Business News Round Up (08/02/2021)
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UK business borrowing during pandemic predicted to exceed £60bn by end of 2021
UK businesses borrowed £35.5bn in net terms last year, with a further £26bn forecast by the end of 2021, according to EY. The professional services firm’s latest ITEM Club forecast noted that this is £25bn more than was borrowed on average over the previous five years, before the onset of the pandemic. While bank lending – including Covid-related government-backed loans – has been vital to businesses of all sizes, for small and medium-sized enterprises (SMEs) it has been particularly critical. Following continued lockdown restrictions, it is predicted that many businesses are unlikely to start making inroads into repaying their debt until 2024. Government mandated restrictions have also had a considerable impact on bank lending to households, with net lending via credit cards and personal loans turning negative in 2020, falling by 9.9% – the largest drop since records began in 1994. In addition, while demand for consumer credit is expected to enter positive territory in 2021, it is only set for a 2.1% rise, according to EY.
https://www.insider.co.uk/news/uk-business-borrowing-during-pandemic-23449593
Scotland’s private sector output tanks as lockdown hits businesses hard – RBS
The latest Royal Bank of Scotland PMI – a measure of combined manufacturing and service sector output – fell to 33.3 in January, down from 47.3 in December, pointing to a rapid drop in private sector output. Any reading below the 50 no-change denotes contraction. Excluding the March to May period of last year, the latest reading was the lowest since the PMI series began in 1998. New work fell at a similarly sharp pace, with the decline also the most marked for eight months. As a result, companies made further cuts to their headcounts. Despite the challenging conditions, sentiment improved during January, with business confidence the highest since early-2014 on the back of the ongoing vaccine rollout, as well as hopes of looser restrictions.
Third lockdown causes North West business activity to plummet, NatWest PMI reports
Business activity in the North West plummeted in January as the third national lockdown hit the UK – although the decline was not nearly as steep as record lows seen last April. NatWest’s latest regional PMI data showed increasing cost pressures amid raw material and transport shortages – although employment fell at the slowest rate for nine months, and regional output modestly increased. Each region is given an index reading based on the survey, with any number over 50 showing growth and with higher numbers showing faster growth. January saw the North West’s number from to 37.1 down from December’s 51.4, and in sub-50 contraction territory for the first time in seven months. The latest reading was below the UK average of 41.2, but well above the record low recorded in April last year of 19.7 during the first lockdown.
https://www.business-live.co.uk/partners/third-lockdown-causes-north-west-19775289
Freeport could create almost 50,000 jobs in the region
The West of England Combined Authority has said the Great Western Freeport the region is hoping to host could create up to 50,000 local jobs and 90,000 nationally. The submitted bid has been put together by the combined authority working with public and private sector partners, including large-scale businesses across the aerospace and nuclear sector, the region’s universities and colleges, innovation centres, local authorities, and business networks. A Great Western Freeport would be based around Bristol Port, the deep water port, with additional tax and customs sites at Avonmouth and Severnside, Junction 21 Enterprise Area and Gravity Smart Campus. Economic modelling shows it could bring in an economic return of £3bn each year to the regional economy. It would bring regeneration and jobs and boost the region’s reputation as a leader in high-value design and innovation, building on strengths in aerospace, nuclear and food manufacturing. A Freeport would also encourage significant growth in green manufacturing and technologies, for example developing the next generation of low carbon aircrafts, nuclear fusion and digital engineering.
https://www.insidermedia.com/news/south-west/freeport-could-create-almost-50000-jobs-in-the-region