Business News Round Up (22/12/2022)
UK tech sector attracting greater investment than EU leaders combined
UK tech companies have raised more than double the venture capital investment than French and German firms combined, according to new research. Figures published by Dealroom on behalf of the UK government showed that domestic tech firms have continued to raise near-record levels of investment this year despite challenging economic conditions. Across 2022, firms raised a total of £24 billion, more than second and third-ranked France (£11.8 billion) and Germany (£9.1 billion) combined, bringing the total raised over the past five years to £97 billion. This strong performance propelled the UK tech industry to surpass $1 trillion in value earlier this year, making it the third country to reach this valuation alongside the US and China. Digital minister Paul Scully said the Dealroom figures highlight the impressive performance of the UK tech sector across 2022 and showcase the ecosystem as an attractive proposition for businesses. “UK tech has remained resilient in the face of global challenges, and we have ended the year as one of the world’s leading destinations for digital businesses,” he said. “This is good news and reflects our pro-innovation approach to tech regulation, continuing support for start-ups and ambition to boost people’s digital skills.” This latest research shows that the UK tech industry is continuing to steam ahead of European peers. At present, the sector is worth more than double Germany’s, which has a valuation of $476.2 billion.
North West SMEs awarded £22.4 million in innovation funding throughout 2022
SMEs in the North West have greatly increased their share of Innovate UK grant funding in the past year with £22.4 million awarded for projects begun in 2022. The amount awarded to the region’s small businesses represents 94.2% of the total innovation grant funding that went to businesses of all sizes in the region, according to analysis of Innovate UK data by funding specialist Catax. The figure represents an increase of 31.1 percentage points from 63.1% in 2021. On a national basis, the proportion awarded to UK SMEs rose to 88.2% in 2022 – up 16.4 percentage points from 71.8% in 2021, itself little changed on 2020 – highlighting the importance of smaller firms to the health of the economy. Chancellor Jeremy Hunt announced in the Autumn Statement last month that the amount of tax relief SMEs receive would be reduced for expenditure incurred from 1st April 2023. SMEs are currently allowed to deduct an extra 130% of qualifying costs from their profits but this will reduce to 86% (plus the normal 100% deduction). For loss-making companies, SMEs will be entitled to a tax credit worth up to 10% of the total surrenderable loss, instead of the current 14.5%.
UK businesses struggle to trade with EU two years after Brexit deal
It is now two years since the UK signed its post-Brexit trade deal with the EU, but for small businesses such as Doncaster-based Apothecary-87, the travails of trading across the English Channel show no signs of abating. Owner Sam Martin’s range of premium beard oils and hair balms took off rapidly when his company was founded in 2012, but export growth came to a shuddering halt when the EU-UK Trade and Cooperation Agreement came into force on December 31, 2020. “Before Brexit, our business was 75 per cent exports and the rest in the UK, but Brexit has pretty much turned that number on its head because of the costs and difficulties of getting products to those countries,” he said. In a report to mark the two-year anniversary of the TCA, the British Chambers of Commerce said that Martin’s frustrations were typical of small and medium-sized companies that were now facing “structural” rather than temporary problems with the deal. A BCC membership survey included in the report found that more than three quarters (77 per cent) of companies that were affected by the deal said it was not helping them increase sales; while more than half (56 per cent) of respondents said they faced difficulties adapting to the new rules for trading goods.
https://www.ft.com/content/9d170855-ed29-49a5-8457-12e093c1dce2
Business confidence falls in Scotland – but latest Bank of Scotland barometer shows firms remain resilient
Business confidence fell in Scotland in December but remained in positive territory as firms look to invest in the year ahead, the latest Business Barometer from Bank of Scotland Commercial Banking has revealed. The latest survey showed overall business confidence in the country fell nine points over the month to 15%. Companies in Scotland reported lower confidence in their own business prospects month-on-month, down five points at 25%, while their overall optimism about the economy also fell 10 points to 6%. The barometer sees 1,200 businesses polled monthly to provide early signals about Scottish and UK economic trends. Overall, UK business confidence rose seven points during the last month to 17%, with eight out of 11 nations and regions reporting a higher reading than November. The bank said Scottish businesses identified their top target areas for growth in the next six months as evolving their offer (36%), investing in their teams (31%) and entering new markets (25%). Meanwhile a net balance of 11% of businesses in the region expected to increase staff levels over the next year, up three points on last month.
https://www.insider.co.uk/news/business-confidence-falls-scotland-latest-28782085