Business News Round Up (20/10/2023)
UK consumer confidence plunges amid higher mortgage and rental costs
A closely watched UK consumer confidence survey has registered its biggest month-on-month drop in more than three years, as households contend with surging mortgage and rental costs, and higher petrol prices. The GfK consumer confidence index — a measure of how Britons view their personal finances and broader economic prospects — fell nine points from minus 21 to minus 30 in October, the research group said on Friday. The reading — the largest monthly drop since March 2020, when the government introduced strict Covid-19 curbs — reversed rises in August and September. Economists polled by Reuters had forecast a slight increase to minus 20. Joe Staton, client strategy director at GfK, said consumers’ “growing unease” had been caused by “fierce headwinds of meeting the accelerating costs of heating our homes, filling our petrol tanks, coping with surging mortgage and rental rates, a slowing jobs market and now the uncertainties posed by conflict in the Middle East”. Investors and economists are watching consumer confidence closely because it indicates households’ willingness to spend, a key driver of economic growth. Please use the sharing tools found via the share button at the top or side of articles. The latest data will add to concerns over the health of the economy after output largely stagnated for more than a year, with fewer job vacancies and interest rates at their highest since 2008 as the Bank of England seeks to tame inflation.
https://www.ft.com/content/891f9809-88b9-40e2-8052-02c3ba649919
Government borrows less than expected in September
Government borrowing in September was lower than most economists had expected. Borrowing – the difference between spending and tax income – was £14.3bn last month, according to the Office for National Statistics (ONS). This was £1.6bn less than a year earlier, but the sixth highest borrowing in September since monthly records began in 1993. Economists had predicted borrowing to be £18.3bn last month. Government debt was running at nearly £2.6 trillion, more than 2% higher than last year. Chancellor Jeremy Hunt said: “We had to borrow during the pandemic to protect lives and livelihoods, but since then Putin’s invasion has pushed up inflation and interest rates. This means we spent twice as much on debt interest last year as we did the previous year.” He added that this was “clearly not sustainable”. Last week Mr Hunt said that higher interest rates were likely to cost the UK an extra £20bn to £30bn per year. He has all but ruled out near-term tax cuts, saying the government needs to prioritise bringing down inflation. But he is under pressure from some Conservative MPs to announce plans to lower taxes before the next general election, which will be held at the latest in January 2025. This week the Institute for Fiscal Studies said the UK economy was in a “horrible fiscal bind” with no room to cut taxes or increase public spending amid mounting political pressure on Mr Hunt to do so.
https://www.bbc.co.uk/news/business-67166913
More than three-quarters of Greater Manchester tech businesses seeking growth capital
New data from UK tech sector monitor, Tech Climbers, has found over 75% of Greater Manchester’s tech businesses plan to seek growth capital this year, potentially attracting millions in investment to the city-region and creating hundreds of new jobs. Launched in 2019 in the Liverpool City Region and with 2023 seeing its inaugural Greater Manchester list, Tech Climbers is an annual showcase of scalable, innovative, and product-led technology businesses in the city-region. The list is published by Active Profile, in partnership with Business Cloud and Techblast. Greater Manchester’s tech ecosystem is outpacing the growth of other regions around the UK, with 66% of entrants to this year’s Greater Manchester Tech Climbers list already in receipt of funding, contributing to the £20.1 million raised by the region’s start-ups this year, according to The Data City. The data also projected that almost 400 jobs would be created by entrants over the next 12 months, as the region continues to become an attractive hub for talent.
UK economy: retail sales crash as cost of living crunch continues to bite
Retail sales volumes fell by 0.9 per cent in September as the month proved to be another wash out for the sector – with fears the slump could reflect a wider slowdown in the economy. According to the latest reading from the Office for National Statistics (ONS), total non-food sales volumes in department and clothing stores dipped by 1.9 per cent, following a slight rise of 0.3 per cent the prior month. The wider economy remains almost flat, with monthly GDP growth of 0.2 per cent in August. The economy contracted by 0.6 per cent, month on month, in July. Household goods store sales volumes reported a monthly fall of 2.3 per cent because of falls in furniture and lighting stores, as consumers continued to put off buying big ticket items amid the cost of living crisis. Jewellery and watch sellers were also impacted by a slowdown in spending, reporting a two per cent fall. Despite food inflation falling to its lowest level since the summer of last year, shoppers still spent less at the till in September as pressures across the economy continued to bite. The ONS said that volumes on groceries fell 0.2 per cent following a rise of 1.4 per cent in August.