Business News Round Up (14/01/2022)
Short-term planning threatens entrepreneurial growth and innovation in Scotland
BDO’s The Ambitious Entrepreneur: Tackling Your Barriers to Growth Report found 70% of businesses are only planning nine months ahead, despite ambitions to launch new products and services and ongoing investments in research and development both at home and abroad. BDO’s Rethinking the Economy survey of 500 entrepreneurial businesses found that domestic growth alongside expansion into international markets including Asia and the USA to reach key geographic markets for growth is a focus in 2022. Yet 21% of companies recognise that a lack of strategic planning will mean they’re unable to develop and launch new products or services. According to BDO’s The Ambitious Entrepreneur: Tackling Your Barriers to Growth Report, two fifths of the companies surveyed are only planning six months ahead, which means they only have visibility until early summer. And fears of further COVID-19 restrictions and a rise in Bank of England interest rates are predicted to have the biggest impact on business in 2022 for 18% and 22% of Scottish businesses respectively.
UK economic growth hit pre-pandemic levels in November
The UK’s economy sped up growth in November, before the Omicron variant struck, pushing above pre-pandemic levels for the first time. The Office for National Statistics (ONS) that gross domestic product (GDP) had risen 0.9 per cent during the month, up from a just 0.1 per cent rise in October. Analysts had predicted a 0.4 per cent rise in November, according to an average compiled by Pantheon Macroeconomics. Services (0.7 per cent), production (1.0 per cent) and construction (3.5 per cent) output all increased between October and November 2021. This means services and construction output are both 1.3 per cent above pre-coronavirus levels. Consumer-facing services are still five per cent below pre-coronavirus levels, but output increased by 0.8 per cent over the time period. This was mainly because of a 1.4 per cent increase in retail trade, while all other services rose by 0.6 per cent.
Business group warns of threat to Scottish economic growth
A rapid return to pre-pandemic levels of economic growth in Scotland is at risk, a survey has found. Reporting “increased concerns” in the Scottish economy, the latest Scottish Chambers of Commerce (SCC) Quarterly Economic Indicator Survey said businesses were worried over rising costs, recruitment challenges and the return of Covid-19 restrictions. Key findings from the Q4 report, published in partnership with Strathclyde University’s Fraser of Allander Institute (FoA), found surging inflation to be a huge problem. With inflation rising to 5.1%, its highest rate in 10 years, businesses across all sectors noted concerns, reaching record highs. There was a 17% increase in the number of firms in the financial and business services (FBS) sector reporting concerns about rising costs, compared with Q3. There was also declining profitability, with businesses reporting negative net balances for both cashflow and profits – both of which are down on Q3. The manufacturing, retail and tourism sectors all experienced a decrease, which firms blamed on the difficult trading environment and the increased costs of doing business.
Poor festive trading knocks hospitality revival hopes as cash reserves dry up
New data from UKHospitality and CGA shows sales in pubs, restaurants, and bars down 60% on Christmas Day, 31% on Boxing Day and 27% on New Year’s Eve, compared to 2019. Latest figures from the pub, bar, and restaurant market reveal how the hospitality market suffered devastating sales falls in the last week of the year. What would traditionally be a bumper sales period for thousands of hospitality businesses is likely to be remembered as a lost chance to rebuild crucial cash reserves in the sector – delaying the recovery and leaving many businesses exposed going into the fallow winter months. Sales were a massive 60% down on Christmas Day as customers opted not to dine out, while Boxing Day sales fell by a third (31%) and takings on New Year’s Eve – one of the biggest individual trading days in the calendar for many venues – were down by more than a quarter (27%). The depressed figures captured by UKHospitality and specialist insight consultancy CGA represent a ‘lost Christmas’ and cap off a devastating December. Based on a separate industry survey, the wider hospitality sector will have seen a 40% drop in sales overall for the month versus the same period in 2019 – the last ‘normal’ Christmas before the onset of the Covid-19 pandemic. The frightful festive figures represent a £3bn hit to the industry, versus 2019.