Business News Round Up (18/08/2023)
Small business growth planning hits three-year high
The proportion of UK small businesses working on specific initiatives to secure business growth has reached its highest level for three years – with 71% of enterprises working on specific strategies to improve their future prospects – according to new research from Novuna Business Finance. Furthermore, across five industry sectors – manufacturing (86%), construction (75%), agriculture (74%), hospitality, IT/telecoms (74%) and finance/accounting (70%) – there was also a three-year high for the percentage of small businesses investing resources to support specific growth initiatives. In medical services (58%) and real estate (60%) small businesses were least likely to be committing to growth action plans. At a time when businesses across the country have been hit hard by the cost-of-living crisis, soaring inflation and a series of interest rate hikes, cost control was the key area where small businesses leaders were focusing attention to get their enterprises fit for growth. Keeping fixed costs down remained the top priority for 58% of respondents – (little change on 57% at the start of the year) – followed by improving cash flow (30%) and being much stricter on chasing late payment (hitting a three-year high at 26%). Reducing headcount remained an important focus (21%) – but this was down from its 28% peak in Q1 2022.
Scottish businesses highlight triple threat of interest rates, low investment and high costs
Almost half of Scottish businesses believe that the Bank of England should resist raising interest rates any further as they continue to battle challenging economic conditions for trading, according to the latest Addleshaw Goddard Scottish Business Monitor (SBM) report. The findings come as business sentiment drops slightly from a relative high in the Spring report, with most businesses experiencing a contraction in sales, turnover, investment, and export activity in Q2 of this year – only employment figures increased on Q1. Produced in partnership with the University of Strathclyde’s Fraser of Allander Institute, the report on the second quarter of 2023 surveyed 400 firms from across the economy in July and August. One of the starkest findings of the Q2 SBM is that around 40% of surveyed firms reported cancelling or delaying investments – primarily physical assets – over the past year. The most common reasons for these cancellations and delays have been economic uncertainty, affordability, and the cost of borrowing. Half of the firms that have cancelled/delayed investments are either unsure when they plan on making these investments or are planning them for 2025 onwards. Coming on the heels of the findings of the report on 25 years of the SBM, published in March this year, which found that low levels of investment have been a longstanding feature of the Scottish economy for many years, the performance of capital investment is a major concern.
North West excels in levels of ‘business creation areas’ new tool reveals
The North West excels in its share of ‘business creation areas’ new research has shown. Business advisor, KPMG, and the University of Nottingham have created the Local Business Pulse Index (LBPI), which uses AI technologies to pinpoint what is influencing economic activity across England, Wales and Scotland by using seven groups to characterise potential growth. The aim is for businesses and local government leaders to use the LBPI to prioritise what type of investment is needed and where it should go. It reveals that nearly a third of local areas in the North West (31%) – surpassing the 19% average seen across England, Scotland and Wales – have been identified as Business Creation Areas, or places which share an anticipated high rate of new business and investment growth. The seven groups have been derived from the geographic, sub-national data covering businesses, employees, and consumers. These groups include Business Creation, Sales Growth, High Investment, Employment Growth, Research and Development, Consumption Growth and High Productivity.
Scotch whisky exports fall as drinkers ‘trade up’
Whisky leaders blamed consumers “trading up” to premium brands as sales fell in the US and India, leading to a slide in first half exports. Exports by value for the six months to the end of June came in at £2.57 billion, a fall of £95.8 million, or 3.6% on previous year. Volumes were down by 20%. The Scotch Whisky Association said the data reflected some consumers “trading up” to more premium brands, but also drinking less alcohol overall. It also pointed out 2022 was a record year for global sales of Scotch whisky. Despite lower demand, the US remains the largest market by value at £437m, down from £460m in the first half of last year. Sales to France, the second biggest, were up 4% to £235m while sales to Asia rose significantly to partly offset declines elsewhere. Singapore moved into third place with 59% growth to £165m. Taiwan was up 21.4% to £149m, and China, despite its economic woes, saw 40% growth to £135m. India, however, was 28% lower at £94m from £131 million in the first six months of 2022. The SWA continues to press India to reduce its 150% tariff on Scotch whisky which could swell sales to £1bn within five years. All top ten markets, apart from Turkey, saw a fall.
https://dailybusinessgroup.co.uk/2023/08/scotch-whisky-exports-fall-as-drinkers-trade-up/