Business News Round Up (14/10/2024)
Inflation tipped to fall below Bank’s 2% target
Cost of living pressures are likely to ease further when new figures may show that annual inflation has fallen below 2% for the first time in more than three years. Analysts believe consumer price inflation (CPI) of 2.2% in August will dip to 1.8% or 1.9% in September, below the Bank of England’s 2% target. The bank is still forecasting an above-target 2.1%. Any fall in price growth will increase pressure on the bank’s monetary policy committee (MPC) to cut interest rates next month. Falling energy prices and an easing of supply constraints have contributed to a sharp fall in annual inflation from a peak of 11.1% at the time of the mini budget in October 2022. Analysts at Barclays said inflation could fall as low as 1.7% and others are expecting a below-target figure on Wednesday when the data is published.
Glasgow City Centre Construction: a four year transformation
Glasgow’s city centre is set to undergo a significant transformation over the next four years, with extensive construction works planned to revitalize key streets and enhance the urban environment. The ambitious project, part of the Avenues and Avenues Plus programme, aims to create a more attractive and investor-friendly city centre, building on past successes such as the pedestrianisation of Buchanan Street in the 1970s. The construction efforts are scheduled to continue until the end of 2028, with work taking place on 18 interconnected projects between 2025 and 2027. The redevelopment will culminate with the renovation of George Street, from George Square to High Street, slated for completion by late 2028. The current phase of the project is focused on Sauchiehall Street, which is expected to be completed within months.
Geopolitics remain the biggest risk to business for UK CFOs
Deloitte’s latest survey of UK Chief Financial Officers shows that corporate confidence edged lower in Q3 of 2024, following a strong bounce in optimism after the General Election. Sentiment has fallen among CFOs, with a net 6% feeling more optimistic about the financial prospects of their businesses now than three months ago (which was at net 23%). Despite this, confidence is still running above the long run average of net -1%. UK CFOs also report a modest increase in uncertainty – 31% now rate the level of external financial and economic uncertainty facing their business as high or very high, compared to 23% last quarter. This remains below the long-term average of 39%. As has been the case for the last five quarters, CFOs say that geopolitical developments represent the greatest external risk to their businesses, with a weighted average rating of 70.
UK business confidence stands at nine-year high – but signs of unease emerge
UK business confidence has hit a nine-year high in 2024, although firms’ economic optimism dipped ahead of expected tax hikes in the Budget. Lloyds Bank’s latest Business Barometer put overall business confidence at a 45% year-to-date average, well above the long-term average of 29%. Business confidence previously hit 50% in 2015. The fresh peak comes after the most successful quarter of the year, with average UK business confidence hitting 49% between July and September. That compares to 43% and 44% in the first two quarters of 2024 respectively. September’s reading for September came at 47%, down from 50% in July and August – which marked the highest numbers since November 2015. Lloyds said the monthly decline was driven by a fall in economic optimism, although confidence is still comfortably above the 36% seen during the same period last year. British firms are bracing for fiscal shake-ups in Labour’s inaugural Budget.