Business news updates
This month (December 2023) we have updates on the following topics:
- General outlook
- Economic forecast
- The Government's November budget
- Challenges faced by businesses
- Skills in demand in our region
- Labour markets
- Most areas in the UK saw a fall in business activity in October, amid broad weakness in demand, according to the NatWest Regional PMI survey. Employment has also declined in most cases albeit generally more slowly than in September. October also saw retail sales fall by 0.3% putting them at the lowest level since February 2021, the expectation had been that there would be a growth in sales in October.
- There was a sharp drop in the rate of inflation, falling from 6.3% in September to 4.7% in October, although this is still higher than the target of 2%, set by the Bank of England. Economists argue that the main reason for this sharp drop was the lowering of the energy price cap which limits the maximum amounts that can be charged by energy companies to consumers. Business leaders, such as Iceland's CEO say that they are now certain that inflation rates have peaked.
- There were 2315 corporate insolvencies in October – an 18% increase on the same month last year and also higher than pre-pandemic figures; Price Waterhouse Cooper argues that this is a result of supply chain pressure, energy costs, inflation, and high borrowing costs and was affecting small owner-managed companies the most. 98% of these insolvencies were in companies with less than £1 million in turnover.
- The East Midlands business activity index increased from 46.8 in September 2023 to 47.5 in October 2023, the third consecutive month where output was under the 50-growth mark. Firms reported weaker domestic and international client demand. Out of the 12 UK regions, the East Midlands was fifth lowest for the Future Business Activity Index in October 2023.
- The notion of a relatively stagnant economy is reflected by the forecast of sluggish growth for the rest of 2023 and into 2024. Although the economy is predicted by most to avoid falling into a recession because of falling interest rates and inflation.
- Combined, subdued growth, weaker labour market conditions and lower-than-expected inflation in September 2023 were enough to persuade the bank of England to pause rate hikes at its November 2023 meeting.
The Chancellor of the Exchequer delivered a far more positive and optimistic autumn statement than would have been expected even a few weeks ago. With a recent fall in inflation figures, and in light of improved debt and borrowing forecasts, the Chancellor focused on the economic progress made this year, and plans to use his newly found fiscal headroom to support growth and make work pay.
For businesses, the most significant tax measure was the announcement that “full expensing” – the ability for companies to get a full tax deduction for qualifying plant and machinery – would be made permanent. For the employed and self-employed, the most significant announcements related to reductions in National Insurance contributions.
The Chancellor also announced that there would be funding of £4.5 billion made available to attract investment to strategic manufacturing sectors, including green energy, aerospace, life-sciences and zero-emission vehicles.
For the East Midlands, the Chancellor announced a new investment zone which will focus on green industries and advanced manufacturing. This is expected to bring in £383 million in private investment and create around 4200 new jobs in the region over the next 10 years.
Main challenges faced by businesses:
- Falling demand for goods and services
- Inflation of goods and services prices
- Energy prices
- Interest rates
- Competition with other UK businesses
- Business rates
- Exchange rates
- Property rental costs
- Supply chain disruption
Skills most in demand in our region from September to October 2023:
- Key Performance Indicators (KPIs)
Ashfield's October 2023 figures show that we have 3.8% or 2960 people of working age seeking work, this is slightly higher than in September 2023, which showed people but is in line with other neighbouring local authorities.
Page updated: 8 December 2023