Business News Round Up (20/10/2022)
Scottish businesses see massive rise in advanced financial distress as hard times begin to bite
Business across Scotland are being warned to prepare for further tough times ahead as new research from leading independent business rescue and recovery specialist Begbies Traynor shows that in the latest quarter, advanced financial distress among businesses in the country had already started to soar compared with other parts of the UK. The latest Red Flag Alert data, published today (19 October 2022) revealed that for the three months to September 2022, there was a 112% increase in the number of businesses in ‘critical’ distress (which refers to companies that have financial problems such as decrees of more than £5,000 filed against them) in Scotland compared to the same quarter the previous year. The figures also revealed a 37% rise since Q2 2022. Across the UK as a whole, this type of advanced distress saw an annual increase of 25% and a quarterly increase of just 7%. Begbies Traynor’s figures also showed a rise in the number of firms displaying early or ‘significant’ distress which includes having had decrees of less than £5,000 filed against them. In Scotland, ‘critical’ distress increased by 3% on the previous quarter – and 5% year-on-year. The new data shows that in the third quarter of 2022 over 30,100 firms in Scotland displayed symptoms of this type of early stage distress. The UK-wide figures showed a 4% uplift since Q2 2022, and an 8% rise compared with the same period the previous year with more than 600,000 firms suffering ‘significant’ distress in the last quarter.
SMEs invest in energy saving skills to cut costs
Small firms are training staff to be more energy efficient and up to speed with government regulations in a bid to beat the rising cost of doing business. Over half of SMEs (53%) have either started training staff in energy efficiency or plan to do so in the next year, according to NatWest (RBS). SME manufacturers (66%) were more likely to report training staff in energy efficiency than service providers (50%). Businesses said that escalating utility bills had increased the need to save energy and prompted staff training to help employees reduce usage. There were also reports of staff training being aimed at reducing energy consumption when designing new products. Andrew Harrison, head of business banking at NatWest Group, said: “Energy costs are a huge issue for businesses, as well as households, and it’s clear that SMEs are prioritising skills that will help them establish more energy efficient practices and help future-proof their business across energy price volatility in the longer term. It’s great news for companies, employees and the environment that businesses are becoming more committed to boosting green skills.”
Scottish retailers face tough Christmas as inflation rises wipe out real-terms sales growth
Scottish retailers look set for tough Christmas trading as inflation increases cancel out real-terms growth in sales, new figures suggest. The retail world had been showing signs of recovery, with total sales increasing by 6.5% in September compared with the same month in 2021, where just 1.3% growth was recorded. But according to the Scottish Retail Sales Monitor produced by the Scottish Retail Consortium (SRC) and KPMG, when figures are adjusted to consider inflationary rises the year-on-year change was just 0.8%. The analysis also showed a portion of the sales growth was a reflection of rising prices rather than increased volumes as inflation is taken into consideration. It also said customers were focusing on essential items such as food and energy-saving products, such as duvets and air fryers. That leaves retailers facing a tough choice between keeping costs low to encourage shoppers to buy their goods or increasing prices to protect profits.
https://www.insider.co.uk/news/scottish-retailers-face-tough-christmas-28270055
Marketing budgets tighten as cost of living crisis hits UK economy
The latest IPA Bellwether report makes gloomy reading for marketers as the financial outlook is at its “most downbeat since the start of the pandemic.” The figures, which are based on questionnaires sent to 300 UK-based companies showed that +2.1% of respondents were still revising their marketing budgets up this quarter. However, that’s down from +10.8% the previous quarter. This was blamed on rising cost pressures, such as energy bills and general prices for goods and services rising sharply, plus high inflation leading to consumers’ purchasing power to deteriorate. “The slow pace of budgets, although being recorded on an upward trajectory doesn’t come as any big surprise when we look at the current geopolitical situation and inflation increases. With the cost of living crisis weighing on the nation, the financial outlook as we know is challenging,” said Richard Aldiss, IPA City Head Manchester and North and Managing Director at McCann Manchester.