Business News Round Up (13/04/2021)
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UK economy to return to pre-COVID-19 level around mid-2022
The UK economy will be back to its pre-COVID-19 level around the middle of next year, according to economists in a Reuters poll who said unemployment would peak at 6.2% as 2021 draws to a close and the pandemic job support scheme ends. The UK has suffered the highest coronavirus-related death toll in Europe. But a swift vaccine rollout and plummeting infections has allowed the government to begin easing restrictions and on Monday non-essential retail and outside hospitality reopened. Last year the economy shrank by the most in more than three centuries, but the April 7-12 poll of around 70 economists said it would expand 5.0% this year and 5.5% in 2022. In a March poll those forecasts were 4.6% and 5.7%, respectively.
Brexit and pandemic blamed as exports fall further
Export trade has worsened with more British firms reporting a decline in overseas sales. New figures for the first quarter of 2021 show 41% of companies report a fall in exports compared to 38% in the final three months of 2020. The data is revealed in a survey of 2,900 exporters in the British Chambers of Commerce’s Trade Confidence Outlook. Further breakdown of the data reveals that hotels, catering, retail, and wholesale firms were the worst hit. Just 4% of hotels and catering firms reported an increase in export sales, with only 14% doing so in retail and wholesale. Respondents cited Brexit and the impact of Covid-19 as the biggest causes of problems in trade. Firms told of issues such as shipping delays, increased cost of transporting goods and extensive paperwork requirements, with many seeing the problems they were facing as structural in nature rather than short term issues likely to alleviate as companies adjusted to the changes in the UK-EU trading relationship.
North West leaders optimistic as restrictions lifted
Leaders from across the North West are looking ahead with optimism as restrictions are further lifted today. The rules have now eased with outdoor pubs, shops, gyms, non-essential retail and hairdressers all reopening. Neil Sturmey, a senior partner at Grant Thornton in the North West, noted that it had been “the longest winter” for high street retailers and the hospitality sector, with both “overdue some good news”. “That is coming,” he said. “Most of us are desperate to go out again and many businesses are hoping that we are heading for a golden summer. “Longer term, things are going to be different. If we fast-forward even further to 2022, it’s still hard to picture Friday nights with customers standing shoulder-to-shoulder in busy pubs. “We expect to see new concepts in the restaurant and hospitality sector emerge. There will be pubs, restaurants, cafes that can’t operate profitably if there is any significant reduction in capacity driven by social distancing or if consumers turn away from crowded venues.
Babcock International to cut 1,000 jobs amid overhaul plans
Defence and aerospace group Babcock International is to cut 1,000 jobs this year. The engineering company, which operates the dockyards at Rosyth in Scotland among others across the UK, said it has written off £1.7bn on its balance sheet in impairments and charges. In an update to investors, it explained that although this loss is a one-off, it is expected to result in an ongoing reduction in underlying operating profit of about £30m each year. Babcock is therefore changing its operating model to simplify the business, which will have a one off cash cost of about £40m and is expected to deliver annual savings of a further £40m. But the move to an operating model which is “more efficient and effective” will mean reducing layers of management, which will “unfortunately result in headcount reductions”. The statement noted that about 1,000 employees will be leaving the group within the next 12 months. The group – which is the Ministry of Defence’s second largest contractor – said about 850 of the job cuts would be made across its UK operations, with the remainder overseas.
https://www.insider.co.uk/news/babcock-international-cut-1000-jobs-23903498