Business News Round Up (27/06/2023)
Scottish economic recovery ‘a little ahead’ of UK
The Scottish economy is recovering “a little bit ahead” of the rest of the UK, but some sectors lag significantly behind, an economic expert has told MPs. Westminster’s Scottish Affairs Committee heard from Professor Mairi Spowage, director of the Fraser of Allander Institute, on the recovery from the pandemic. The MPs are examining if various sectors have returned to pre-pandemic levels of activity. She told them that coronavirus and other global factors had made it a “challenging” period. “The sorts of growth rates people were hoping for as we emerged from the pandemic haven’t materialised in practice. Both the Scottish and UK economies have just got back to the position they were pre-Covid. Which after several years is obviously not brilliant.” Spowage continued: “Looking at the very latest data would suggest that Scotland’s a little bit ahead of the UK in terms of recovery. But that aggregate picture hides a lot of sectoral variations underneath.” The manufacturing sector in Scotland is “well behind” the UK’s, she said.
https://www.insider.co.uk/news/scottish-economic-recovery-a-little-30330327
Generative AI ‘could add £31bn to UK economy
The adoption of generative artificial intelligence could add 1.2% to the level of annual UK productivity – equivalent to £31 billion at current levels. A new KPMG report – Generative AI and the UK labour market – shows a relatively small but significant overall effect of the technology, which could impact around 2.5% of tasks performed across the UK, allowing workers to be redeployed to other tasks and activities. The report finds that the impact across different occupations is relatively varied, while 10% of jobs may be facing the most significant impact, with more than 5% of their tasks affected, another 60% of jobs could face little to no direct effect from generative AI. The wider implications that generative AI may have on the economy and society are highly uncertain. Set against the underlying impacts on employment and productivity, the wider social impacts may warrant a high degree of caution in how regulators and policymakers approach these technologies. “It will take time for the new technology to be adopted across the economy. Changes to working practices, skills, and significant levels of digital investments are required to unlock the productivity benefits,” said Yael Selfin, chief economist at KPMG UK. “While we do not anticipate many job losses as a result, changes to work practices of some occupations could still lead to short-term skill mismatches, as the labour market adjusts to the new technology. Additional support will be needed to facilitate the transition of affected workers to new occupations.”
Funding challenges hampering North West business growth
Nearly nine in ten businesses in the North West have admitted difficulty in accessing capital, a new report from BDO has found, despite a “real and immediate need to raise funds” to spearhead growth. According to BDO’s bi-monthly Economic Economysurvey, nearly a third of regional companies are having to scale back or make redundancies, with 29 per cent struggling to repay loans or credit. The report found that 26 per cent are unable to increase salaries as they have done in the past due to a shortage of funding. Over the next few months, North West businesses anticipate challenges, such as supply chain disruption, stock shortages and cost increases, to continue. In terms of priorities, 39 per cent want to invest in research and development, with 32 per cent looking to improve cash flow or generate new sources of revenue. Ed Dwan, regional managing partner at BDO in the North West, said: “As a result of the tough economic conditions that continue to hamper regional businesses, companies are facing a real and immediate need to raise funds within the next 12 months, in order to kick-start their growth plans. Against a challenging backdrop, North West businesses are having to explore every option when it comes to raising additional finance, with many struggling to access the capital they need. For more than a third, the equity capital markets are the most appealing source of funding, with bank loans and venture capital also high up on the list.”
https://www.insidermedia.com/news/north-west/funding-challenges-hampering-north-west-business-growth
Our survival depends on people choosing local, Scots businesses say
Three-quarters of Scottish businesses say the support of local people is critical to their survival as they battle continued unprecedented challenges. The statistic has been revealed by the Scotland Loves Local campaign as it issues a rallying cry for people to choose local this summer and support enterprises – and protect jobs – in their community, unlocking millions of pounds worth of spending. Its call to action is supported by the Scottish Government, with the findings reinforcing the importance of grassroots action in fuelling a fairer, stronger, more sustainable national economy. Research was carried out by Scotland’s Towns Partnership (STP), the organisation which spearheads Scotland Loves Local, among its members and stakeholders, which include the country’s Business Improvement Districts (BIDs). It found: 73% of businesses who responded to questions said custom from residents in their local community as “extremely important”, with 13% describing it as “very important”; Nine-in-10 (90%) said it was important that people “love local” and get behind businesses in their community this summer; And the circular impact of businesses boosting their local economy was reinforced by the survey responses, with three-quarters (75%) of those who took part saying they buy from and sell to other local enterprises.