions with the region’s business leaders will inform our work to grow the talent pipeline so these industries of the future continue to shine on the global stage.” Manchester has now produced eight ‘futurecorns’ expected to hit the $1bn valuation mark in the future, and six unicorns, including fintech Interactive Investor.
UK business lending to contract sharply this year as recessionary pressures intensify, but growth forecast from 2024
Bank to business lending is expected to contract 3.8% (net) this year, representing one of the sharpest falls in a decade, according to the latest EY ITEM Club for Financial Services Forecast. The fall is largely due to the deteriorating economic environment reducing demand and a rise in borrowing costs. The outlook for business lending is set to improve next year as the economy begins to recover. However, growth remains subdued, and only 0.9% net growth is forecast in 2024 as businesses, especially SMEs, continue to deal with the economic shocks of recent years. Demand for mortgage lending is also set to be affected this year, as the housing market faces multiple headwinds. Cost of living pressures, falling real household incomes, and rising interest and mortgage rates mean only 0.4% growth is forecast this year, which is the lowest rate of mortgage growth since 2011. Slightly higher growth of 1.4% (net) is forecast in 2024. At the same time as market demand wanes, banks are expected to tighten their mortgage lending criteria as a result of higher interest rates, a challenging outlook, and falling house prices.
https://www.ey.com/en_uk/news/2023/02/uk-business-lending-to-contract-sharply-this-year
Supply chain issues continue for North West businesses – BDO
Domestic and global supply chain issues continue to hamper the growth of North West businesses, according to the latest report from accountancy and business advisory firm BDO. The bi-monthly Rethinking the Economy survey of 500 mid-market businesses has revealed that nearly half of regional companies (47 per cent) view supply chain disruption, such as delayed materials and a lack of supplies, as the biggest challenge during the next six months. This ranks ahead of supporting employees through the cost-of-living crisis (43 per cent), with a third citing rising interest rates and the cost of borrowing (33 per cent) as their number one concern. The survey showed that the resurgence of Covid-19 in China, including ongoing lockdowns and a recent spike in cases, has caused renewed delays, and made it harder for 40 per cent of businesses to access goods or materials. While ongoing supply chain issues are having the biggest impact on regional companies, rising business and material costs, such as higher rents and soaring energy bills, are also proving to be a real cause for concern. According to the Rethinking the Economy survey, more than a third of North West businesses (37 per cent) said goods and raw materials have become more expensive, with the cost of importing and/ or transporting goods and materials increasing for 30 per cent of those surveyed.
North West tech and digital sectors ‘broadly positive’ for year ahead finds annual Manchester Digital audit
More than half (53 per cent) of tech and digital businesses in the North West report that they are not expecting any negative impact on staffing or turnover this year, despite the challenging economic climate. The Digital Skills Audit, released today by Manchester Digital, also found that 78 per cent of tech and digital businesses in the North West have expanded in terms of revenue growth in the past 12 months, and 72 per cent have increased their staffing levels. The report found that 19 per cent of businesses remained the same for revenue growth and staffing levels in the last 12 months, with only four per cent seeing lower revenue, and nine per cent reducing staffing levels. The annual Digital Skills Audit is collated by not-for-profit trade body Manchester Digital as part of the annual Digital Skills Festival, taking place this week and including a round table with Tech and Digital Minister Paul Scully as part of Wednesday’s Talent Day. The report covers business confidence, working trends, tech skills and recruitment, diversity, and inclusion. The data is collected from a cross-section of tech and digital businesses and individuals from across the North West.