Business News Round Up (10/12/2024)
Rise of populism “affecting corporate decision-making” – Glasgow study
The rise of populism across Europe is affecting corporate decision-making, according to a major new study. Researchers from Glasgow Caledonian University have analysed employment and industrial data from 29 countries as part of a £2.7 million UK Research and Innovation and EU-funded study into the drivers of extremism and the economic forces shaping modern labour markets. They found some manufacturing firms are bringing production back to domestic markets due to political pressure. The study reveals that firms are responding to the rise of populist politics and growing instability by reshoring production at great economic cost. The study concludes that ensuring workers have secure jobs with upskilling opportunities is key to combating the rise of political extremism across Europe. The last European Skills and Jobs Survey revealed that 38% of workers fear losing their jobs.
Scottish service sector ‘remains strong’ heading into year-end
The Scotland Business Activity Index, which measures month-on-month change in the combined output of the manufacturing and service sectors, remained broadly unchanged in November, with a reading of 51.1; only slightly below October’s 51.3. The headline index has signalled an increase in private sector activity in each month since the start of the year, with the rate of growth exceeding that seen at the UK level. Underlying data again revealed that the uptick was dependent on the performance of service sector firms. Manufacturers, meanwhile, again struggled to report growth and slumped further into contraction. Nevertheless, sentiment regarding the year-ahead outlook – although still positive – eased to a near two-year low. Scottish private sector firms experienced a second straight monthly fall in new business in November. However, the rate of contraction eased, as increased new business at service firms nearly offset a sharp fall in manufacturing.
https://www.insider.co.uk/news/scottish-service-sector-growth-remains-34277018
UK-owned manufacturers bet more on the UK economy, says RSM UK
UK-owned manufacturing businesses invest a greater share of their turnover on capital and innovation than internationally owned companies shows a new report by leading audit, tax and consulting firm RSM UK and industry body Make UK. The report found that international companies with UK subsidiaries on average invest just 5% of their turnover on plant and machinery and research and development (R&D). In comparison UK companies invest a greater share in both plant and machinery (9%) and R&D (6%), with larger UK organisations with international operations investing 11% of their turnover in each of these areas. More than half of manufacturers (53%) said that plant and machinery was an investment priority for their business in the next 12 months, with a third (33%) also prioritising investment in R&D programmes, yet less than half surveyed (46%) use R&D tax credits to fund innovation.
https://www.rsmuk.com/news/uk-owned-manufacturers-bet-more-on-uk-economy
Business costs rise to affect wider UK economy: BCC
The British Chambers of Commerce’s (BCC) quarterly economic forecast (QEF) recently revised down growth expectations for the country for this year to 0.8% from 1.1% earlier, but marginally improved gross domestic product (GDP) expectations for 2025 to 1.3% from 1% earlier and for 2026 to 1.5% from 1.1% earlier. Increased government spending is likely to boost GDP. However business investment and trade are likely to suffer next year due to the impact of the national insurance rise and major global uncertainties. Upgrades to 2025 and 2026 are driven by increased levels of government spending, but the overall growth landscape remains relatively weak. Inflation is now expected to remain above the Bank of England’s target until the end of 2026, due to increased business costs and global trade uncertainties, BCC said in a release.