Business News Round Up (27/09/2022)
OECD says UK economy ‘will not grow’ next year as world faces slowdown
The UK economy will grow less than expected this year and will flatline in 2023 as the wider global picture darkens, according to a major intergovernmental organisation. The OECD (Organisation for Economic Co-operation and Development) has downgraded its annual projection, saying that UK GDP will grow by 3.4% in 2022, down from the 3.6% it predicted in June. The Paris-based body also forecast a global economic slowdown, with world output projected to be $2.8 trillion lower than its prediction from before Russia attacked Ukraine – a loss of income equivalent in size to the French economy, reports Reuters. The OECD projected eurozone economic growth would slow from 3.1% this year to only 0.3% in 2023, with the 19-nation currency bloc in a recession for part of the year. Bloomberg reports that more severe fuel shortages – especially for gas – could reduce growth in Europe by a further 1.25% in 2023 and raise inflation by over 1.5%, the OECD said, pushing “many countries into a full-year recession in 2023”. European growth “would also be weakened in 2024”, it added.
More help for start-ups as bank extends loans
More early stage businesses will be offered access to loans after the British Business Bank expanded its Start Up Loans programme. It now includes start-ups that have been trading for up to three years and second Start Up Loans are now available to eligible businesses that have been trading for up to five years. The programme previously provided finance to start-ups which had been trading for up to two years. The expansion follows the 2021/22 Spending Review in which the government made the commitment to provide 33,000 loans to the programme over the next three years. The scheme has already delivered more than 6,300 loans worth more than £55 million to new business owners in Scotland since 2012. Susan Nightingale, devolved nations director, UK Network, commented: “This extension of the programme will enable us to work with those businesses that had perhaps just got going when the pandemic hit or are ready to consolidate and grow their businesses now that they are back on their feet. We want to ensure that these businesses do not get left behind. We have always been committed to providing support and funding to smaller businesses across Scotland, with entrepreneurial ambitions across all industry sectors.”
Number of UK businesses grew by 808,000 this year – still close to recent record highs despite struggling economy
The number of new businesses in the UK grew to 808,000 in the past year, near recent record highs in spite of the stress of inflation and rising interest rates on the economy, says Growthdeck, the private equity investment firm. Growthdeck says that the Covid-19 pandemic unleashed a new wave of entrepreneurialism in the UK. Many individuals have taken advantage of the opportunities available through technology and flexible working to start new businesses. The number of new businesses created last year was only slightly down on the 836,000 created in 2020/21, which was a record high. The sector that saw the most new businesses created in the past year was retail, with 98,000 started last year, largely driven by online retail. The online retail sector has been a major growth industry for a number of years. The pandemic supercharged this trend as entrepreneurs took advantage of a more accessible e-commerce marketplace to turn hobbies into business ventures. The red hot jobs market in the past two years means that recruitment is one of the sectors seeing the biggest rise in new businesses being created. Growthdeck’s figures show that the number of new businesses created in the recruitment sector rose by 11% from 8,000 to 8,900 in the last year as more recruiters sprang up to meet demand from both businesses and individuals.
What is the top concern for the UK’s SMEs?
Small and medium-sized companies across the UK are most concerned about the impact of employee mental health and wellbeing, financial uncertainty, and health and safety, on their businesses, numbers from Marsh reveal. The UK Business Risk Report 2022 collected data from over 1,700 UK businesses with revenues of up to £20 million to explore how circumstances over the past year have affected business risk appetite and the approach to risk management of small and medium-sized businesses. Nearly half (49%) of respondents identified employee health and wellbeing as a key risk, up from 30% in 2021, when COVID-related risks dominated business risk registers. Health and safety likewise remained a top concern, flagged by one-third (33%) of businesses compared to last year’s 32.6%. Only 18% of businesses disclosed that there were no people-related risks they were ‘most concerned’ about. More than a third (36%) of respondents identified financial certainty as a key risk to their business, down by 6% from last year’s data, indicating some remaining balance-sheet volatility. Three of the top emerging risks identified in the report reflected the wider economic climate. Thirty-nine per cent (39%) of businesses cited increased energy costs as being the ‘new risk’ they were most concerned about, while 32% cited inflation and 27% cited staff shortages. Falling short of the top three emerging risks were cyber security, which 23% of respondents still viewed as a pressing issue, and supply chain disruption (18%).