Business News Round Up (18/11/2022)
Consumer confidence rises but cautious Brits could hinder UK economy growth
Consumer confidence in the UK remains at a near historic low despite increasing slightly in November. Consumer sentiment rose across all measures in November, according to data from the GfK consumer confidence barometer. GfK said the negative environment will deflate future spending plans, and cautious consumers could easily slow the UK economy further. Consumer confidence jumped three points to -44 in November, 30 points lower than the same month in 2021, but an improvement on the historic low of -49 recorded in September. Confidence in personal finances over the past year grew four points to -24, while sentiment for the upcoming 12 months increased five points to -29. The research suggested that shoppers are slightly more positive about the general economic situation in the UK. The outlook for the next 12 months increased three points to -58, while the measure for the general economic situation over the past year grew two points to -67. The major purchase index also inched up three points to -38. Consumers are increasingly more confident in their savings – this is the only positive measure, which jumped eight points to 21 for the month of November as consumers gear up for Christmas.
Manchester office take-up rises, however, Liverpool suffers lack of grade A space
Manchester enjoyed increased take-up in its office sector during the third quarter, but Liverpool is still constrained by the shortage of Grade A space. The latest ‘Big Nine’ report by real estate specialist, Avison Young, focusing on the UK’s nine major cities, showed that the Manchester office take-up was up24% on Q2, making it the most active quarter since the beginning of the pandemic (Q4 2019). The city centre saw 12% more space let than 10-year average quarterly levels, while the out-of-town market was 37% higher. The quarter saw four serviced offices deals, totalling 74,937 sq ft. Other key deals included diagnostics firm Yourgene’s expansion to Manchester Science Park (43,029 sq ft), the Government Property Agency taking the final 36,375 sq ft at 101 Barbirolli Square, as well as RSM’s downsize from Spinningfields to 14,000 sq ft at Landmark. Just under 208,000 sq ft of Grade A space was let in Q3, 14% more than last quarter, demonstrating continuing demand for quality. Average achieved rents were £24.50 per sq ft, while the prime rent remained unchallenged at £39.50 per sq ft. Rupert Barron, director in Avison Young’s Manchester office agency team, said: “Whilst we have seen an uplift in take-up, enquiry and viewing levels have softened and we have some obvious concerns about how macro-economic conditions and political uncertainty will impact take-up numbers. Traditionally the occupational market takes longer to react to these outside influences, and we may not see the true impact until early next year as relocation decisions are deferred until there is more certainty. At the moment there is sufficient demand and space under offer to suggest we will see a year-end take up surpass one million sq ft, however, plans are constantly being reviewed against the wider economic backdrop and we may see positions reconsidered.”
Wylie & Bisset says ‘patient capital’ opens up private equity to SMEs
Wylie & Bisset, Accountants and Business Advisers, says that the development of ‘patient capital’, together with ‘buy and build’ and ‘hub and spoke’ investment models, are making SMEs more attractive for private equity firms. Last year saw £895m invested into businesses in Scotland by PE firms, a strong increase on previous years, according to a report from the British Private Equity and Venture Capital Association. This investment is powering SMEs across Scotland, with technology the most attractive area for investment in 2021, with 65% of businesses operating in this sector. Gerald McLaughlin, Head of Corporate Finance at Wylie & Bisset, suggests that one reason for this significant rise in investment is that many PE houses had raised funds that had been expected to be deployed throughout 2020/21 but were delayed due to Covid-related uncertainty, leading to cash pots sitting waiting to be invested. “There is currently much deal activity as these funds have already been raised and private equity funds want them deployed because it is only through these investments that returns are generated,” he said. And whereas PE firms traditionally sought an IRR (Internal Rate of Return) in excess of 20%, with a 3–4-year investment period, over recent years many have been more comfortable with a longer investment period, with the advent of ‘patient capital’ deployed by some business growth funds benefitting SMEs seeking to scale-up their enterprises.
New report will showcase Greater Manchester’s FinTech ecosystem
Whitecap Consulting, working in partnership with key regional stakeholders, is to publish a new report focusing on the FinTech ecosystem in Greater Manchester, helping address the recommendations of a national strategic review. The Kalifa Review, published in February 2021, was the result of a strategic review of UK FinTech and highlighted Manchester and Leeds as one of three ‘established’ regional FinTech clusters in the UK. The review recommended that each cluster should develop a growth strategy, and this new report will provide data, analysis, and insight to support the future development of FinTech in Greater Manchester. Whitecap’s previous report in 2020 identified Greater Manchester to be the largest regional FinTech ecosystem in England. The city is home to the largest financial and professional services sector outside London, and is also the second largest PE hub in Europe. The project is currently being supported by Bruntwood SciTech, MIDAS, and Vialto Partners, along with promotional partners pro-Manchester and FinTech North. It will involve detailed research and analysis of the ecosystem, including a programme of interviews and engagement via roundtables and events, including FinTech North’s annual conference in Manchester on 24th November, and a pro-Manchester seminar on 13th December.