Business News Round Up (27/07/2023)
UK outlook upgraded by IMF but remains second slowest G7 economy
The UK has seen a huge turnaround in its economic outlook, with the International Monetary Fund now predicting it will grow by 0.4% this year and avoid a recession.This compares to a 0.3% contraction initially predicted in April, when the UK was forecast to be the worst performing economy in the world. In its latest assessment of global economic prospects, the IMF said the improvement was a result of “stronger-than-expected consumption and investment from the confidence effects of falling energy prices”. It added the Windsor Framework agreement, announced by Rishi Sunak in February, had also helped trade between Northern Ireland and Great Britain thanks to “lower post-Brexit uncertainty”. However, despite the upgrade, Britain remains in the slow lane as it still has the highest headline rate of inflation of the G7 economies, the highest rate of core inflation and, along with Germany, was the last advanced economy to return to its pre-pandemic size. Germany’s economy is now expected to shrink by 3% this year, contradicting Chancellor Olaf Scholz’s insistence that the country would avoid a contraction. The IMF said a “weakness in manufacturing output” was to blame for the forecast, which had been downgraded from a 0.1% reduction. The forecast positioned the UK as the second slowest G7 economy this year ahead of Germany, and the joint- second slowest next year, ahead of Italy and in line with US and Japan.
https://www.investmentweek.co.uk/news/4120935/uk-outlook-upgraded-imf-remains-slowest-g7-economy
Scottish corporate insolvencies rise 19.7% year-on-year
Scottish corporate insolvencies rose by 19.7% in the first quarter of this year – to a total of 292 – when compared to the same period last year, while personal insolvencies rose 2.9%. New data from Scotland’s insolvency service Accountant in Bankruptcy (AiB) showed that corporate insolvency numbers in Scotland also increased by 21.7% when compared to pre-pandemic levels in 2019. However, the number of liquidations and receiverships in Scotland for the first quarter decreased by 15.6%, compared with the previous quarter’s total of 346. Overall, personal insolvency numbers – bankruptcies and protected trust deeds – in Scotland during the first quarter increased by 2.9% year-on-year, to a total of 2,098. Personal insolvency numbers in Scotland also decreased by 40.5% when compared to pre-pandemic levels in 2019. Tim Cooper, vice president of insolvency and restructuring trade body R3 and partner at Addleshaw Goddard, said: “The yearly rise in corporate insolvencies has been driven by a rise in the number of compulsory liquidations which can likely be attributed to the end of the temporary legislation that altered the process and criteria for these. Creditors’ Voluntary Liquidations are also almost 140% higher than they were in 2019, as a combination of the aftereffects of the pandemic and the challenging economic climate mean more and more directors are choosing to close their businesses before that choice is taken away from them.”
https://www.insider.co.uk/news/scottish-corporate-insolvencies-rise-197-30559279
Liverpool City Region confirmed as £320m investment zone
Focusing on life sciences and the pharmaceutical industry, the investment zone will encompass Liverpool, Runcorn, St Helens, Maghull, and Prescot, the government has announced. Backed by £80m of government funding, the Liverpool City Region investment zone could leverage £320m of private sector investment over the next five years and “make Liverpool a pharmaceutical production superpower”, according to Whitehall. An initial £10m investment will be made by US pharmaceutical manufacturer TriRx, which will go towards immunotherapy research at its Speke biotech facility. The investment zone will benefit from a range of interventions that could include skills, infrastructure, and tax reliefs, depending on local circumstances, according to a statement published by the Department for Levelling Up, Homes, and Communities. The statement added that the government would work with the Liverpool City Region and the University of Liverpool to co-develop the plans for the life sciences investment zone, including agreeing priority development sites and specific interventions to drive cluster growth.
Occupier demand for Scottish commercial property falls
Occupier demand in the commercial property market in Scotland fell flat through the second quarter, according to the Royal Institution of Chartered Surveyors (RICS) – although surveyors appear more optimistic about the market in the three months ahead. The industry body’s Commercial Property Monitor also revealed that a net balance of 2% of respondents in Scotland said that occupier demand rose in the second quarter, which is consistent with a broadly flat picture – compared to 5% in the first quarter. There was a reported increase in demand in the industrial sector, with a net balance of 26% of respondents seeing a rise, retail space remained in negative territory at -21% and demand for office space was reported to be flat. On the investor side, a net balance of -22% of surveyors reported an overall fall in investor enquiries, with all three sub-sectors experiencing a decline. A net balance of -17% of respondents saw a fall in office space, -13% in industrial space and -38% in retail property. On the outlook, capital values are expected to remain in negative territory. A net balance of -25% of respondents in Scotland indicated that they expect net capital values to fall across all sectors over the second quarter of 2023, with all three sub-sectors anticipated to decline. However, a net balance of 16% of respondents expects a rise in rents over the next three months, indicating a more positive outlook overall for the occupier market.
https://www.insider.co.uk/news/occupier-demand-scottish-commercial-property-30564599