Business News Round Up (10/10/2023)


IMF says UK faces five more years of high interest rates

The UK faces another five years of high interest rates to stem rising prices, an influential global group has warned. The International Monetary Fund expects the UK to have the highest inflation and slowest growth next year of any G7 economy including the US, France, Germany, Canada, Italy, and Japan. However, the Treasury said recent revisions to UK growth had not been factored into the IMF’s report. The outlook was drawn up before this weekend’s developments in Israel. Forecasts are never perfect given the many factors that affect economic growth – from geopolitics to the weather. But such reports can point in the right direction, especially where they align with other forecasts. The IMF, an international organisation with 190 member countries, has said the forecasts it makes for growth the following year in most advanced economies have, more often than not, been within about 1.5 percentage points of what actually happens. According to the IMF’s latest forecast which it produces every six months, it expects the UK to grow more quickly than Germany in 2023, keeping the UK out of bottom place for growth among the G7. But it downgraded the UK’s prospects for growth next year, estimating the economy will grow by 0.6%, making it the slowest growing developed country in 2024 – widely predicted to be a general election year. The IMF says the UK’s immediate prospects are being weighed down by the need to keep interest rates high to control inflation, which has been falling but remains stubbornly above target.

https://www.bbc.co.uk/news/business-67056069

North West business activity sees second month of decline, finds NatWest survey

The latest findings of NatWest’s Regional PMI survey of North West businesses has revealed a second consecutive month of decline in business activity in the region in September 2023. Amid the sustained downturn in demand for goods and services from North West businesses, employment also fell for the first time in two-and-a-half years. More positively however, business expectations for the coming months continued to improve, while inflationary pressures softened, with firms’ costs and charges rising at the slowest rate since September 2020. The performance of the North West largely mirrored other regions of the UK, which all saw a decrease in employment. The region’s businesses also experienced a continued decline in the inflow of new business, with only the other Northern regions (the North East and Yorkshire & Humber) seeing steeper falls. Business confidence in the region, however, has crept back above the UK-wide average. Optimism towards the year-ahead outlook was attributed to marketing plans, new product launches and hopes of a general improvement in economic conditions. Business costs rose at a slower rate in September. Input price inflation eased notably from the previous month to a three-year low. It also fell below its long-run average and was the second-slowest among the 12 regions monitored by the survey.

New partnership for Scotland’s first bank ‘solely dedicated to small and medium sized businesses’

A new partnership has been struck for Scotland’s first bank ‘solely dedicated to small and medium sized businesses’. Alba Bank, founded by Scottish entrepreneur Jim McColl in 2018, with its headquarters in Glasgow, will work with cloud banking platform Mambu to manage its lending services. The so-called ‘challenger bank’ was established to provide commercial finance to UK SMEs which remain underserved by the mainstream banks. By adopting Mambu’s cloud banking platform, Alba Bank will be embracing a ‘composable’ approach, enhancing its agility and speed to market, providing a much-needed boost to SMEs. Over the last five years, over half (58%) of UK SMEs have been unable to secure any or sufficient funding to cover the needs of their business, on at least one occasion, according to a report by Mambu. More than nine in ten (93%) would consider switching lenders if a competitor provided a better service. Nick Lawler, market director, Northern Europe, at Mambu, said: “Now more than ever, the availability of finance is key to the success of all SMEs. SME pain points need to be properly acknowledged by banks, as success rates for loan applications are 20% lower than for large enterprises. By pivoting to Mambu, along with a growing number of neobanks in the UK, Alba is in good stead as it continues to transform this sector of banking, supporting small and medium-sized businesses to reach their potential. We look forward to working with Alba as it supports direct lending to SMEs and fuels economic growth in Scotland and the wider UK region.” Alba was earlier this year granted its banking licence by the UK Prudential Regulatory Authority (PRA) and the FCA, allowing it to move into mobilisation, during which time it is currently focusing on building its team, operations and infrastructure.  

Foreign property investment in the North West up 20%

According to law firm Irwin Mitchell’s latest FDI (Foreign Direct Investment) report, the North West property sector is primed to see significant investment from overseas buyers. Irwin Mitchell has compiled the summer 2023 report in collaboration with leading economic consultancy Cebr. It offers foreign investment analysis and ‘on the ground’ commentary on the UK’s largest cities and key sectors. The UK real estate section of the vital sector insights states that the property industry (grouped in with hospitality) had an investment position of £209 billion in 2021. However, this figure took a hit due to COVID-19, Brexit, and the war in Ukraine. While not immune to these challenges, the appetite for investment in the UK from overseas has proved to be resilient. According to the report, the property market in London remains desirable to foreign investors, especially when it comes to Grade A office space. There has been an increase in taxes for property investors, and regulations have tightened, but this hasn’t put off international buyers, who continue to choose the UK over other countries. In particular, strong growth has been observed in the North West and the West Midlands. There were 88 new investment projects in the North West last year, up 20% compared to before the pandemic, which suggests the region has quickly recovered from the lull in investment over the past few trying years.

https://www.rw-invest.com/uk/foreign-property-investment-in-the-north-west-up-20/