Business News Round Up (07/09/2023)
Fiscal and monetary policy challenges facing the UK
The UK economy is in something of a bind. Inflation has remained stubbornly high. Household living standards are in the middle of the largest two-year fall since records began in the 1950s. The Bank of England has raised its interest rate to a level not seen in 15 years in an attempt to squeeze demand out of the economy and return inflation to the 2% target – as per its mandate. The public debate around interest rate increases has so far focused on households with mortgages, many of whom will see big increases in monthly repayments as they roll off fixed term deals. This is, however, only one of the ways in which higher interest rates will affect households, firms, and the wider economy. Higher inflation and increased interest rates are also pushing up the government’s debt interest bill. The Office for Budget Responsibility (OBR) recently pointed out that the UK government is particularly vulnerable to these shocks: the rise in global interest rates has fed through to the UK’s debt servicing costs more than twice as fast as in other countries, despite many of those countries having a higher level of debt than the UK. That’s largely because, as a result of quantitative easing, the UK has more debt on which payments immediately increase when the Bank of England raises interest rates. The UK also has more debt in the hands of private foreign investors, and more debt on which payments are directly tied to the rate of inflation, which adds to the vulnerability of its position.
https://ukandeu.ac.uk/fiscal-and-monetary-policy-challenges-facing-the-uk/
Glasgow sees rising appeal as UK real estate investment city
A report released by international law firm CMS has shown that Glasgow’s commercial real estate market has maintained a steady upward increase in its appeal to investors. Scotland’s biggest city is also closing the gap against other major UK cities as a place for real estate investment according to CMS’s Tomorrow – Real Estate Takes the Long View report. The report, which focuses on the global as well as UK real estate market, includes a survey of UK property professionals which shows Manchester as the nation’s leading ‘big six’ city outside of London. 58% of respondents said it was an appealing location for real estate investment prospects. While Glasgow sits at the foot of this list with a 19% approval rating, behind Birmingham (35%), Bristol (35%), Edinburgh (30%) and Leeds (28%), it is the only city to experience a steady upward trend as a place to invest since 2016. The gap between Glasgow and Manchester in its appeal to investors has also significantly shrunk, from 57 percentage points in 2016 to 39 points in this latest report. The rise in Glasgow’s appeal is being attributed to a number of factors including its numerous and well-regarded higher education centres as well as the city’s consequent talent pool and its well-developed transport network.
Horizon deal with European Union huge relief for UK science
Technology and science business organisations have welcomed the news that the UK is to rejoin the Horizon Europe programme after two years of absence post-Brexit. The UK crashed out of the EU’s €100bn (£85bn) research programme even through associate membership of Horizon was agreed in principle as part of the Brexit Trade and Co-operation Agreement, but the disagreements around the Northern Ireland Protocol set the UK on an alternative course. This morning, the Prime Minister issued a statement confirming agreement in principle on the association of the UK to Horizon Europe and Copernicus space programme under the Trade and Cooperation Agreement. “This is a landmark moment for scientific and space collaboration between the EU and the UK following agreement of the Windsor Framework earlier this year. The tAssociation to Horizon Europe will further strengthen and deepen links between the scientific communities in the UK and the EU, foster innovation and enable researchers to work together on global challenges from climate to health. The UK Government and the European Commission look forward to enabling collaboration between their researchers in which the UK and the EU share a mutual interest, such as in new and emerging technologies. To this end, the EU will assess UK participants’ access to strategic parts of the Horizon Europe programme on equal terms with other associated countries. UK researchers will be able to fully participate in the Horizon Europe programme on the same terms as researchers from other associated countries, including leading consortia, from the 2024 Work Programmes and onwards – including any 2024 calls opening this year. For calls from the 2023 Work Programmes, the European Commission will continue to administer transitional arrangements and the UK will continue to provide funding under the UK Guarantee. UK and EU scientists and researchers can have confidence in continuing long-term partnerships with their counterparts.”
Two Scottish universities feature in UK top 10 for spinout companies
Two Scottish universities have featured in the UK top 10 for generating spin-out companies, according to a survey by a leading venture capital fund. Dundee university secured top spot, and Edinburgh Napier placed 10th on a UK list compiled by Octopus Ventures, one of Europe’s largest VC teams. Dundee was up from fourth spot on last year’s report, whilst Edinburgh Napier climbed 33 places, the third highest rise of any UK university. The top 10 includes the universities of Oxford and Cambridge as well as University College London and King’s College London. The report explores and celebrates how UK universities are fuelling economic growth and solving society’s biggest challenges. At the heart is an ‘impact rating’, which ranks universities using crucial indicators influencing spin-out activity at universities. These are disclosures, patents, spin-outs created, and subsequent financial transactions associated with exits. The exiting of spin-out companies is fundamental to how well universities perform in the ranking.