Business News Round Up (10/06/2022)

Research shows catastrophic impact of Brexit on UK economy

The Centre for European Reform (CER) has modelled the economic performance of a UK that remained in the EU – using data from countries like the US, Germany, New Zealand, Norway, and Australia – whose performance was similar to ours before Brexit. It then compared this with the real performance of the UK economy since the referendum six years ago. It comes as the PM took aim at his own government’s tariffs on imports of food that is not produced domestically, saying their removal could ease the UK’s cost-of-living crisis.  The CER concludes that by the end of last year our economy was 5.2%, or £31 billion, smaller than it would have been had we stayed in the EU. Investment by businesses and government was 13.7% lower; goods trade 13.6% lower; although services trade was 7.9% higher. “Disentangling the economic effects of Brexit and Covid-19 is difficult. But now that most advanced economies have surpassed their pre-pandemic level of output, we have a basis of comparison for the UK economy,” says Ian Springford, Deputy Director at the CER.

Hiring activity in Scotland slows amid steep decline in staff availability

Momentum in the Scottish labour market slowed last month, with the growth in numbers of people being hired into new full-time roles falling to a 15-month low. May saw the slowest increase in permanent placements since February 2021, according to the Royal Bank of Scotland’s Report on Jobs, with the growth in temp billings falling to a four-month low. The slowdown comes amid a steep decline in staff availability, which helped push up wages. Sebastian Burnside, chief economist the Edinburgh-based bank, said: “While the loss of hiring momentum was inevitable following the sharp rebounds in activity seen after the easing of pandemic-related restrictions, it is hoped that any slowdown will be limited as overall demand for staff remains robust. “Scotland’s job market saw a further marked increase in recruitment activity during the latest survey period, however hiring momentum eased for both permanent and temporary staff to the slowest in 15 and four months respectively, as the supply of staff deteriorated rapidly.” It is the 17th successive month the number of permanent staff appointments north of the border has increased, with firms telling the bank that increased activity and improved market conditions resulted in more permanent placements. The rate of growth eased for the second month running to the weakest figure since February 2021. The increase was slower than the UK-wide figure for the first time in five months.

https://www.insider.co.uk/news/hiring-activity-scotland-slows-amid-27195306

UK economy will fall behind all major economies except Russia, OECD warns

The OECD has warned that the UK economy will fail to grow at all next year, as the cost of living crisis, the fastest fall in living standards since records began as well as the impact of the war in Ukraine drive down consumer spending. The UK will be the worst performing economy of any nation in the developed world apart from Russia in 2023. The OECD estimates that the economy will grow by 3.6% in 2022 before being predicted to post zero growth in 2023. Meanwhile, the euro area economy is expected to expand by just 1.6 per cent and the US by 1.2 per cent. With child poverty expected to reach a record 5 million next year, and with UK households saddled with the highest tax burden since the 1940s, the report also warns that inflation will hit 10 percent towards the end of the year, further squeezing the incomes of households. The report states: “The UK economy is susceptible to economic spill over effects from Russia’s invasion into Ukraine through rising energy prices and supply chain disruptions.”

HSBC launches £1.25 billion fund to support SMEs in the North  West

HSBC UK has launched a £15bn lending fund for small and medium-sized businesses with £1.25 billion ring-fenced to support local economies, employment opportunities and drive growth across the North West.Whilst concerns about the broader market remain, HSBC’s customers are thinking about growth via investment, acquisitions, and capital expenditure. Businesses have told HSBC that they are ready to invest for growth and are confident about the prospects for their own businesses. They point to the biggest areas of opportunity as sustainability (12%) and digitisation (11%). This year’s fund also includes ring-fenced funding for businesses trading internationally (£2 billion), in the agriculture sector (£1.2 billion) the tech sector (£500m) and franchise businesses (£500m). It is also aligned with the Green SME Fund (£500m) for businesses of all sizes to transition and thrive in a low carbon economy and the new Growth Lending Fund (£250m) for high growth tech businesses to support well-equitised, high growth, loss-making scale-ups early in their growth journey. Since launching the SME Fund in 2014, HSBC has lent more than £90 billion helping businesses to make the most of their money.