Business News Round Up (11/11/2022)
UK on brink of official recession after economy shrank in the summer
The UK economy moved closer to having official confirmation of being in a recession after the latest GDP figures, for the quarter to September, showed a 0.2% contraction. Manufacturing and retail were badly hit – signs that both businesses and consumers are reining in spending. A recession is typically defined as two consecutive quarters of negative growth. Data from the Office for National Statistics estimated a 0.6% drop in September itself, although highlighted the impact of the bank holiday for the Queen’s funeral. Chancellor Jeremy Hunt will deliver the Government’s Autumn Statement on Thursday as he attempts to respond to the global economic conditions and repair the damage to the domestic economy of the impact of Liz Truss and Kwasi Kwarteng’s mini-Budget. Responding to the latest GDP figures, Hunt said: “I am under no illusion that there is a tough road ahead – one which will require extremely difficult decisions to restore confidence and economic stability. But to achieve long-term, sustainable growth, we need to grip inflation, balance the books, and get debt falling. There is no other way. While the world economy faces extreme turbulence, the fundamental resilience of the British economy is cause for optimism in the long run.” The UK economy does not start from a strong position with the ONS estimating the level of quarterly GDP to now be 0.4% below its pre-Covid level.
Uncertainties for Scotland’s tourism sector as cost of living bites
A new survey of Scotland’s tourism sector has been published as a major two-day national tourism conference concludes at the EICC in Edinburgh with delegates from all sectors of Scotland’s tourism industry gathering to discuss the state of the industry, the threats it faces and what opportunities may lie on the horizon. The STA partnered 56 Degree Insight in the study, the results of which were revealed at the event hosted by Scottish Tourism Alliance (STA), Association of Scottish Visitor Attractions (ASVA) and HIT Scotland (Hospitality Industry Trust). Commenting on the results and their implications, Marc Crothall MBE, Chief Executive Officer of the Scottish Tourism Alliance said, “Our industry is key to the recovery and growth of the Scottish economy as a major export earner, employer, and contributor of revenue to every one of our communities. The latest survey demonstrates both resilience and fragility. People need a break and want to do that at home and abroad, however the cost-of-living crisis is biting hard on a sector which has not yet recovered from the impact of the pandemic. For many, Covid continues to be a concern and a major factor in their travel choices. From Covid to the cost-of-living, Scottish tourism faces unrelenting challenge with the new tourism tax adding yet more uncertainty and risk at the worst possible time. While opinion is broadly split on whether this tax is a good thing, appetite for anything over £1 per visitor a night is negligible. These findings assume the money raised goes to help the sector; it is simply vital that it does if the tax proceeds.”
UK tech leaders report a spending increase, as IT blurs into business
Even though 90% of IT leaders in the UK expect an economic downturn, technology spending this year is set to grow at its third fastest rate in over 15 years, and most tech executives expect their budget to rise in 2023, according to the latest Digital Leadership report from recruitment firm Nash Squared (formerly Harvey Nash). More than half (52%) of IT leaders in the UK polled for the report expect their technology budget to rise, and 56% of UK organisations expect to increase their technology headcount in 2023. Only approximately one in seven believe their budget will fall. The Nash Squared Digital Leadership Report marks the 24th year the firm has polled leading CIOs, CTOs and CDOs, with this year’s study finding a surprising uptick in global, European and UK tech spending, as organisations accelerate digital transformation initiatives and adapt to hybrid working. The report polled 1,783 digital leaders across 87 countries, including 746 in the UK, and discovered that improving operational efficiency, customer experience and developing new products and services are the top three priorities for digital leaders— markedly similar to last year’s findings. It also suggested, however, that many of those same leaders are yet to feel the pinch from the recession and cost-of-living pressures.
Businesses warn research cuts will stall UK economy
Leading scientists and businesses have said that cuts to the government’s research risks “stalling” efforts to make the UK a science superpower. The stark message was delivered ahead of the Autumn Statement next Thursday. There is concern that proposed increases to boost the UK economy will now be cut back. Among those expressing concern are leading pharmaceutical companies, The Royal Society, and the Academy of Medical Sciences. The government does not comment on spending plans ahead of the Autumn statement. Prof Sir Adrian Smith, who is head of the Royal Society, which represents the UK’s leading scientists, is among those who in a joint statement with other senior researchers and business leaders have called on the chancellor to use the Autumn statement on 17 November to recommit to a long-term plan to support what he describes as “one of the UK’s greatest strengths”. I think it’s important, given the government’s growth agenda, that our industry colleagues have joined together with scientific colleagues to stress the vital importance of R&D investment, not just for beauty, truth, and goodness in science, but as a fundamentally important ingredient in ensuring prosperity for the future of the UK,” he told BBC News.