Business News Round Up (12/09/2022)
UK sees one of the biggest drops in OECD real wages, report finds
The UK saw one of the biggest falls in real wages among OECD countries, a new report from the organisation shows. Real wages dropped by 2.9% between 2021 and 2022, according to the data, compared to a 2.3% drop across the bloc. The new data from the Organisation for Economic Co-operation and Development (OECD) also showed that the UK had one of the largest falls in employment among the least well-educated because of the pandemic. Between the end of 2019 and the last three months of 2021, the rise in economic inactivity among those with lower levels of education was one of the highest among the OECD’s 38 member countries. The country is also “one of just a handful” of member countries where the employment rates for 55- to 64-year-olds and 65- to 74-year-olds were still below pre-crisis levels at the start of this year. Mostly these people have fallen into economic inactivity rather than being unemployed.
Cash flow is ‘biggest concern’ for Scottish businesses
Cash and debt are the biggest priorities for mid-sized Scottish businesses over the next six months, as companies prepare for an anticipated recession later this year. Current market conditions are creating significant challenges for Scottish businesses, with managing cash flow an immediate priority for almost a third of companies (29%); with the same number stating that making loan repayments is top of their list. Accountancy and business advisory firm BDO conducts a bi-monthly survey of 500 medium-sized businesses – defined as having revenue between £10m and £300m – with 51 Scottish businesses taking part in the latest poll. Supply chain management and the Russian invasion of Ukraine pose the greatest threat to mid-sized Scottish businesses over the next six months, with nearly a third concerned about the ongoing impact of Brexit. A further 59% of business leaders in Scotland are also worried they won’t meet sustainability targets within the next two years, due to increasing market challenges.
https://www.insider.co.uk/news/cash-flow-biggest-concern-scottish-27948053
North West bucks national trend with modest growth in August
The North West private sector saw modest growth in business activity during August compared with a downturn across the UK as a whole, according to the latest Regional PMI data from NatWest. The headline North West Business Activity Index – a seasonally adjusted index that measures the month-on-month change in the combined output of the region’s manufacturing and service sectors – came in at 51.8 last month. This represented a slight improvement from July’s 51.1 and took it further above the 50 threshold that separates growth from contraction. Of the 12 regions monitored, just two others (London and Yorkshire & Humber) recorded an increase business activity during the month. NatWest added that the pace of growth remained muted compared to earlier in the year, however, amid signs that high inflation and the uncertain economic outlook were weighing on demand. Business confidence in the region declined, whilst the pace of job creation slowed to an 18-month low. After decreasing in July – albeit marginally – for the first time in 17 months, inflows of new work across the North West private sector broadly stagnated during August. The result was in line with the UK-wide trend. The bank also said that anecdotal evidence pointed to increased difficulty securing new work due to cost of living pressures and a general economic slowdown.
https://www.business-live.co.uk/economic-development/north-west-bucks-national-trend-24978437
UK equities will struggle to attract investors back, says top fund manager
A tumbling pound and a renaissance for the fossil fuel industry will not be enough to reverse a long-term trend and draw investors back to the UK stock market, according to a leading British fund manager. Richard Buxton, an investment manager in UK equities at London-based Jupiter, said in an interview: “What could bring people back to major investing in the UK? I can’t hand on heart provide a heap of compelling answers.” Investors have pulled £6.6bn from UK equities strategies this year, making 2022 already the biggest year of outflows in a decade, according to data from the Investment Association, a trade body. This outstrips the £4.8bn withdrawn in 2016, the year of the Brexit referendum. UK-focused funds have recorded net outflows every year since then. Meanwhile UK government bonds and the pound have dropped on estimates that inflation could reach 20 per cent next year if energy prices remain high, and investors and analysts expect them to weaken further as the country issues billions of pounds in debt to fund prime minister Liz Truss’s £150bn energy package.
https://www.ft.com/content/2a3accc3-5522-4398-a85f-b95aacf31f63