Business News Round Up (18/07/2022)
Scottish business confidence falls sharply, but stays stronger than rest of Europe
Scottish business confidence fell to a record low in June but remains stronger than Europe. The latest Accenture and S&P Global UK Business Outlook showed that a net balance of +17% more private sector firms forecast their activity to increase over the coming year. This is half the level recorded in February (+34%) and is now weaker than most other regions in the UK, with the South East (excluding London) and the west Midlands being the most confident (at 43% and 39% respectively). The EU average is +16%, with the UK as a whole recording an index of +28%. In Scotland, expectations for profits have fallen into the negative (from 14% to -4%) for the first time and plans for recruitment have also dipped (from 14% to 1%) over the four months from February to June, with rising inflation – fuelled by increased energy costs – continuing to be the critical factor. More positively, optimism is strongest across the financial services sector and investment expectations in capital projects and research and development (R&D) saw a slight overall upturn – capital expenditure is up 5% and R&D up 2%. David Caskie, managing director for Accenture in Scotland, said: “Business confidence here in Scotland, like in the rest of the UK, has clearly been knocked by mounting concerns around inflation, pressure on profits and economic uncertainty. The signs are that investment is being focussed on resilience through spend on capital projects, but this still needs greater focus. This is a time to look long term and invest where possible, not losing sight of critical targets such as net zero, ensuring that the right investments and strategies are in place to emerge from this period of uncertainty in the strongest position to take advantage and market share going forward.”
https://www.insider.co.uk/news/scottish-business-confidence-falls-sharply-27506294
North West corporate insolvencies surge by 65% as financial pressures increase
Corporate insolvencies in the North West rose by 65% in the first six months of 2022. Businesses are feeling the pressure of spiralling inflation, rising interest rates and energy costs, supply chain disruption and ongoing geo-political uncertainty. Analysis of notices in The Gazette, by Interpath Advisory, reveals that a total of 86 companies based in the North West fell into administration from January to June 2022 – up from 52 during the same period in 2021. This mirrors the UK picture which saw a total of 451 companies fall into administration in H1 2022 – up from 312 companies in H1 2021, but still not back at the pre-pandemic levels of 655 in H1 2020 and 686 in H1 2019. March saw the highest monthly levels of administrations since July 2020, with 101 appointments. The rising number of insolvencies can be seen across a wide range of sectors, with building and construction, industrial manufacturing, and retail industries experiencing the sharpest rises. Rick Harrison, managing director and head of Interpath’s team in the North West, said: “Businesses up and down the country continue to be buffeted by an array of headwinds, from inflation and interest rate rises, to supply chain disruption and staff shortages, not forgetting the war in Ukraine which has put further pressure on energy prices and supply chains.”
UK labour shortages may cost economy £30b a year, REC says
Labour shortages in the UK could cost the economy £30 billion (S$49.9 billion) a year, a prominent jobs consultant said, putting pressure on the government to boost the workforce. The Recruitment and Employment Confederation (REC) said a 10 per cent surge in demand in the economy coupled with shortages like the ones the UK is now suffering could shave as much as 1.6 per cent off gross domestic product by 2027. The analysis helps explain the volatility hitting the UK economy now, with companies struggling to hire staff needed to cope with the jump in business accompanying the end of coronavirus lockdowns. REC said the scale of the potential hit is about the same as what the UK spends on defence every year – or double the cost of the new Elizabeth line on the London Underground. “Labour shortages have the power to bring segments of the UK economy to their knees,” said Neil Carberry, chief executive officer of REC. “Government needs to create the environment for businesses to be able to invest and thrive.” The industry group urged ministers to develop an immigration policy that would allow in workers as well as ways to bring more people who fell out of the workforce in the pandemic back into jobs. Britain is leading much of the world when it comes to people dropping out of the workforce, not filling jobs despite vacancies hitting a record high.
Challenge to Scottish bosses after study reveals no drop in productivity when working from home
A new study has revealed there’s no overall drop in productivity when staff work from home rather than the workplace. And it’s led to a challenge for Scottish business bosses: Let your team choose where they want to work to improve retention and overall happiness. “Hybrid working has gone from being a privilege a few years ago, to something staff are now expecting,” said local technology expert Alex Currens, of Acu IT Solutions. “I think work was heading in this direction anyway. The pandemic just accelerated the change. Smart employers are realising they need to be fully flexible to keep their people happy.” Alex has been reading details of a study into the impact of home working on productivity. It was carried out before the pandemic, after Hurricane Harvey hit Houston, Texas in the US. The study looked at productivity before, during, and after a prolonged stretch of remote working. Researchers found company and employee resilience may be enhanced by remote work. And also discovered there was no overall drop in the level of output.