Business News Round Up (22/01/2024)
EY upgrades UK growth as stagnation begins to fade
Britain should begin to pull out of its prolonged period of economic stagnation this year with inflation hitting the Bank of England’s target in May, says a key forecasting group. Potential interest rate cuts and tax reductions create momentum for growth in 2024 and 2025, with business investment rising next year, according to the EY ITEM Club. Its Winter Forecast, published today, sees GDP for 2024 upgraded from 0.7% in October’s Autumn Forecast to 0.9%, while the UK economy is now forecast to grow by 1.8% in 2025, up from 1.7% predicted in October. Consumer Price Index (CPI) inflation is expected to fall to the Bank’s 2% target by May, while averaging 2.4% throughout 2024. This is lower than the 2.9% predicted in the Autumn Forecast, suggesting a more positive outlook for real household incomes.
https://dailybusinessgroup.co.uk/2024/01/ey-upgrades-uk-growth-as-stagnation-begins-to-fade/
Scotland sees double-digit increase in financial distress
Businesses in Scotland experienced a hike in both early-stage financial and more advanced financial distress during the last quarter of 2023. In the final three months of the year, there was a 25.9% rise in levels of Scottish businesses seeing advanced or ‘critical’ distress compared with the previous quarter. There was also a 9.1% increase compared with the same period in 2022 with this type of severe distress now affecting over 2,240 businesses in Scotland, according to the latest Red Flag Alert data from Begbies Traynor. Some sectors were particularly badly hit, with printing and packaging seeing a quarter-on-quarter rise in critical distress of 150%; hotels (+111%); professional services (+49%); food and drink (+40%); leisure and cultural activities (+35%); and construction (+31%). Only two sectors in Scotland saw critical distress fall since the previous quarter – travel and tourism decreased by 23% and utilities by 21%.
https://www.insider.co.uk/news/scotland-sees-double-digit-increase-31935215
All parts of UK hit by economic stagnation since 2010, says think-tank
All parts of the UK have suffered from economic stagnation since 2010, according to research that shows households in some of the richest and poorest cities have been similarly hard hit. The report by the Centre for Cities think-tank, published on Monday, charts the failure of successive Conservative governments in the wake of the financial crisis to boost urban economies, lift productivity or narrow regional divides. Most cities and large towns have seen strong employment growth since 2010, but it has been strongest in London, according to the report, so an even larger share of jobs are now clustered in and around the capital. Because more people have moved into work there, households’ disposable income has also risen more in London than elsewhere — but still far less than it would have done if living standards had continued to improve at the pace that was typical before 2010.
https://www.ft.com/content/884f307b-0807-4c8b-8656-43fd33443ab4
Number of UK sectors reporting demand growth doubles
The number of UK sectors reporting growing demand more than doubled in December, according to the latest Bank of Scotland UK Sector Tracker, amid relatively slower inflation and stable interest rates. In December, seven of the 14 UK sectors monitored by the tracker saw demand, as measured by new orders, increase – more than twice as many as in November. Property delivered the strongest growth in new orders – 61.5 vs. 54.9 in November – reflecting greater confidence, as mortgage rates continued to ease. The tourism and recreation sector – which includes pubs, bars, and restaurants – posted its first rise in demand for 10 months (54.6 vs. 36.8 in November). Software services (59.0 vs. 58.1 in November), metals and mining (56 vs. 43.1), banks (54.5 vs. 47.1), food and drink manufacturing (54.9 vs. 59.4) and technology equipment manufacturing (50.2 vs. 46) also recorded new order growth.
https://www.insider.co.uk/news/number-uk-sectors-reporting-demand-31920695