Business News Round Up (27/03/2023)
Economy was ‘more resilient than expected’ last year but still faces a risk of recession, KPMG warns
The economy was ‘more resilient than expected’ last year but still faces a risk of recession, KPMG has warned. The accountancy firm said the outlook was brighter in the first half of 2023 as inflation cooled after energy and food prices fell. While flat GDP growth meant the UK avoided recession at the end of 2022, a squeeze on incomes and interest rate hikes would probably derail short-term momentum. The Big Four firm forecast the economy will shrink this year by 0.3 per cent and grow 0.6 per cent in 2024. Yael Selfin, chief economist at KPMG UK, said: ‘Despite slightly stronger near-term momentum and the boost from the recent Budget announcements, ongoing tensions in the banking system and the lingering risk of a recession put a question mark around the outlook for the UK.’ Selfin added ‘skills shortages, slowing workforce participation, and ageing population’ dominated long-term economic risks. KPMG said strikes knocked 0.1 percentage points off final quarter growth in 2022.
Businesses ‘face £180m Scotland-only rates surcharge over next three years
Scottish businesses face a £180m rates surcharge over the next three years, according to the Scottish Retail Consortium (SRC). The Scotland-only higher business rates on firms occupying medium-sized and larger commercial premises will enter its eighth year of operation next week. The Large Business Rates Supplement in Scotland was doubled to 2.6p in the pound but remains 1.2p in the pound lower in England. It was subsequently rebranded as the Higher Property Rate (HPR) and was described as “damaging perceptions” of Scotland’s competitiveness by the Barclay Rates Review, which called for parity with England to be restored by 2020. The Scottish Government’s 2021 Framework for Tax has pledged to restore parity with England by the end of the current parliamentary term, in 2026. The SRC is now calling for that timeline to be accelerated. The surcharge currently applies to 11,570 commercial and industrial premises, of which 2,390 are shops, 580 are hotels, and 1,760 are offices. The retail sector alone is liable for £9.1 million of this surcharge each year. According to the SRC, one in six retail premises in Scotland is lying vacant and shopper footfall, while improving, has yet to climb back to pre-pandemic levels. It argued that the surcharge makes life tougher for firms in Scotland who are already grappling with a growing cumulative burden of public policy-imposed costs. Although changes have been made, such as the one-year freeze in the headline business rate and more regular revaluations which come into effect next week, the rates burden remains ‘onerous’.
https://www.insider.co.uk/news/businesses-face-180m-scotland-only-29556782
Strong Q4 for Liverpool office market
Liverpool’s office market experienced the highest level of fourth quarter take-up since 2019, according to Avison Young’s Big Nine report. Lettings for 189,601 sq ft of space in the quarter was 45 per cent up on ten-year average levels, and ending 2022 as the most active city across the UK’s Big Nine markets. Liverpool’s annual take-up totalled 510,552 sq ft. This is despite Q3 figures previously being 9 per cent down on Q2 and 12 per cent lower on the ten-year quarterly average. End-of-year deals, including Firesprite’s 54,121 sq ft deal at Duke & Parr, which was the city’s largest of the year, as well as Green Switch Capital at Exchange Station, Wealth at Work at 1 St Paul’s Square, and Direct Line at 5 St Paul’s Square, all contributed to ending the year on a high. Prime rents were also up 16 per cent at £25.50 per sq ft. Despite these figures, the city is still facing availability shortages with historic low levels at 5.4 per cent, a further 16 per cent drop from the previous quarter. However, Avison Young predicts that this will change. Ian Steele, principal in Avison Young’s Liverpool office agency team, said: “Availability is likely to increase over the next 12 months as several occupiers in key city core buildings are due to downsize from their existing space. As workplaces take on hybrid working policies, the requirements for large office space have shifted, focusing instead on quality and ESG credentials, and we predict that more will therefore become available as businesses look to redesign and reconfigure their spaces.”
https://www.insidermedia.com/news/north-west/strong-q4-or-liverpool-office-market
CBI launches ambitious taskforce to tackle economic inactivity and improve both the health and wealth of the nation
With economic inactivity historically high, ill-health costing the UK economy £180bn in lost output, and millions of lost working days annually, the need to find solutions driven by employers and supported by government is critical. The latest labour market statistics released this month showed the numbers of inactive people due to long-term sickness is at a record high, and over a quarter of those who are now inactive cite long-term sickness as the driver. Business-led health interventions such as free health screening, employee assistance programmes and workplace ergonomic assessments- could contribute up to £36 billion in output to the economy – through a 20% reduction in the impact of ill-health on our collective workforce. That’s why partnership between industry and government is crucial within this Parliamentary term. The employers’ organisation, the CBI is today launching and co-chairing a new Health and Work Taskforce – backed by industry CEOs alongside the TUC and the Health Foundation – to recommend and implement near-term actions which will lead to long-term benefits. The Taskforce will identify what UK industry can do to improve the health of their workforces and the working age population more broadly. It will also identify where government can provide signals, framework, and incentives to help the whole economy to value health investment more proactively.