Business News Round Up (25/05/2023)
IMF expects UK to dodge recession this year but warns on ‘stubborn’ inflation
The International Monetary Fund (IMF) has sharply upgraded its growth forecast for the UK and now expects the British economy to avoid a recession this year but cautions against “premature celebrations” on inflation. It predicted the UK economy to grow by 0.4% in 2023, having forecast a contraction of 0.3% last month. The BBC reports IMF comments that inflation “remains stubbornly high” and that higher interest rates will be needed to bring it under control. Kristalina Georgieva, IMF’s managing director, said that the government had taken swift action to resolve concerns over financial stability in March. “We have to recognise that … there has been a very significant turnaround in policy,” she said, adding that Westminster had put relations with the EU on a more predictable path and rose above the “political fray” on fiscal policy. However, the IMF cautioned against “premature celebrations” and warned that inflation was set to remain above the Bank of England’s (BoE) 2% target until mid-2025 – six months longer than it had forecast last month, according to the FT. Latest figures from the Office for National Statistics show the UK recorded the sharpest fall in inflation since the cost-of-living crisis began, down to an annual rate to 8.7% in April, although food prices continued to rise at the fastest pace in 45 years.
Scottish insolvency activity reaches 2023 high
The number of insolvency-related activities in Scotland has reached its highest level this year, according to new research from R3, the insolvency and restructuring trade body. Its analysis of data provided by Creditsafe shows there were 122 cases of insolvency-related activity – which includes liquidator appointments, administrator appointments and creditors’ meetings – in Scotland during April. These figures were the highest since December 2022 – when 142 cases were recorded – and 11.9% higher than March’s total of 109. Scotland saw the highest monthly rise in insolvency-related activity of all the regions and nations in the UK in April. Insolvency-related activity in Scotland was up year-on-year as well, with April 2023’s figures 32.6% higher than those recorded in April 2022. Richard Bathgate, chair of R3 in Scotland, said: “The monthly and yearly rises in insolvency-related activity in Scotland reflect the challenging trading climate that many businesses are still experiencing post-pandemic. The high cost of living is affecting consumer spend, while at the same time the costs of rent, utilities, raw materials, and transportation for Scottish businesses have all increased. These factors, coupled with pressure to increase staff wages have left many businesses struggling to grow, to pay their bills, or to pay off existing debt.”
https://www.insider.co.uk/news/scottish-insolvency-activity-reaches-2023-30064552
Report reveals contribution of commercial real estate sector to the UK economy
A report published by the British Property Federation (BPF) has identified an annual economic output of £137.5 billion generated by the UK commercial real estate market. This is equivalent to over 7% of the UK’s total gross value added (GVA). GVA from the commercial real estate sector increased by just over £30 billion (28%) from 2021 to 2022, indicating significant growth in the market. Further evidence of the sector’s growth can be seen in the £7.1 billion (18.5%) increase in total tax revenue paid to the exchequer through employment-related taxes, business rates, and other taxes including property transaction taxes. In addition to playing a large role in the UK economy, the commercial real estate sector is a big employer. The report also found that the industry directly supported 1.37 million jobs in 2022 and a further 1.3 million indirectly, supporting 1 in every 12 jobs in the UK. The total number of direct and indirect jobs supported by the sector rose by 338,000 (14.7%) from 2021 to 2022.
Blockchain technology could unlock £4.48bn opportunity for Scotland, according to report
Blockchain technology could unlock a multi-billion pound boost to Scotland’s productivity, according to a new report from Scottish Enterprise. The business support agency released an industry paper that decentralised digital tech could help grow the nation’s gross domestic product (GDP) by £4.48bn by 2030. The economic forecast was outlined in the report, ‘Blockchain Industry in Scotland Landscape Overview: Companies, Investors, Influencers and Trends‘, released on Tuesday. Worldwide, blockchain is expected to generate $1.2trn to the global economy by 2030. The report was put together by Deep Knowledge Analytics, presenting an overview of the entire blockchain industry ecosystem. Suzanne Sosna, Scottish Enterprise director of economic opportunities, said: “This is the first review of its kind into the companies, investors, and impact of blockchain that could unlock new and scalable innovation opportunities for our digital economy in Scotland. The technology is most associated with the financial sector, but we wanted to look beyond that across industries where blockchain technology might be lesser known, but no less innovative, such as in education where it’s used to make qualifications secure. Scottish Enterprise will continue to support the development of blockchain technology to help business growth and innovation in Scotland.”