Monthly business news updates
This month (April 2023) we have updates on the following topics:
- National outlook and trading environment
- Spring Budget
- Economic forecasts
- Labour markets
- Property markets
National outlook and trading environment
The UK economy only narrowly avoided recession last year, and the outlook for 2023 has improved thanks to a sharp drop in wholesale energy prices, a robust labour market and better global growth prospects. But higher debt servicing costs, the sharp fall in real income and tighter fiscal policy over the remainder of the year are still key risks to watch.
These issues and their ongoing impact across the Midlands cannot be underestimated. This includes the ongoing effect of restricted economic and business activity / investment on the labour market, driven by the cost crisis. There are also additional business challenges such as:
- Industrial action - ONS data suggests that the East Midlands lost 65 working days per 1000 employees between June and December 2022 because of strikes, and the West Midlands lost 70.
- Trade performance – analysis and on the ground evidence demonstrating the issues associated with UK-EU trade within the post-Brexit agreement.
March saw the Chancellor set out his Spring Budget, coined a “Budget for Growth” and is built on 4 pillars for tackling economic inactivity and business investment: “Enterprise, employment, education and everywhere”. Overall, the spring budget has been received as a step in the right direction for the Midlands, providing our region with the opportunity to further build confidence and reap the benefits of levelling-up.
£1.75 billion worth of direct funding announcements were made to the Midlands area, including a further devolution deal for the West Midlands Combined Authority, 2 investment zones (both east and west), 6 levelling up partnerships, and around £100 million for capital projects across the Midlands. Other policies - such as related to childcare, over 50’s, energy security and R&D – were also welcomed.
website: Business chiefs react to budget - Express and Star
However, many businesses and business groups have pointed out that there was very little support for tackling ingrained cost pressures, such as through business rates reform or a more generous support package for energy costs. This has been voiced by local business representatives but also nationally by the FSB and the British Chambers of Commerce. The key concern is that failing to tackle cost pressures will not provide sufficient incentive or possibility for businesses to invest for growth, and will in many cases cause them difficulties in surviving.
The latest Office for Budget Responsibility forecasts suggest the UK will narrowly avoid entering a technical recession this year, but the economy will still shrink (-0.2% GDP). Inflation is now likely to fall further than forecasted in the Autumn budget to 2.9% by the end of the year.
Falling inflation is partly as a result of wholesale gas prices rapidly reducing, with annual energy prices for the average household expected to fall below £2200 by the end of the year. Real disposable household incomes are therefore projected to fall by 5.7% over the next 2 financial years. Whilst this is lower than previously forecasted, this is still the largest fall since records began in the 1950s.
Nationally, the latest labour market data reinforces the trends of the last few months with employment continuing to creep up and economic inactivity edging down:
Unemployment remains broadly flat, and close to its lowest level in 50 years. There are also early indicators of a potential slowdown with redundancies and short term unemployment both levelling off, and vacancies falling less steeply than they were in the latter part of last year.
The latest job postings data shows that the number of postings across the Midlands dropped 29.9% over the last 6 months to nearly 1.19 million. Despite employer demand narrowing, those seeking work - wanting a job, currently remains heightened.
Nevertheless, advertised median salary across the Midlands has increased by 8.3% year-on-year to £28,800; 4.1% below the national median advertised salary of £30,000.
- In Ashfield the latest unemployment figures show that we have 3030 people seeking work, this equates to 3.88% of our working age population. This figure is slightly higher than the regional average of 3.2% and national average of 3.6%.
*** Key Sectors that are hiring at the moment: Logistics & Warehousing, Engineering, teaching, I.T. Hospitality & Catering
Tim Gilbertson, Director at FHP reports that the impact of the current energy crisis and inflationary pressures is certainly starting to be felt in the commercial property market but it’s not all ‘doom and gloom’. The underlying trend in terms of industrial and distribution space throughout the region shows that there is still good demand and a lack of space, with demand still strong at the top end of the market from major distribution and manufacturing companies.
For the smaller, local companies, we are still seeing activity but undoubtedly committing to leases or buying premises is a difficult decision to make at present and there is certainly some nervousness in this sector. The office market in the region is still stable although there is stock available, and retail and leisure continues to be challenged by the impact that all individuals and businesses are feeling due to the general increases in costs of living.
- website: FHP property search
- email: firstname.lastname@example.org
You can find more information about the latest economic situation and sector forecasts on the following websites:
Key sector updates: Trade associations
- website: Federation for Small Businesses
- website: Logistics UK - research reports
- website: MAKE UK - Manufacturing reports
- website: Medilink – Health & Life Sciences industry magazine
Regional economic updates
- website: D2N2 Dashboard
- website: Nottinghamshire County Council employment bulletin
- website: Midlands Engine Observatory - Latest reports
- website: Midlands Engine Intelligence Hub
National economic updates
- website: Nomis – Official labour market statistics
- website: Varbes – Statistics and trends for UK and Local areas
- website: NatWest Monthly Economic Outlook
- website: The Office for Budget Responsibility
- website: CHAPS card data
Global economic updates
- website: Global & regional outlooks
- website: IMF reports
- website: Trading economics
- website: Weekly economic update from Deloitte
- website: United Nations briefing reports