Business News Round Up (28/02/2023)
Cost of living pressures set to intensify the UK’s regional economic divide, finds latest EY report
The rising cost of living and weaker consumer spending are expected to deepen the economic divide between London and the rest of the UK, according to the latest EY UK Regional Economic Forecast, released today. The forecast says that UK Gross Value Added (GVA) is expected to decline 0.6% over the course of 2023, with London (-0.2%) the only part of the country predicted to see a smaller economic contraction than the UK overall. London’s estimated 2022 GVA growth of 5.5% was the fastest in the UK, while only Scotland (5.3%) and the East of England (4.3%) join the capital in being expected to have seen better GVA growth than the UK as a whole (4.1%) last year. Although Scotland is expected to match the overall UK GVA performance in 2023 (also contracting 0.6%), other parts of the UK are forecast to lag behind. Yorkshire and the Humber and the East Midlands are predicted to see the steepest GVA contractions, at 1% each. Driving the contraction in UK output in 2023 are the forecast declines in services most dependent on household spending. With consumers struggling amid cost of living pressures, this year’s worst performing sectors are expected to include wholesale and retail (-3.3% GVA contraction), accommodation and food services (-2.7%), and arts, entertainment, and recreation (-1.8%). Manufacturing (-2.9%), which relies on consumer spending to maintain demand, also faces challenges relating to higher input costs such as raw materials and labour, alongside increased borrowing costs.
Scottish business confidence sees February uptick
Business confidence in Scotland rose four points during February to 14%, according to the latest Business Barometer from Bank of Scotland Commercial Banking. Companies in Scotland reported lower confidence in their own business prospects month-on-month, down one point at 7%. When taken alongside their optimism in the economy, up eight points to 20%, this gives a headline confidence reading of 14%. Scottish businesses identified their top target areas for growth in the next six months as investing in their team (43%), introducing new technology (31%) and evolving their offer (30%). The monthly survey of 1,200 businesses – including 100 in Scotland – showed that a net balance of 1% of businesses in the region expect to reduce staff levels over the next year, down 15 points from January, when a net balance of 14% of businesses planned to create new jobs. Chris Lawrie, area director for Scotland at Lloyds Bank Commercial Banking, said: “After a dip in confidence in January, it is good to see that businesses are once again feeling optimistic about their own trading prospects and the wider economy. However, rising costs, supply chain challenges and skills shortages are still affecting several key sectors across the country – as firms grapple with these challenges it’s easy for attention to pull away from seizing opportunities for growth. Firms that keep a close eye on cash flow and manage their working capital will be best placed to take on any unforeseen challenges and go after prospects in the months ahead.”
https://www.insider.co.uk/news/scottish-business-confidence-sees-february-29330839
Manchester’s economy to be UK’s third fastest growing between 2024 and 2026
A new report claims that Manchester will see the third-fastest economic growth of all UK towns and cities between 2024 and 2026. When measured by Gross Value Added (GVA), Manchester’s economy is expected to see annual average growth of 2.5% between 2024 and 2026, comfortably outpacing the national growth rate (2.1%). Only Reading (2.7%) and London (2.6%) are expected to see faster growth than Manchester, says EY’s latest regional economic forecast. The North West is expected to see annual average growth of two per cent over the same period – a bounce back from the 0.7% contraction forecast for 2023. Manchester is also expected to record the fastest rate of employment growth of any UK town or city from 2024 to 2026, with job numbers in the city forecast to grow 1.8% per year over the period. Meanwhile, UK jobs are expected to grow an average of 1.3% a year, and North West jobs are expected to be up 1.2% each year. Elsewhere in the North West, Liverpool’s economy is forecast to see 1.9% annual average growth from 2024 to 2026 – marginally below the national and regional averages. Positively, the city is forecast to see job numbers average 1.3% growth per year between 2024 and 2026, in line with the national rate and slightly outpacing the North West average. The North West is expected to have the fastest-growing economy in the North of England between 2024 and 2026, with the administrative and support services, and information and communication sectors set to play a key role for the region’s growth.
Bibby enjoys a surge in funding for Scots SMEs
Britain’s biggest independent invoice finance provider, Bibby Financial Services, last year saw a significant rise in funding for Scotland’s small and medium sized enterprises. Debts factored – the total funded turnover of BFS clients in Scotland – grew by 12% to £382m over 2021 with funding advanced growing by 4%. Mike Day, head of sales for BFS Scotland said: “Our team in Scotland had an incredible year in 2022 and we’re already off to a flying start in terms of new business enquiries. We’re in growth mode and ready to support Scottish SMEs and their advisors with working capital and cashflow solutions. We’re now actively recruiting for sales roles to grow our funding further.” BFS’s recent SME Confidence Tracker survey, undertaken in February, found almost two-fifths of Scottish businesses (39%) do not have the cashflow they need to operate effectively or to grow.
https://dailybusinessgroup.co.uk/2023/02/bibby-enjoys-a-surge-in-funding-for-scots-smes/