Business News Round Up (26/04/2024)
Scottish financial distress rises as economic downturn bites
While UK inflation remains sticky and the prospect of interest rate cuts is moving further away, businesses in Scotland once again saw both advanced and early signs of financial distress rise in the Q1 of 2024, compared to the same period last year. According to the latest Red Flag Alert data from business recovery firm Begbies Traynor, in the period from January to April there was a 22.6% increase in more advanced or ‘critical’ distress among Scottish businesses, compared with 2023. This type of severe distress affected more than 2,060 businesses in Scotland. The level was even greater than the UK-wide figure, which saw a 20.1% rise in critical distress since the first quarter of 2023; representing over 40,170 businesses. While Scotland saw an 8% fall in critical distress since the previous quarter, this was lower than the drop of 15.4% across the UK as a whole.
https://www.insider.co.uk/news/scottish-financial-distress-rises-economic-32674956
Rise in number of firms operating in ‘significant distress’
The number of North West firms operating in “significant” financial distress rose by a third in the first quarter of 2024, a new report has found. According to the Begbies Traynor Red Flag dataset, 58,599 businesses were operating in distress, with the percentage increase above the national average of 30 per cent. Significant distress refers to businesses showing deterioration in key financial ratios and indicators including those measuring working capital, contingent liabilities, retained profits and net worth. The largest leaps in significant distress over the past year have been seen in sectors including sports and health clubs, food and drug retailers and general retail, as the general public continue to cut back on personal spending. The largest volume of distressed businesses are found in the quartet of key economic sector hubs in the North West region: Construction, real estate, support services and professional services.
Regional startups thrive through Barclays Eagle Labs
More technology start-ups based outside London and founded by women or ethnic minority entrepreneurs are getting support through a government-backed initiative. A £12m “digital growth grant” was switched from Tech Nation to Barclays Eagle Labs, which says that in its first year 74% of the 1,681 tech start-ups taking part were not London based, while about 65% were set up by women or ethnic minority entrepreneurs. In its final year of operation, Tech Nation said 58% of the companies it worked with had HQs, while 28% were founded by women. However, Barclays fell short of the agreed target of backing 80% of companies outside of London. Barclays Eagle Labs work with local delivery partners to provide advice on investment readiness to programmes on climate tech, AI, and creativity. It has existed since 2015 and runs 37 locations around the country.
https://dailybusinessgroup.co.uk/2024/04/regional-startups-thrive-through-barclays-eagle-labs/
The huge impact manufacturing has on the UK economy
There seems to be a continuing myth regarding the status of the manufacturing sector in the UK which often portraying it as outdated and making minimal contributions to the nation’s economic prosperity. However, the latest report from the Manufacturing Technologies Association (MTA) aims to dispel this fallacy by demonstrating the significant positive influence that manufacturing exerts on the UK economy. Its True Impact of Manufacturing Report shows that the sector remains a pivotal component of the UK’s economy, directly employing a substantial workforce of 2.6 million and contributing £184bn to GVA in 2022. However, it is not just one homogenous sector and its diverse nature make varying contributions to the economy. For example, food product manufacturing stands out as the largest sub-sector, accounting for 13% of manufacturing GVA and 17% of employment. This may be due to its perishable nature and local preferences, making it less susceptible to outsourcing.
https://www.business-live.co.uk/opinion-analysis/huge-impact-manufacturing-uk-economy-29063481