Business News Round Up (26/10/2023)
Scottish economy showing signs of apathy as many businesses choose to hold back investment
Growth in the economy has been faltering and pretty muted over 2023, with a high interest rate environment and wider economic uncertainty leading to investment being delayed or cancelled, according to the Fraser of Allander Institute. The Institute’s quarterly Economic Commentary, which includes an assessment of all the latest key data on the UK and Scottish economies, is published today. In the Deloitte-sponsored Economic Commentary, the University of Strathclyde researchers have set out their new forecasts for the Scottish Economy. The economists are forecasting growth of 0.2% in 2023, 0.7% in 2024 and 1.2% in 2025. For 2023, this is a revision down from the Institute’s previous set of forecasts in June, as data for 2023 to date has been much weaker than expected. The forecasts for 2024 and 2025 have not changed since June. The most recent data on inflation, which held steady at 6.7% in September, shows that the high inflationary and interest rate environment is likely to persist for longer than previously thought – therefore it is likely that there are more risks to the downside for these forecast numbers than when they were presented in June.
Scottish corporate insolvencies rise 20% from pre-pandemic levels
Corporate insolvencies in Scotland rose 19.9% during the second quarter, when compared to pre-pandemic levels in 2019 and rose by 4.8% compared to the same period last year. Meanwhile, personal insolvency numbers in Scotland saw no real change, with a decrease of just 0.05% – which equates to a single case – to a total of 2,074. Personal insolvency numbers also fell by 40.2%, when compared to pre-pandemic levels in 2019. The latest data from Accountant in Bankruptcy, the Scottish Government’s insolvency service, also revealed that the number of liquidations and receiverships in the second quarter decreased by 3.1% compared with the previous quarter’s total of 292. Iain Fraser, chair of the Scottish Technical Committee at R3, the UK’s insolvency and restructuring trade body, said: “The year-on-year rise in corporate insolvencies has been driven by an almost 35% rise in compulsory liquidations. This increase suggests that, faced with financial challenges of their own, more and more creditors are now increasing their efforts to pursue debts they are owed to meet their own financial obligations. Times remain tough for Scottish businesses, “ he continued. “Inflation is still a big worry for many, prices are going up, and businesses are struggling to reasonably pass on these extra costs to customers. Businesses have faced the dilemma of whether to increase prices to compensate for their falling margins, or whether to absorb these expenses themselves in an attempt to retain customers. For some, further increases could be enough to see them entering an insolvency process to resolve their financial issues, while others may hold on in the hope things will improve. “
https://www.insider.co.uk/news/scottish-corporate-insolvencies-rise-20-31275138
Surge in Manchester office activity in Q3 – MOAF
Take-up in the Manchester city centre office market more than doubled in the third quarter of 2023 to 351,063 sq ft. Compared to 179,073 sq ft in the previous quarter, the take-up reflected a total of 59 deals which were completed. Highlights included Arden University acquiring 42,944 sq ft at 2 Hardman Street, UA92 signed up for 36,751 sq ft at Bruntwood’s Riverside, and Cubo leased 30,829 sq ft across two floors at The Lincoln. The third quarter also saw Manchester reach record headline rents in the city centre with Relentless Development’s pre lets to Pinsent Masons and Hill Dickinson at No.1 St Michael achieving £43 per sq ft. “Grade A space continues to let well, especially as supply of quality space is diminished in the city centre,” said Rosie Veitch, from Sixteen Real Estate. “The take-up we’ve seen over the last three months is hugely positive, and we expect this level of level of activity to continue as we look ahead to the final quarter. The region is poised for a strong finish to the year, and we are confident take up will again surpass one million sq ft for the year.”
https://www.insidermedia.com/news/north-west/surge-in-manchester-office-activity-in-q3-moaf
Investor demand for commercial property in Scotland declines at faster rate as weak lending conditions and fragile economy impact on sentiment
Occupier demand in the commercial property market in Scotland remained flat through Q3 2023, according to the latest Royal Institution of Chartered Surveyors (RICS) Commercial Property Monitor, however investment enquiries fell sharply across all sub-sectors. A net balance of -1% of respondents in Scotland said that occupier demand fell in Q3 2023, which is consistent with the broadly flat picture that was seen in Q2. There was a reported increase in demand for both industrial and office space, with a net balance of 16% and 9% of respondents seeing a rise respectively. Regarding retail space, this figure remained in negative territory at -30%. Although this is down from -21% in Q2, it is up from -46% this time last year. Looking at the investor side, a net balance of -34% of surveyors reported an overall fall in investor enquiries, with all three subsectors experiencing a decline. A net balance of -38% of respondents saw a fall in investor demand for office space, -23% for industrial space and -41% for retail property. On the outlook, capital values are expected to remain in negative territory. A net balance of -23% of respondents in Scotland indicated that they expect net capital values to fall across all sectors over the final quarter of 2023. This is the fifth consecutive quarter that this figure has remained in negative territory.