Business News Round Up (28/01/2021)
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UK small businesses struggle with Brexit red tape
Britain’s small businesses warn profits are being wiped out and operations forced to move to Europe as they struggle to deal with the red tape and costs of trading with the EU after Brexit. A month after the UK left the EU’s single market and customs union, British SMEs are still working out whether they can afford to maintain once-thriving export businesses with the bloc. For those which decide to continue, it is often at the cost of jobs in the UK as they move operations across the channel. Others are simply absorbing the spiralling costs of sending goods to the continent, slicing already stretched margins and raising questions over their long-term plans. Since the UK left the EU, companies face extra courier fees, health certificates and other Brexit costs, as well as duties on good originating outside the UK, administration of VAT and often the need for operations within the bloc.
https://www.ft.com/content/13f0f13a-abce-4327-ad81-aaf392518b2a
Hospitality sector suffers £72bn lockdown wipeout
Britain’s hospitality sector lost more than half of its annual turnover last year – a staggering £72 billion – amid fresh concern at new lockdown measures. Sales collapsed 54% from £133.5bn in 2019 to £61.7bn in 2020 as pubs, hotels and restaurants were forced to close. The UKHospitality and CGA Quarterly Tracker follows recent data showing nearly 10,000 hospitality businesses closed last year, a net loss of 6,000 when openings are taken into account. Strict local and national restrictions on trading and socialising caused a particularly damaging drop in trade in the final quarter of the year, the Tracker shows. Sales from October to December were worth just £14.3bn – down by £18.7bn or 57% on the last quarter of 2019.
SMEs expect recovery by summer 2022, research reveals
SMEs that have suffered due to COVID-19 don’t expect to recover to pre-pandemic levels until summer 2022, according to research from Santander UK. With the UK now well into a vaccination programme that many hope will enable the economy to start reopening, ongoing cashflow issues and a decline in consumer demand means that one-in-twelve (8%) small businesses do not expect to survive the pandemic. 21% of UK SMEs say they are ‘not sure’ if they will survive long enough to take advantage of any change in the current restrictions. The data reveals that COVID-19 is likely to widen regional disparity, with London firms forecasting a decrease of 3.8% in profits by March 2021, compared to before the pandemic. Comparing this to the East Midlands (-11.6%), West Midlands (-9.3%), Yorkshire and the Humber (-8.0%) and the North West (-7.1%), it is clear that tailored, regional support will be vital in helping these important business hubs recover.
Scottish office and retail property troubles continue in the fourth quarter
Activity across the Scottish commercial property sector ended a tumultuous year with industrial demand strengthening, while the availability of vacant office and retail space is now rising at the strongest rate since the 2009 global financial crisis. The latest Royal Institution of Chartered Surveyors (RICS) Commercial Market Survey showed that overall, a -34% net balance of Scottish contributors reported a fall in tenant demand – a rate that is somewhat lower than the falls reported over the second and third quarters last year. While this might signal a small silver lining, when looking at individual sectors, the rate of decline has not shown any signs of easing in the retail and office sectors, which posted net balances of -79% and -68% respectively. The industrial sector was solely responsible for delivering the only positive outcome, with a net balance of +44% of respondents citing a rise in occupier demand. The contrast in fortunes is also evident in availability, as the retail sector posted the sharpest uptick in vacant space – in net balance terms – since 2009.
https://www.insider.co.uk/news/scottish-office-retail-property-troubles-23395187