Business News Round Up (27/10/2022)
RICS: Commercial property outlook in Scotland declines as occupier and investment demand fall
Occupier and investor demand for commercial property in Scotland fell further, according to the latest Royal Institution of Chartered Surveyors (RICS) Commercial Property Monitor. The survey points to a weakening in the market as the prospect of further interest rate rises weigh heavily on the outlook over the year ahead. On the occupier side, overall tenant demand in Scotland fell to a net balance of -10% of respondents, the lowest figure since Q1 2021. There has been a downward trend in occupier demand for both office and retail space (net balances of -5% and -46% respectively). However, tenant demand for industrial property saw an increase through Q3, with a net balance of +25% of respondents reporting a rise. The net balance of respondents regarding retail demand has now been negative for 26 consecutive quarters. Meanwhile the net balance for industrial demand has been strongly positive since the middle quarters of 2020 when there was a covid-related dip. Overall rental expectations in Scotland are broadly flat for the three months ahead (down from +8% previously), but there is a big variation between industrial on the one hand and retail on the other. A net balance of +41% was recorded for industrial rental expectations and -52% for retail. But both figures were weaker than in Q2.
Newly announced £8m North West SME growth fund to create over 300 jobs
North West fund manager River Capital, has announced the launch of a new £8m fund which will provide loans of up to £300k to support SMEs throughout the North West, with a particular focus on the Liverpool City Region. Having recently refreshed its identity and as part of its ongoing growth strategy, the launch of the Business Growth Loan Fund (BGLF) is the first of several impending announcements set to be made by River Capital. The BGLF is funded by Merseyside Special Investment Fund as part of its ongoing commitment to support SMEs in the North West and will provide an alternative form of loan finance complementary to more traditional sources such as banks. In a time when businesses are still navigating the aftereffects and implications of Covid-19 as well as significant economic challenges, the fund seeks to provide finance for working capital, capital expenditure, acquisitions and management buyouts. From early stage to more established SMEs, companies at all points of development and from most sectors can apply for funding. Applications from those who demonstrate evidence of strong social values and positive ESG impact are “particularly welcomed”, with the fund also targeting the creation of over 320 jobs over its life.
Scottish insolvencies on the rise – with more to come
Scottish corporate insolvencies rose 28% in the second quarter, when compared to the same period last year – driven by a more than 143% rise in compulsory liquidations. The figures compiled by Accountant in Bankruptcy (AiB), an executive agency of the Scottish Government, also showed that the number of corporate insolvencies – liquidations and receiverships – increased by 10.7% compared with the previous quarter. There were 2,069 personal insolvencies during the second quarter of 2022 – up 7.7% year-on-year. Under the Debt Arrangement Scheme, there were 1,251 Debt Payment Programmes approved in the second quarter – up 9.9% from 1,138 for the same quarter in 2021. There were 879 applications for moratoria granted in the second quarter – a decrease of 7.2% year-on-year. Corporate insolvencies increased from 211 in the second quarter of 2021 to 270 during the same period this year. Steven Jansch, head of business restructuring and support at Gilson Gray, commented: “These numbers are unfortunately not surprising, taking into account the end of a lot of the government Covid-19 support measures, the continued turmoil in financial markets, the increase in interest rates, and the rise of virtually all other costs that businesses face.”
https://www.insider.co.uk/news/scottish-insolvencies-rise-more-come-28331562
UK economy to contract by 0.2% in 2023 as a result of increased inflation, forecasts GlobalData
The UK government’s introduction of the mini-budget negatively affected the country’s economy, which was already reeling from high inflation, the Russia-Ukraine conflict, Brexit, and the supply chain issues triggered by the pandemic. Against this backdrop, GlobalData, a leading data and analytics company, expects the UK economy to grow at 3.5% in its October 2022 forecast compared to the previously estimated 4.3% in February 2022 before sliding into a recession (-0.2%) in 2023. Aiming to kickstart the UK economy, the mini budget, through ‘The Growth Plan’, announced a range of measures including tax cuts worth £45 billion, a freeze in energy bills, VAT free shopping for non-UK visitors and a reversal of the National Insurance rise. Since these were unfunded measures, putting the public finances on an ‘unsustainable path’, investors lost confidence in the UK market which resulted in a financial market disruption. Following the announcement of the mini budget, the FTSE 100 hit a three-month low and pound sterling depreciated sharply against the dollar. The UK stock market was down by 7.1% and pound per dollar depreciated by 16.4% on a year-to-date basis on October 21, 2022.