Business News Round Up (29/04/2022)
Scottish tech companies ‘bounce back’ from Covid despite drop in exports
Scotland’s technology industry has “bounced back” from the Covid-19 pandemic, despite a drop in exports amid geopolitical tensions, according to new research. In its annual polling of Scottish tech businesses, trade body ScotlandIS found that 72% of companies experienced an increase in sales in 2021 – marking a return to pre-pandemic levels of sales growth reported in 2019, after a significant drop in 2020 (44%). Its Scottish Technology Industry Survey also shows that digital firms are expecting to “reap rewards” from growth in data analytics, artificial intelligence, and the Internet of Things, but the largest increase in potential growth opportunities has been seen in cybersecurity. A third (31%) of Scotland’s tech businesses are now seeing it as an opportunity in the year to come. But whilst the sector is on a “positive trajectory”, exports are in decline. Last year saw a four per cent reduction in exports to 56%, and one in five Scottish tech businesses have no plans to export this year. Of those planning to export, key markets are Europe (68%), rest of the UK (77%) and North America (60%). It also reports that the skills gap is becoming “increasingly challenging” for industry to manage, with talent continuing to stay in high demand across the sector.
Number of empty shops falls as UK economy reopens
The number of shops standing empty fell in the first quarter, industry research showed on Friday, as the UK economy reopened following the worst of the pandemic. According to the latest BRC-LDC Vacancy Monitor, the overall vacancy rate decreased to 14.1% in the first three months of the year, 0.3 percentage points down on the fourth quarter and only the second quarter of falling vacancy rates since the start of 2018. All locations reported falls, with vacancies easing to 14.1% from 14.4% three months earlier on the high street and to 19.0% from 19.1% in shopping centres. In retail parks, the number of empty shops eased by 0.7 percentage points to 10.6%. Helen Dickinson, chief executive of the British Retail Consortium, said: “The economy has fully reopened, with more city workers back in the office and more tourists out on the streets. This allowed some businesses to grow and invest in repurposing and reopening empty units, especially in retail parks and high streets.” However, she acknowledged that the overall proportion of empty shops remained well above pre-pandemic levels and warned of uncertainty ahead.
Rise in North West firms in ‘critical distress’ during first quarter
More North West firms have slipped into ‘critical distress’ during the first quarter of 2022, but the region has witnessed a fall in the amount of companies deemed to be in ‘significant distress’. Manchester-based insolvency specialist Begbies Traynor today (April 28) published its latest Red Flag Alert, which has analysed the health of companies across the region for the past 15 years. The latest report found that 240 firms were in ‘critical distress’ in the first three months of 2022 – a year-on-year increase of 22%. It also confirms that 55,728 firms remain in ‘significant distress’ with 23,602 being from Greater Manchester and 8,996 from the Liverpool City Region. This is a 22% drop on the same period last year – when 70,496 were judged to be in ‘significant distress’ – which was during a national lockdown. Real estate (7,334), construction (7,328) and support services (9,176) were the three sectors that contained the highest volumes of distressed firms from the 22 analysed in first quarter of 2022. Sectors seeing a rapid triple-digit percentage increase in critical distress against the previous quarter include bars and restaurants (217% increase) and food retail (117% increase).
Manufacturing sentiment falls sharply as demand slows and costs rise
Optimism fell sharply in April, as growth in manufacturing output and new orders slowed and costs and selling prices grew at their fastest paces in over 40 years. Investment intentions weakened notably, but employment growth improved and is expected to pick up further next quarter. The survey, based on the responses of 250 manufacturing firms, found that Business optimism fell at the sharpest pace since April 2020. Output volumes in the quarter to April grew at a slower pace than in the quarter to March, but growth remained above the long-run average Total new orders rose at a slower pace in the three months to April compared with January. Firms expect growth to slow further over the next three months. Average costs in the quarter to April grew at the fastest rate since July 1975, while domestic prices grew at the fastest pace since October 1979. A supplementary question found that the cost of raw materials was the most important factor behind expectations for cost growth in the next three months (80% of respondents said this was extremely important), followed by energy costs (59%), transport costs (41%) and labour costs (38%).