Business News Round Up (28/03/2024)
Cashflow declines as high costs hammer Scottish businesses – Chamber of Commerce survey
The latest Scottish Chamber of Commerce research has revealed a significant downturn in cashflow and profitability during Q1 of this year, with sizeable contractions across four of the five sectors recorded. The organisation surveyed 400 Scottish firms, with 97% of respondents being SMEs, with less than 250 employees. Challenges in recruiting staff also rose, to 47% for Q1, compared to 40% during the final quarter of 2023; although recruitment intentions remain stable for the next quarter. More firms indicated that they would raise prices this quarter compared to last, rising by 10 percentage points to half of all firms. The leading cost pressures remain labour costs (76%), energy costs (60%) and raw material prices (44%), with more companies raising concerns specifically on labour and energy costs. More than half of companies have also reported investment freezes and do not expect this to change next quarter, due to economic uncertainty.
https://www.insider.co.uk/news/cashflow-declines-high-costs-hammer-32451658
Manchester’s economy sees ‘significant’ weakening as global picture remains mixed, chamber of commerce study reveals
An influential business survey has shown a “significant” weakening in the Greater Manchester economy over the last three months as economic uncertainty goes on. The headline GM Index of business health, from Greater Manchester Chamber of Commerce, fell from 19.3 at the end of 2022 to just 3.7 now – its lowest for more than two years. Subrahmaniam Krishnan-Harihara, deputy director for research and information systems at GM Chamber, said the picture across Greater Manchester and the UK remained mixed. Inflation is coming down, but broader uncertainties over policy direction remain as the UK heads to a general election and the impacts of Brexit and Covid continue. The QES results showed GDP was broadly flat, growing just 0.1% in 2023 and rising just 0.2% in January. Consumer confidence was in negative territory, though it had improved on a year ago.
Poor but improving: economy slowly recovers in line with expectations
Economic data in early 2024 is showing that the economy is likely to be recovering hesitantly as expected, following the contractions in growth in the final part of 2023. This comes in the latest economic assessment from the Fraser of Allander Institute at Strathclyde University. In the Deloitte-sponsored Economic Commentary, the University of Strathclyde researchers have set out their latest forecasts for the Scottish Economy. The economists are forecasting growth of 0.6% in 2024, 1.1% in 2025 and 1.2% in 2026. These forecasts are unchanged from the previous assessment. Bright spots for the UK as a whole can be seen in the inflation data, with the latest showing that Consumer Price Inflation fell to 3.4% in February, adding to hopes that interest rate cuts are likely to be coming over the course of 2024. January GDP data for the UK also shows growth after a poor end to 2024.
North West business confidence falls in March
Business confidence in the North West fell by six points during March to 43%, according to the latest Business Barometer from Lloyds Bank Commercial Banking. Companies in the North West reported higher confidence in their own business prospects month-on-month, up one point to 55%. However, their optimism in the economy fell 12 points to 31%, giving a headline confidence reading of 43% (vs. 49% in February). Looking ahead, North West businesses identified their top target areas for growth as entering new markets, for example by diversifying into adjacent markets or exporting to new ones (37%), evolving their offering, including by introducing new products or services (32%) and introducing new technology, such as automation or AI (32%). Overall UK business confidence registered 42% in March, the same as in February, as firms’ confidence in their own trading prospects (49%) held steady, and confidence in the economy strengthened by one point (35%).