Business News Round Up (20/02/2024)
Bank lending to UK businesses forecast for <1% growth this year
UK bank-to-business lending is set to remain low this year, with growth of 0.8% forecast in 2024, according to the latest EY ITEM Club UK Bank Lending Forecast. While an improvement on last year’s business lending contraction, UK firms appear apprehensive about taking on debt in a still-uncertain economic environment, especially while borrowing costs remain high. However, a rebound to 3.5% growth is forecast for 2025 as further falls in inflation and interest rates are expected to boost business appetite and confidence. Total bank loans to households and businesses are expected to grow 2.2% this year, up from 0.6% in 2023, and rise to 3.5% in 2025 and 3.4% in 2026. Despite entering into a technical recession in 2023, falling inflation and energy prices, alongside expected interest rate cuts, mean UK GDP is expected to rise 0.9% year, with further growth of 1.8% in 2025 and 2% in 2026 predicted.
https://www.ey.com/en_uk/news/2024/02/ey-item-club-uk-bank-lending-forecast
Scottish M&A market slows after years of growth
The mergers and acquisitions (M&A) market in Scotland slowed in 2023, after consecutive years of growth, with the total figures down by 15% on 2022. The latest Experian MarketIQ M&A Review revealed that the total number of transactions announced during the year was 394 – worth £7.3bn – and quarterly results show a steady decline from 108 in the first quarter, down to 90 deals in the fourth; illustrating the difficulty of getting transactions over the line amid a challenging economic climate. Value analysis showed a decline for all segments in line with overall volume, with small cap deals dropping by 22%, large falling by 46% and so-called mega deals down to only three for the year; down from eight in 2022. Mid-market deals declined by 17%, although the total value of these deals actually remained fairly consistent at £818m for 2023, compared to £816m the previous year.
https://www.insider.co.uk/news/scottish-ma-market-slows-after-32160158
UK market report: uncertainty around economic outlook impacts hiring decisions
The latest KPMG and REC, UK Report on Jobs survey, compiled by S&P Global, highlighted that ongoing uncertainty around the economic outlook continued to impact hiring decisions at the start of the year. Permanent placements fell at “a sharp and accelerated pace, while the downturn in temp billings remained mild.” Overall vacancies meanwhile declined “slightly for the fourth time in five months.” Lower levels of recruitment activity and redundancies fuelled “further increases in staff availability.” Though sharp, upturns in both permanent and temporary candidate numbers cooled from December, however. Competition for staff “with desirable skills and the rising cost of living underpinned further increases in starting pay, albeit with rates of salary and wage inflation both posting below their long-run trends.” The report is compiled by S&P Global from responses “to questionnaires sent to a panel of around 400 UK recruitment and employment consultancies.”
Greater Manchester colleges awarded £2.5 million to expand innovation
Nine General Further Education colleges across Greater Manchester have been awarded a collective £2.5 million to increase innovation support for businesses. The Greater Manchester Further Education (FE) Innovation Programme, which has been funded by Innovate UK, aims to increase the role of FE colleges by expanding its innovation support and improve productivity for local businesses. Among the initiatives being funded is a new Innovation Centre in each of the city-region’s ten boroughs that will engage local businesses and establish colleges and places where businesses can connect and collaborate. Funding comes a year after city-region leaders agreed a strategic partnership with Innovate UK to support innovation in Greater Manchester. Trafford & Stockport College Group in Stockport is among the nine organisations to secure a share of the funding, with FE colleges in all 10 boroughs that comprise GMColleges receiving a share.