Business News Round Up (24/10/2022)
Moody’s lowers UK’s outlook to ‘negative’
The UK’s battered international image has suffered another blow after its financial and economic outlook was revised from “stable” to “negative” by ratings agency Moody’s. The agency attributed the change to “heightened unpredictability in policymaking amid weaker growth prospects and high inflation.” It said there were “risks to the UK’s debt affordability from likely higher borrowing and risk of a sustained weakening in policy credibility.” The rating’s agency said it viewed the government’s mini budget, the reversal of the majority of the policies in it, and the change in Prime Minister as a “continuing reflection of the weakening predictability of fiscal policymaking seen in previous years”. The change to the UK’s outlook does not mean its credit rating has been downgraded – a reflection of its continued economic resilience – but a negative outlook indicates it could be downgraded at some point. This would drive up borrowing costs for the government, add pressure to public spending, and weaken investor appetite for UK assets. The last timeMoody’s downgraded the United Kingdom’s credit rating was in October 2020, citing lower than expected growth following Brexit, rising government debt and a weakening of the UK’s institutions that it said had led to a “fractious policy environment.”
Almost 1.7m invoices overdue in Scotland, R3 says
Almost 1.7m invoices were overdue in Scotland in the third quarter of the year, new research from insolvency and restructuring trade body R3 has revealed. R3’s analysis of data from Creditsafe shows 1,696,445 invoices were overdue in Scotland in Q3 – up 7.1% on Q2’s total of 1,583,353. R3 said Scotland and the West Midlands saw the biggest quarter-on-quarter rise in overdue invoices across the UK. They were followed by Northern Ireland (up 6.9%), the East Midlands (5.4%) and East Anglia (5.2%). It said Scottish businesses’ debt burden had been increasing steadily since the beginning of the year, rising from 552,897 unpaid bills in July, to 564,375 in August and 579,173 in September. Almost 101,500 Scottish businesses reported that they had late payments on their books in Q3 2022 – a figure which peaked at 33,936 firms in September. Richard Bathgate, chair of insolvency and restructuring trade body R3 in Scotland, says: “This research highlights late payment is a growing issue in Scotland, and would suggest that businesses are facing ongoing cash-flow challenges, whether that’s supplier or client side. For small businesses that rely on regular income, even if just one client fails to pay or there is a delay in payment, that can have a serious effect – and in some cases, may mean they become financially distressed or insolvent.”
https://www.insider.co.uk/news/almost-17m-invoices-overdue-scotland-28299967
Three quarters of businesses have been hit by labour shortage in last 12 months
Three-quarters of respondent businesses have been impacted by labour shortages over the last year and a majority now believe the issue is a threat to labour market competitiveness, in a new survey out today. In its annual Employment Trends Survey with Pertemps Network Group, the CBI reports that ‘shortages in the labour market are having a material impact on firms’ ability to operate at full capacity, let alone grow’. Many businesses have responded by investing in training, while also increasing pay and improving their offer to staff to help retain workers and attract new recruits. The survey found that nearly half of those who have faced labour shortages in the past 12 months have been unable to meet output demands; 36% made changes to or reduced the products or services they offer, while 26% reduced planned capital investment. Nearly three quarters of respondents said the UK has become a less attractive place to invest/do business in over the past five years.
Highland businesses lack confidence in economy
A survey carried out this summer indicates most firms in the Highlands were operating then at either pre-Covid levels or above. However, the survey also showed significant declines in levels of exporting activity and in the overall level of confidence in terms of economic outlook. The Highlands and Island Enterprise (HIE) Business Panel survey forms part of a wider rural Scotland study with the Scottish Government and South of Scotland Enterprise. Interviews were conducted in June and July, with 2719 businesses and social enterprises taking part, 1043 of which were based in the Highlands and Islands. Around half (49 per cent) of respondents expressed confidence in the economic outlook for Scotland. That was down from 60 per cent in the previous survey in February and March. Two-thirds (67 per cent) of respondents said they were operating at either the same or above their pre-Covid pandemic level. While the proportion of businesses trading domestically remained steady, the proportion exporting to international markets had fallen considerably in the past year – from 46 per cent in June/July 2021 to 28 per cent, and from 59 per cent to 48 per cent in terms of those selling to the rest of the UK. Almost all had been affected by rising costs.
https://www.ross-shirejournal.co.uk/news/firms-lack-confidence-in-future-of-economy-291189/