Business News Round Up (14/07/2023)
UK economy shrank 0.1% in May
THE Office for National Statistics has revealed that Britain’s economy shrank slightly in May, with GDP falling by 0.1 per cent as suspected causes points towards an extra bank holiday on top of the cost-of-living squeeze, and public sector strikes. During May, the report highlighted that that the dominant services sector stagnated, production output fell by 0.6 per cent and the construction sector fell by 0.2 per cent, while the GDP results were reported to be slightly higher than the 0.3 per cent fall that City economists predicted. Despite results being slightly more positive than expected, May’s contractions means that monthly UK GDP is now estimated to be just 0.2 per cent above its pre-coronavirus levels set in February 2020. Experts say the news that the UK economy shrank in May will not deter the Bank of England from raising interest rates again to fight inflation as the Chancellor proposes that resist to public sector pay rises will be beneficial in the long run.
Manchester reported as leader in digital inclusion
Manchester has been ranked as the UK’s leading location for digital inclusion in a table compiled by the Uswitch home services comparison website. Under ratings compiled from the local poverty index and numbers of digital inclusion hubs and databanks, Manchester came top above Coventry and York. With a poverty index of 59.2 out of 100, Manchester had 11.2 digital inclusion hubs and 5.6 databanks per 100,000 people. Behind it were Coventry with figures of 43.1, 10.7 and 2.6 respectively, then York with 38.5, 8.9 and 0.5. While London had the most databanks with 38 overall, this amounted to only 0.4 per 100,000 people, leaving it in 19th place in the Uswitch table. The least digitally inclusive location was Wakefiled, with a poverty index of 32.4 and figures of 0.3 per 100,000 for both hubs and databanks. Others with low rankings were Reading with 39.4, 0.6 and 0.0, and Slough with 50.9, 0.6 and 0.0. Rehan Ali, mobile expert at Switch, commented: “Manchester has emerged as the most digitally inclusive location in the UK. The city has identified the demand for digitally inclusive services for its residents that cannot afford mobile data to access digital services or for those who need support with accessing them, due to lack of online skills. Our data shows that while Manchester is considerably smaller than the country’s capital, London has considerably less digital inclusion hubs and databanks per 100,000 people. This shows the vast support and improvement needed for individuals and families around the country to carry out essential tasks that require an internet connection.”
https://www.ukauthority.com/articles/greater-manchester-reported-as-leader-in-digital-inclusion/
Investment held back by economic uncertainty
Lingering economic uncertainty is forcing firms to put investment decisions on hold and holding back growth, according to new data on the Scottish economy. Labour is now the biggest cost pressure and driver of price rises, cited by three-quarters of all firms responding to the latest Scottish Chambers of Commerce survey. However, interest rates are the second largest concern behind inflation, impacting 40% of all firms. The survey was undertaken between 15 May and 12 June and highlights that persistent economic uncertainty is forcing firms to put investment decisions on hold, which makes prospects for medium and long-term growth far more challenging, said Chamber president Stephen Leckie. “The flatlining performance across the business community must act as a wake-up call to Governments north and south of the border,” he said. “Governments must work with us if we are to revive investment decisions and maintain our competitiveness as a business destination. The eyes of the business community are firmly on how the First Minister will respond to the New Deal for Business Recommendations. Specifically, how he will reform non-domestic rates to incentivise businesses to grow as well as find the right balance between taxation and spend.”
https://dailybusinessgroup.co.uk/2023/07/investment-held-back-by-economic-uncertainty/
Highland businesses ‘not in a good place’ as Bank of England announces shrinking of UK economy
The Federation of Small Businesses (FSB) in Scotland has reacted to the announcement from the Bank of England that the UK’s GDP contracted by 0.1 per cent in May. FSB’s Highlands and Islands development manager David Richardson said the “alarming” announcement was nonetheless no surprise given it was in line with predictions – and May had included three public holidays. But he added: “However, the truth is that many Highland and Islands businesses are not in a good place. For while our recent Big Small Business Survey found that 46 per cent of businesses here saw their turnovers grow in 2022, for over half of these (56 per cent) it was by less than 10 per cent, i.e., inflation. “Add this to the 41 per cent that saw turnovers decrease and the 13 per cent that saw no change, and the picture was far from bright. And as for this year, we are getting mixed reports, many tourism businesses saying that while overseas numbers have shot back up following the pandemic’s end, they are no busier than last year and some are less busy.”