Business News Round Up (21/07/2022)
UK economy should narrowly avoid recession – EY ITEM Club
The UK’s economic growth prospects have been downgraded again in the latest EY ITEM Club forecast, published today. However, the Summer Forecast says that the UK should narrowly avoid a recession – provided there are no further energy price shocks and the Bank of England doesn’t tighten monetary policy too quickly. The EY ITEM Club forecasts UK GDP to grow by 3.7% this year, down from the 4.1% predicted in the spring, followed by 1% growth in 2023, a downgrade from 1.9%. As inflation falls back, the EY ITEM Club expects the economy to expand 2.4% in 2024, slightly faster than previously predicted (2.2%). The EY ITEM Club’s downwards revisions are prompted by the continued squeeze on households’ real incomes from higher inflation, ongoing supply chain disruption, borrowers facing the consequences of a series of interest rate rises and the rise in asset prices during the pandemic now subsiding. Hywel Ball, EY UK chair, said: “The outlook for the UK economy has become substantially gloomier than it was in the spring, but – while there are significant risks – the forecast suggests there should still be enough supports to help the economy eke outgrowth over the rest of the year and avoid a recession. The challenges are spread across the economy, with both consumers and businesses under pressure. Business investment continues to under-perform expectations and subdued growth prospects, rising costs and increasing debt, particularly among small and medium-sized companies, mean a turnaround looks unlikely in the short-term. Investment is still far below the levels seen prior to the pandemic, despite the relaxation of pandemic restrictions and government incentives.”
Two fifths of Scottish employees are unable to take time off due to staff shortages, survey reveals
Two fifths (40%) of Scottish office workers are prevented from taking annual leave, with their requests frequently rejected due to staff shortages, a new nationwide survey has revealed. The Annual Leave Allowances survey, from Just Eat for Business, reveals how office workers utilise annual leave allowance, how their employer promotes holiday entitlement, and how time off impacts work-life balance amidst a move towards flexible working. Despite annual leave being key to employees taking time off work to rest and re-energise, many of the nation’s workforce are unable to do so due to staff shortages and demands. This includes 2 in 5 Scottish workers, who regularly have their annual leave requests rejected to accommodate reduced staff resources, and a further fifth (22%) who are contacted whilst away from work to assist with staff absences and/or excessive workloads. In fact, a recent report on the Impacts of Labour Shortages on Scotland’s Economy found that over one third of Scottish businesses are experiencing a shortage of workers, while candidate supply for permanent jobs had also reached an all-time low. As a result, many office workers are being asked to forgo annual leave and to work longer hours, unpaid, in order to make up for the shortfall and help manage heavy workloads.
SMEs in North of England under significant financial distress
While small and medium sized enterprises in the North of England saw performance improve in the last year, the region’s low level of financial strength has left many in a perilous position for the coming months. A new study has found that many more mid-tier firms in the North are facing acute levels of distress than the national average – a trend which is particularly pronounced in the North West. Initially proposed by the 2010 Coalition Government, the Northern Powerhouse scheme aims to bolster historically neglected regional economies beyond London, particularly in the “Core Cities” of Manchester, Liverpool, Leeds, Sheffield, Hull, and Newcastle. Since its formal launch in September 2016, the project has worked to champion policy ideas aimed at improving quality of life, economic regeneration, and to promote the north as a place to work, study, live and invest. Six years into the Northern Powerhouse scheme, however, it remains up for debate whether it has significantly strengthened the region’s economy. According to recent research by business advisory firm Quantuma, the post-lockdown period has seen distinctly middling growth in the North. By the firm’s reckoning the SMEs in the region obtained a ‘growth score of 49, and while this is significantly stronger than the 43 scored by London, it is well behind Scotland, the South West, Wales, Midlands and the East of England.
https://www.consultancy.uk/news/31849/smes-in-north-of-england-under-significant-financial-distress
Scottish retailers lifted by rise in high street sales
Retailers have reported an increase in sales on Scotland’s high streets, despite disappointing footfall figures. The Scottish Retail Consortium (SRC) said total sales rose year-on-year by 4.4% in June. Adjusted for inflation, the increase was 1.2%. Food sales were up by 2.7%, while the non-food category improved by 5.8%. SRC said sales were lifted by spending on sandals, swimwear and sunscreen as Scots prepared for their summer holidays. There was also an improvement in sales of formalwear and dresses for special occasions. However, larger ticket items such as furniture and electronic and electrical items fared less well, despite signs of improved stock availability. The increase in sales comes after the retail consortium reported disappointing footfall figures for June, with rail strikes and concern about the cost of living keeping shoppers away from the high streets. SRC director David Lonsdale said: “Even when adjusted for the current higher level of shop price inflation, Scotland’s retailers turned in a positive performance in June. Whilst these more chipper results are pleasing the fact is one swallow does not make a summer. It will be a real challenge to sustain this improvement over the months ahead as retailers and consumers face into a multitude of headwinds including rising inflation, weak foot-traffic which will be exacerbated by further rail disruption, and a fitful economy.”
https://www.bbc.co.uk/news/uk-scotland-scotland-business-62211997