Tag: business

Royal Bank of Scotland: Downturn deepens amid falling demand

  • Business Activity Index falls to 45.8 in October from 48.0 in September
  • Contraction in new orders quickens
  • Growth in employment further weakens

The contraction across Scotland’s private sector firms deepened during October, according to the latest Royal Bank of Scotland PMI® data. Adjusted for seasonality, the Business Activity Index posted below the neutral 50.0 threshold for the third month running, at 45.8, indicating a sharp decrease overall.

Inflows of new business also went into further decline, the latest downturn being the most severe in 20 months. To further add weakness across the sector, inflationary pressures reaccelerated from September’s recent low, as service providers reported quicker upturns in input costs and charges during October.

The gloomy performance resulted to the softest intake of workers in 18 months, with goods producers reporting their first reduction in employment since January 2021.

New business received at Scottish private sector firms fell sharply during October. The rate of decrease quickened from September to the fastest in the current fourth-month sequence of reduction.

Of the two sub-sectors, manufacturing firms reported the steeper downturn. Companies noted that looming recession, economic uncertainty and the cost of living crisis weighed on client activity.

The downturn in incoming new business across Scotland outpaced the UK-wide average.

Output expectations for the year ahead across private sector firms in Scotland strengthened in the three months to October. The increase in confidence was underpinned on planned expansions and investment, with firms also hopeful of future economic stability. That said, sentiment was relatively muted in context of historical data.

Business confidence across Scotland was broadly in line with that recorded for the UK as a whole.

Employment across the Scottish private sector expanded for the nineteenth month running in October. However, amid a cooldown in hiring activity at service providers, with goods producers reporting their first contraction since January 2021, the overall rate of growth ticked down to the joint-lowest in the aforementioned series.

The rate of job creation across Scotland remained softer than that seen at the UK level, which similarly also slowed in October.

October’s survey showed a sustained fall in levels of outstanding business across Scotland’s private sector. The respective seasonally adjusted index posted below the neutral 50 threshold for the fifth consecutive month, the latest reading signalling the fastest depletion in work outstanding since January 2021. As per surveyed businesses, declines in new orders allowed firms to work through previous backlogs.

The rate of contraction in Scotland was the third-fastest across the UK, ahead of Northern Ireland and Wales.

October data signalled a robust rise in input costs across Scotland’s private sector, thereby extending the run of inflation to 29 months. Adjusted for seasonality, the latest reading increased from September’s 13-month low as a result of a reacceleration in input price inflation reported at service firms. The uptick in average costs was attributed to higher wages and utilities, cost of living crisis and general inflation adding strain on costs.

Despite being severe, the pace of input price inflation was however, softer than the UK average.

In line with the upturn in average cost burdens, charge levied by Scottish private sector firms also inclined from September’s recent low at a quickened rate during October.

The rate of charge inflation across Scotland posted weaker than the UK-wide average which slowed during October.

Source: Royal Bank of Scotland, S&P Global.

Judith Cruickshank, Chair, Scotland Board, Royal Bank of Scotland, commented: “The Scottish private sector reported a third month of contraction during October. The downturn in activity quickened on the month, as stubbornly high inflationary pressures, the ongoing cost of living crisis and a threat of recession deterred growth. New orders received at firms also fell further.

“Employment trends across the sector indicated a slowdown in hiring activity over the recent months. The latest upturn was the joint-softest in the current 19-month sequence of expansion. At the same time, the level of outstanding business also fell at a much sharper rate. The data thus suggesting the further weakness in the labour market will not be surprising.

“As we proceed into the final quarter of the year, market conditions are set to become more challenging. The aggressive interest rate hikes, the decline in the value of sterling against the dollar and the rebound in post-COVID demand phasing out, all amidst the ongoing cost of living and energy crises, all point to an extremely difficult period for Scotland.”  

Almost 1.7 million overdue invoices in Scotland in Q3, new R3 research shows

New research from insolvency and restructuring trade body R3 reveals Scottish firms had almost 1.7 million overdue invoices on their books in the last quarter.

R3’s analysis of data provided by Creditsafe shows 1,696,445 invoices were overdue in Scotland in Q3 – an increase of 7.1% from Q2’s total of 1,583,353.

Scotland and the West Midlands saw the biggest quarter-on-quarter rise in overdue invoices across the UK, followed by Northern Ireland (6.9% increase), the East Midlands (5.4%) and East Anglia (5.2%).

And Scottish businesses’ debt burden has been increasing steadily since the beginning of the year, rising from 552,897 unpaid bills in July, to 564,375 in August and 579,173 in September.

Almost 101,500 Scottish businesses reported that they had late payments on their books in Q3 2022 – a figure which peaked at 33,936 firms in September.

Richard Bathgate, Chair of insolvency and restructuring trade body R3 in Scotland, says: “This research highlights late payment is a growing issue in Scotland, and would suggest that businesses are facing ongoing cash-flow challenges, whether that’s supplier or client side …

“For small businesses that rely on regular income, even if just one client fails to pay or there is a delay in payment, that can have a serious effect – and in some cases, may mean they become financially distressed or insolvent.”

Richard, who is Restructuring Partner at Johnston Carmichael in Aberdeen continues: “I would urge the directors of any businesses who are worried about the impact of late payments or are worried about their ability to pay their invoices to seek professional advice.

“There are many steps that can be taken to support businesses, but they can only be taken if you move quickly and act early before the issue spirals.”

Nationwide survey shows drop in confidence across business leaders as economic turbulence bites

A major new survey of small and medium-sized businesses across the UK has shown a dramatic dip in confidence amidst rising inflation and wider economic turbulence.

The Be the Business Productive Business Index (PBI), now in its fifth edition, shows business owners and directors forecasting a negative shift in their prospects over the next three months due to the difficult economic environment.

The Productive Business Index, unique amongst UK business surveys, tracks changes in five key areas of business activity shown to impact on productivity. Management capability; Technology adoption; Training, Development and HR; Operating efficiency; and Innovation.

Key findings include:

  • The first-ever negative change in headline figure since the Index launched;
  • Two in five businesses are seeking efficiencies as a direct result of inflation;
  • Business leaders feel less confident that they have the management skills to handle the current economic situation, but are fighting back with plans to improve

Anthony Impey MBE, CEO of Be the Business, said: “These findings tell a stark story – following two years of unprecedented challenge, many businesses are struggling to cope with the latest turbulence in the UK economy.

“For the first time ever, our Productive Business Index shows a decrease in the optimism and outlooks of business leaders. Having been through the challenges of the pandemic and the ongoing supply chain and workforce issues, it highlights how heavily the economic situation is weighing on them.

“The headline figures are concerning, but it’s encouraging to see more leaders digging deep and looking for ways to improve themselves and their business to help navigate the next year. Business owners are tired, but they’re being forced to pedal harder in response to the difficult conditions they’re facing. It’s vitally important that they’re given all the support they need so that improving their business and boosting productivity is as easy as possible.”

The Be the Business’ Productive Business Index’s headline score, running from 0 to 200, decreased for the first time this quarter, from 121.1 to 115.6, indicating a fall in the productivity of firms.

In response to inflation, two-fifths (38%) of business leaders are planning to respond by finding efficiencies, one quarter (26%) will prioritise growth opportunities, and about one in six (15%) are considering reducing headcount to help their business survive.

Despite fighting through the previous two years of ups and downs, business outlook has fallen for the first time since Q4 2020, with half (50%) of leaders not confident in their business’ ability to respond to sustained inflation.

However, leaders are increasingly looking to improve their businesses and performance as they look to survive these new challenges.

Beneath the figures: Bruised UK firms are still looking to improve in the face of decreasing confidence

The consistent pressure on business leaders over the last several years – from the pandemic through to supply chain issues and now the escalating cost of living crisis – appears to have had a negative impact on them.

Business leaders feel less confident in their management skills as they look to navigate an increasingly challenging autumn and winter.

While belief in capabilities is down, business leaders continue to respond positively, by looking to bolster their skills as managers and invest time and money in their business over the next year:

  • Over half (56%) of UK business leaders believe their management teams have the right blend of skills, an 8% decrease from Q1 2022.
    • However, determination and the drive to improve shine through, with 45% expecting to spend more time on management and leadership activities – a 9% increase in only 6 months.
  • Just 54% of business leaders believe they have the skills and talent needed to succeed, a 10% decrease from Q1 2022
    • But 4 in 10 (40%) have plans to reassess pay, rewards and incentives to improve employee motivation, an increase of 8% on the last PBI.
  • There has been a significant drop (9%) in the number of business leaders that feel their company fosters innovation and new ideas from employees.
    • Yet, 41% of business leaders plan to develop new ideas, an increase of 7% compared to the beginning of the year.

The contrast between lower confidence and intent to improve is striking in the data on capabilities, and demonstrates the determination from business leaders to succeed in spite of the volatile economic context.

The Fall Guy: Kwasi Kwarteng sacked

CHANCELLOR Kwasi Kwarteng has been sacked, carrying the can for the ill-judged ‘mini-budget’ which has caused economic turmoil since it was announced three weeks ago today.

‘I’m going nowhere’ Kwarteng, Prime Minister Liz Truss’s choice as Chancellor, was recalled from an IMF meeting in Washington DC this morning to be told the news.

Prime Minister Liz Truss will desperately hope that the departure of close ally Kwarteng will appease the markets. She made the following brief statement confirming a humiliating U-turn this afternoon:

Good afternoon,

My conviction that this country needs to go for growth is rooted in my personal experience.

I know what it’s like to grow up somewhere that isn’t feeling the benefits of growth.

I saw what that meant and I am not prepared to accept that for our country.

I want a country where people can get good jobs, new businesses can set up and families can afford an even better life.

That’s why from day one I’ve been ambitious for growth.

Since the 2008 financial crisis, the potential of this great country has been held back by persistently weak growth.

I want to deliver a low tax, high wage, high growth economy.

It’s what I was elected by my party to do.

That mission remains.

People across this country rightly want stability.

That is why we acted to support businesses and households with their energy costs this winter.

It’s also the case that global economic conditions are worsening due to the continuation of Putin’s appalling war in Ukraine.

And on top of this, debt was amassed helping people through the Covid pandemic.

But it is clear that parts of our mini budget went further and faster than markets were expecting. So the way we are delivering our mission right now has to change.

We need to act now to reassure the markets of our fiscal discipline.

I have therefore decided to keep the increase in corporation tax that was planned by the previous government. This will raise £18 billion per year.

It will act as a down-payment on our full Medium-Term Fiscal Plan which will be accompanied by a forecast from the independent OBR.

We will do whatever is necessary to ensure debt is falling as a share of the economy in the medium term.

We will control the size of the state to ensure that taxpayers’ money is always well spent.

Our public sector will become more efficient to deliver world-class services for the British people.

And spending will grow less rapidly than previously planned.

I met the former Chancellor earlier today. I was incredibly sorry to lose him. He is a great friend and he shares my vision to set this country on the path to growth.

Today I have asked Jeremy Hunt to become the new Chancellor.

He is one of the most experienced and widely respected government ministers and parliamentarians.

And he shares my convictions and ambitions for our country.

He will deliver the Medium-Term Fiscal Plan at the end of this month.

He will see through the support we are providing to help families and businesses including our Energy Price Guarantee that’s protecting people from higher energy bills this winter.

And he will drive our mission to go for growth, including taking forward the supply side reforms that our country needs.

We owe it to the next generation to improve our economic performance to deliver higher wages, new jobs and better public services, and to ease the burden of debt.

I have acted decisively today because my priority is ensuring our country’s economic stability.

As Prime Minister, I will always act in the national interest.

This is always my first consideration.

I want to be honest, this is difficult. But we will get through this storm.

And we will deliver the strong and sustained growth that can transform the prosperity of our country for generations to come.

Kwarteng’s replacement – and the UK’s fourth Chancellor in a tumultuous 2022 – is none other than veteran former health secretary Jeremy Hunt.

Hunt supported Rishi Sunak – who’s predictions on the economy have been proved painfully accurate – in the recent Tory leadership election.

Hunt himself was an early casualty in the recent Tory leadership election and was also once voted as the most unpopular front-line politician of all time!

Clearly another popular choice … what could possibly go wrong?

HM Treasury issued the following statement this evening:

Government update on Corporation Tax

  • The Prime Minister has set out that the way the government is delivering on its mission to achieve a low tax, high wage, high growth economy is to change.
  • The legislated increase in the Corporation Tax rate from April 2023 will go ahead, with most small businesses benefitting from the new small profits rate.
  • Chancellor Jeremy Hunt will deliver the Medium-Term Fiscal Plan on 31 October, detailing action to get debt falling as a percentage of GDP over the medium term.

The government has today [Friday 14 October] announced that Corporation Tax will increase to 25% from April 2023 as already legislated for, raising around £18 billion a year and acting as a down payment on its full Medium-Term Fiscal Plan.

The decision has been taken in recognition of the need to ensure the UK’s economic stability and reassure markets of its commitment to fiscal discipline, after elements of September’s Growth Plan went further and faster than markets were expecting.

The Prime Minister has set out that the government is prepared to do whatever is necessary to ensure debt is falling as a share of the economy in the medium term and to ensure that taxpayers’ money is well spent, putting public finances on a sustainable footing.

The previously announced small profits rate of Corporation Tax will be maintained. Smaller or less profitable businesses will not pay the full 25% rate, and companies with less than £50,000 of profit – the large majority – will not see any increase at all, continuing to pay Corporation Tax at 19%.

The UK’s corporate tax regime will remain competitive and supportive of growth at the 25% rate, continuing to be the lowest rate in the G7. As part of the forthcoming tax review, the government will look at how the tax system can go further to promote growth and investment.

The government is committed to growing the economy and taking forward supply-side reforms that will ignite strong and sustained growth that delivers prosperity for the UK.

Chancellor of the Exchequer Jeremy Hunt will set out the government’s Medium-Term Fiscal Plan on 31 October, alongside a full forecast from the independent Office for Budget Responsibility.

UK Government cuts ‘red tape’ for thousands of growing businesses

  • More businesses to be categorised as small businesses, meaning less red tape
  • Move will potentially exempt tens of thousands of the UK’s growing businesses from relevant future regulations, saving them thousands of pounds
  • Start of a sweeping package of reforms to cut red tape for business and stimulate growth

Thousands of the UK’s fastest-growing businesses will be released from reporting requirements and other regulations in the future, as part of plans aimed at boosting productivity and supercharging growth, Prime Minister Liz Truss announced yesterday.

Currently, small businesses are presumed to be exempt from certain regulations. However, many medium sized businesses – those with between 50 and 249 employees – still report that they are spending over 22 staff days per month on average dealing with regulation, and over half of all businesses consider regulation to be a burden to their operation [source].

The Prime Minister has announced plans to widen these exemptions to businesses with fewer than 500 employees for future and reviewed regulations, meaning an additional 40,000 businesses will be freed from future bureaucracy and the accompanying paperwork that is expensive and burdensome for all but the largest firms.

The exemption will be applied in a proportionate way to ensure workers’ rights and other standards will be protected, while at the same time reducing the burden for growing businesses.

Regulatory exemptions are often granted for SMEs, which the EU defines at below 250 employees. However, we are free to take our own approach and exempt more businesses to those with under 500 employees. We will also be able to apply this to retained EU law currently under review, which we would not have been able to do without our exit from the EU.

The changed threshold will apply from today (Monday 3 October) to all new regulations under development as well as those under current and future review, including retained EU laws. The Government will also look at plans to consult in the future on potentially extending the threshold to businesses with 1000 employees, once the impact on the current extension is known.

This is the first step in a package of reforms to ensure UK business regulation works for the UK economy. The reforms will harness the freedoms the UK has since leaving the EU to remove bureaucratic and burdensome regulations on businesses, while streamlining and making it easier for them to comply with existing rules, ultimately saving them valuable time and money.

Scottish private sector suffers first contraction since February 2021

  • Output contracts during August amid quicker fall in new orders
  • Growth in employment moderates
  • Business outlook dampens, as confidence hits 27-month low

Scottish private firms registered the first contraction in 18 months, according to the latest Royal Bank of Scotland PMI® data.

The seasonally adjusted headline Royal Bank of Scotland Business Activity Index – a measure of combined manufacturing and service sector output – posted 47.8 in August, down from 50.2 in July.

Below the neutral 50.0 threshold for the first time since February 2021, the latest reading indicated a modest decrease in private sector activity. At the same time, inflows of new work fell for the second consecutive month, and that too at a quickened pace.

The drop in business requirements allowed firms to work through backlogs, resulting to capacity pressures easing for the third month running. Also, the rate of job creation measured the weakest in 16 months, signalling a slowdown in hiring activity.

On the flipside, weakening demand gave a respite to inflationary pressures; input prices rose at the weakest pace in seven months, while firms raised their charges at the second-slowest rate since January.

For the second consecutive month, a contraction was recorded in new business received at the Scottish private sector during August.

The rate of decrease quickened on the month as inflows of new orders received at service firms stagnated, while manufacturing companies noted a fourth running month of reduction. According to surveyed businesses, the downturn stemmed from weakening client demand, Brexit, the Ukraine-Russia war, and rising economic uncertainty.

Moreover, the pace of decrease registered across Scotland was stronger than that seen for the UK as a whole.

Expectations towards future activity at Scottish companies moderated during August. The level of positive sentiment dropped to a 27-month low. Rising recession risks, the cost-of-living crisis and declining demand all dampened the 12-month outlook.

Scotland registered weaker output expectations than Wales and all English regions except the North East, although it was more optimistic than Northern Ireland.

Scotland’s private sector firms raised employment for the seventeenth successive month in August. However, reduced business requirements resulted in a slowdown in hiring growth. The latest reading signalled the softest expansion in workforce numbers since April 2021. Firms also cited hiring difficulties amid a highly competitive jobs market.

The latest upturn across Scotland was softer than that at the UK level.

Backlogs of work at Scottish private sector firms fell in August for the third consecutive month. The rate of depletion quickened marginally on the month as the respective seasonally adjusted Outstanding Business Index was largely pulled down by a sharp drop seen across the manufacturing sector. Respondents noted that reduced order volumes and additional staff allowed them to clear away backlogs.

Overall, the rate of reduction was only marginally faster across Scotland than that seen across the UK as a whole.

Average cost burdens facing private sector firms in Scotland increased during August, thereby extending the current run of inflation to 27 months. While the rate of input price inflation recorded the weakest in seven months, it remained strong in the context of historical data. COVID, Brexit, the war in Ukraine and rising energy and raw material prices were all in part blamed for the latest incline.

As has been the case for the last 22 months, Scottish private sector firms continued to raise their charges during August. Thought the respective seasonally adjusted index posted the second-lowest in seven months, it remained comfortably above the long-run series average. According to panellists, the rise in charges reflected higher input costs.

Scotland registered the weakest increase in charges across all 12 UK areas monitored in August.

Source: Royal Bank of Scotland, S&P Global.

Judith Cruickshank, Chair, Scotland Board, Royal Bank of Scotland, commented: “August data signalled a deterioration across the Scottish private sector, as activity levels fell for the first time in 18 months. Moreover, weak client demand and rising economic uncertainty, with a threat of a recession looming, resulted in falling inflows of new business.

“The latest survey data did indicate some easing of upward pressure on input costs as a result of a reduction in client appetite. Nonetheless, inflation rates remained stubbornly strong.

“Moreover, the contraction across the sector impacted business confidence, which hit a 27-month low during August. Market uncertainties and the cost-of-living crisis heavily weighed on optimism and suggests a gloomy performance in the months ahead.”

RBS-Scotland-Jobs-report-Sept-2022-1Download

University supported companies celebrate EDGE Awards success

Innovators to share in £150K prize fund and other business growth support measures

A host of University of Edinburgh students and alumni who have founded their own startup companies are celebrating after taking honours at this year’s Scottish EDGE Awards.

Xiaoyan Ma, founder of Danu Robotics, an innovative business focused on developing sustainable technological solutions for the benefit of the environment, was named among this year’s main award winners. The company secures £75K in grant funding to accompany its award.

Three other company founders, which have also been supported by Edinburgh Innovations (EI), the University’s commercialisation service, were named as Young EDGE winners. They include Alex Hodson of Podspectrix; Niall McGrath of Robocean; and Elena Höge of Yaldi Games.

Meanwhile Ioannis Stasinopoulos of Prozymi Biolabs, a further EI-supported startup, was named as a Wildcard EDGE award winner. Between them, the four companies will share a further £45K in grant funding along with their awards.

The annual Scottish EDGE Awards, aimed at identifying and supporting Scotland’s up-and-coming, innovative, high-growth entrepreneurial talent, recognises and supports entrepreneurs and startup businesses.

Funded by the Hunter Foundation, the Royal Bank of Scotland, the Scottish Government, Scottish Enterprise and private donors, the competition is delivered twice annually and has to date supported 395 early-stage Scottish businesses with over £15m in award funding.

The winners from this year’s Scottish EDGE Awards will share in more than £150K ingrants and benefit from other forms of support and mentoring to help them maximise their growth aspirations.

John Lonsdale, Head of Enterprise Services from Edinburgh Innovations said: “We congratulate all the University of Edinburgh students and alumni in their success at this year’s Scottish EDGE Awards.

“We are delighted to have supported these emerging companies, all of which are focused on developing innovative solutions to some of the key challenges facing society.

“As an organisation committed to helping University of Edinburgh startups reach their full potential, Edinburgh Innovations is proud of its role in supporting entrepreneurs who are driving economic growth in Scotland and beyond.”

US trade ‘delivering for Scotland’ as Aberdeen hosts transatlantic dialogue

  • International Trade Secretary welcomes US counterpart Ambassador Tai to Aberdeen to discuss how transatlantic trade is delivering for the people of Scotland and the rest of the UK.
  • Talks focus on key sectors for Scottish economy and bring together iconic Scottish businesses including Walker’s Shortbread and innovative energy SME, Enpro-Subsea.
  • Figures show US investment is supporting over 100,000 jobs and generating nearly £50 billion for the Scottish economy.

The UK will today host the second transatlantic trade dialogue in Aberdeen aimed at boosting our £200 billion trade partnership with the US.

Against a backdrop of Aberdeen’s flourishing tech scene and world-leading energy sector, the dialogue will focus on agreed priority areas including digital and innovation, green trade, supporting SMEs and supply chain resilience.

Latest figures show the importance of transatlantic trade to Scottish workers, businesses and industry:

  • Nearly a quarter of the nation’s services exports are to the US
  • Scotch whisky exports continues to play a vital role in wider UK-US trade, with almost two thirds of beverages exported to the US coming from Scotland
  • The US is Scotland’s number one foreign investor, according to EY
  • US-owned businesses support over 100,000 jobs, generating nearly £50 billion for the economy

The Secretary of State for International Trade Anne-Marie Trevelyan will discuss the importance of trade for creating jobs and spreading economic opportunities throughout the UK – a key part of our levelling up agenda.

The dialogue will convene leaders from across Scottish, central and local government, a wide range of businesses as well as trade unions and civil society groups such as Trades Union Congress.

International Trade Secretary, Anne-Marie Trevelyan, said:  “This dialogue gives us a platform to explore more modern, digital ways of trading. It will identify and resolve barriers to trade to make it cheaper and easier for businesses in Scotland and throughout the UK to do business with our US friends.

“As two leaders in green innovation, it also gives us the opportunity to harness trade to tackle shared challenges such as climate change.

The Trade Secretary met with leaders from Scotland’s food and drink industry including Walker’s shortbread and Clootie McToot last night.

Attendees also included US spirits company Brown-Forman which owns three of Scotland’s top distilleries GlenDronach, Benriach and Glenglassaugh and employs hundreds of people in the UK. The firm hailed the lifting of tariffs on US whiskey thanks to the recent resolution of the S232 steel and aluminium tariffs dispute, and revealed it is now planning a multi-million pound investment in its Scottish facilities.

Ahead of the dialogue, Trevelyan and Tai will visit offshore energy SME, Enpro-Subsea in Aberdeen where Trevelyan will highlight the UK’s energy strategy aimed at securing energy security and independence, while we support the transition from fossil fuels to new technologies. The company demonstrates that achieving our environmental goals must go hand-in-hand with an evolving North Sea industry.

Discussions at the dialogue will provide a solid foundation for further engagement with the US. This includes ongoing work at a state-level such as mutual recognition of qualifications as well as continuing to remove barriers to trade.

The Government has already helped lift the ban on UK exports of lamb and beef and resolved the Large Civil Aircraft dispute, which removed 25 percent tariffs on Scotch whisky, resulting in huge wins for Scottish producers and exporters.

UK Government Minister for Scotland Iain Stewart said: “We’re delighted to host today’s talks in Aberdeen, marking a positive development in our already strong trade relationship with the US. Improving our partnership will create new high-quality opportunities for businesses in Scotland, including from our thriving food and drink, tech and energy sectors.

“At a time when we face immense global challenges, joining with our friends in the US to lift barriers, improve communication and encourage new and innovative ways of working together will support jobs across Scotland and beyond, benefiting businesses of all sizes.”

Shevaun Haviland, Director-General of the British Chambers of Commerce, said: “The UK and US are natural trading partners. These dialogues are an opportunity to build on that relationship and set new ambitious standards on sustainable trade. In a shifting and uncertain world, we must also take this opportunity to reinforce the resilience of our supply chains and stabilise prices.

“Smaller businesses make up the majority of our membership, and the UK economy, so it’s vital they are given a voice in these talks and that they get to reap the benefits on both sides of the Atlantic.

“Supply chain disruption and soaring inflation have reduced the operating margins of many small firms to almost nothing, so reducing the costs of trade with the US would be a huge boost for them. This would then help communities right across the UK to see the benefits that improved trade with the US could bring.”

Allan Hogarth, Executive Director of the Scottish North American Business Council (SNABC) said: “The SNABC is very much looking forward to participating in the Aberdeen session of the Transatlantic Dialogue, building on the success of the Baltimore session last month.

“These discussions will cover vital areas to the Scottish, UK and US economies – it is a great opportunity to make sure Scottish voices are heard on this, our single biggest export market, and to try and make it simpler for us all to continue to prosper and strengthen the transatlantic relationship for our mutual benefit.”

According to EY’s Attractiveness Survey Scotland, June 2021 , the US was the largest contributor of Scottish FDI projects in 2020. The 38 investment projects originating from the US accounted for 35.5 percent of all projects recorded in Scotland in 2020.

Building a tech nation

Investment can help create more high quality start-ups

Work to create the best opportunities for entrepreneurs is helping transform Scotland into one of Europe’s leading economies to start or grow a technology business.

Building on the entrepreneurial ambitions set out in the National Strategy for Economic Transformation, Economy Secretary Kate Forbes said work is underway – backed by £45 million of investment – to help transform Scotland’s tech sector.

During a parliamentary statement Ms Forbes highlighted progress made to date to implement the Logan Review. Actions include:

  • finalising arrangements for five new Tech Scaler hubs, with the potential to create more than 300 high quality start-ups, that will offer mentorship support to budding entrepreneurs. These new hubs, located around the country, will help to ensure new and existing tech innovators have access to high quality commercial education
  • establishing a £1 million Scottish Tech Ecosystem Fund providing support for organisations to deliver meet ups and events which create the best environment for entrepreneurs to succeed
  • investing more than £1 million in new devices and equipment to support teaching of computing science
  • appointing teachers who will drive improvements in equipment and training while sharing best practice
  • allocating £1.5 million for reskilling – including support for those on low incomes to gain digital skills

A Chief Entrepreneur Officer will also soon be appointed in the Scottish Government to help ensure entrepreneurship ambitions are embedded in policy development.

Ms Forbes said: “The Scottish Government is committed to the most radical reforms of the Scottish entrepreneurial system since devolution. Our ambition is to establish Scotland as one of Europe’s leading start-up economies.

“These game changing tech scalers will deliver one of the most sophisticated and comprehensive state-funded environments in Europe for the creation and growth of start-ups.

“Tech scalers will put Scotland on the global start-up map and we will promote their services relentlessly to attract the world’s best talent to scale up their businesses in Scotland.

“A key ambition in our strategy to transform the economy is to help establish Scotland as a world-class entrepreneurial country, founded on a culture that encourages, promotes and celebrates entrepreneurial activity.”

Mark Logan said: “These coordinated initiatives are part of the most significant strategic investment in Scotland’s high-technology industry ever seen in Scotland.

“Together, they create the perfect environment for starting and scaling technology-based businesses, with the many opportunities for our people that will result from that. It’s a very exciting time for the sector.”

From Bad to Worse: Universal Credit families face another income cut

UP TO £660 PER YEAR COULD BE SLASHED FROM HOUSEHOLD INCOME

In a letter to the chancellor last week, the Bank of England stated that it expected inflation to be “around 8 per cent” this spring. With Universal Credit set to rise by just 3.1 per cent in April, families with children on universal credit now face a real-terms cut of around £660 per year, on average.

This is an increase on Child Poverty Action Group’s original analysis which showed a cut of £570, when inflation was expected to be 7.25 per cent.

The £20 cut to universal credit last October plunged out-of-work benefits to their lowest level in 30 years. Latest analysis shows that the picture for families is going from bad to worse.

Without government action, families will be pulled deeper into poverty. Increasing benefits by anything less than 8 per cent risks pushing those with already stretched budgets past breaking point.

Anti-poverty charities wrote to the Chancellor last week calling for a minimum 7% benefits rise:

Prices are rising at the fastest rate in 30 years, and energy bills alone are going to rise by 54% in April. We are all feeling the pinch but the soaring costs of essentials will hurt low-income families, whose budgets are already at breaking point, most.

There has long been a profound mismatch between what those with a low income have, and what they need to get by. Policies such as the benefit cap, the benefit freeze and deductions have left many struggling.

And although benefits will increase by 3.1% in April, inflation is projected to be 7.25% by then. This means a real-terms income cut just six months after the £20 per week cut to universal credit. 

Briefing_UC_Feb_2022_finalDownload

Child Poverty Action Group’s analysis shows families’ universal credit will fall in value by £570 per year, on average. The Joseph Rowntree Foundation has calculated that 400,000 people could be pulled into poverty by this real-terms cut to benefits.

The government must respond to the scale of the challenge. Prices are rising across the board. Families with children in poverty will face £35 per month in extra energy costs through spring and summer, even after the government’s council tax rebate scheme is factored in. These families also face £26 per month in additional food costs. The pressure isn’t going to ease: energy costs will rise again in October. 

A second cut to benefits in six months is unthinkable. The government should increase benefits by at least 7% in April to match inflation, and ensure support for housing costs increases in line with rents. All those struggling, including families affected by the benefit cap, must feel the impact.

Much more is needed for levels of support to reflect what people need to get by, but we urge the government to use the spring statement on 23 March to stop this large gap widening even further. The people we support and represent are struggling, and budgets can’t stretch anymore.

Alison Garnham, Chief Executive, Child Poverty Action Group

Emma Revie, Chief Executive, The Trussell Trust

Graeme Cooke, Director of Evidence and Policy, Joseph Rowntree Foundation

Morgan Wild, Head of Policy, Citizens Advice

Dan Paskins, Director of UK Impact, Save the Children UK

Imran Hussain, Director of Policy and Campaigns, Action for Children

Thomas Lawson, Chief Executive, Turn2us

Sophie Corlett, Director of External Relations, Mind

Dr Dhananjayan Sriskandarajah, Chief Executive, Oxfam GB

Caroline Abrahams, Charity Director, Age UK

Eve Byrne, Director of Advocacy, Macmillan Cancer Support

Kamran Mallick, CEO, Disability Rights UK

Katherine Hill, Strategic Project Manager, 4in10 London’s Child Poverty Network

Mubin Haq, Chief Executive Officer, abrdn Financial Fairness Trust 

Bob Stronge, Chief Executive, Advice NI 

Dr Ruth Allen, Chief Executive, British Association of Social Workers

Joseph Howes, Chief Executive Officer, Buttle UK

Helen Walker, Chief Executive, Carers UK 

Balbir Chatrik, Director of Policy and Communications, Centrepoint

Gavin Smart, Chief Executive, Chartered Institute of Housing 

Leigh Elliott, CEO, Children North East

Niall Cooper, Director, Church Action on Poverty

Lynsey Sweeney, Managing Director, Communities that Work

Anna Feuchtwang, Chair, End Child Poverty Coalition

Claire Donovan, Head of Policy, Research and Campaigns, End Furniture Poverty

Victoria Benson, CEO, Gingerbread 

Neil Parkinson, co-head of casework, Glass Door Homeless Charity

Graham Whitham, Chief Executive, Greater Manchester Poverty Action

Yasmine Ahmed, UK Director, Human Rights Watch 

Sabine Goodwin, Coordinator, Independent Food Aid Network 

Jess McQuail, Director, Just Fair 

Gemma Hope, Director of Policy, Leonard Cheshire

Paul Streets, Chief Executive, Lloyds Bank Foundation for England & Wales

Jackie O’Sullivan, Director of Communication, Advocacy and Activism, Mencap

Mark Rowland, Chief Executive, Mental Health Foundation

Chris James, Director of External Affairs, Motor Neurone Disease Association

Nick Moberly, CEO, MS Society

Anna Feuchtwang, Chief Executive, National Children’s Bureau

Charlotte Augst, Chief Executive, National Voices

Jane Streather, Chair, North East Child Poverty Commission

Tracy Harrison, Chief Executive, Northern Housing Consortium

Karen Sweeney, Director of the Women’s Support Network, on behalf of the Women’s Regional Consortium, Northern Ireland 

Satwat Rehman, CEO, One Parent Families Scotland

Mark Winstanley, Chief Executive, Rethink Mental Illness

James Taylor, Executive Director of Strategy, Impact and Social Change, Scope

Irene Audain MBE, Chief Executive Scottish, Out of School Care Network

Steve Douglas CBE, CEO, St Mungo’s 

Richard Lane, Director of External Affairs, StepChange Debt Charity

Robert Palmer, Executive Director, Tax Justice 

Claire Burns, Director, The Centre for Excellence for Children’s Care and Protection (CELCIS)

The Disability Benefits Consortium 

Dr. Nick Owen MBE, CEO, The Mighty Creatives

Peter Kelly, Director, The Poverty Alliance

Elaine Downie, Co-ordinator, The Poverty Truth Community

Tim Morfin, Founder and Chief Executive, Transforming Lives for Good (TLG)

UCL Institute of Health Equity 

Dr Mary-Ann Stephenson, Director, Women’s Budget Group 

Natasha Finlayson OBE, Chief Executive, Working Chance

Claire Reindorp, CEO, Young Women’s Trust 

Businesses in Scotland are also calling for the Chancellor to announce new measures to help with rising costs ahead of his Spring Statement tomorrow, according to a recent survey from Bank of Scotland.  

As inflation hits the highest levels seen since 1992, over half (55%) of Scottish businesses said that direct help with energy bills and rising costs tops their wish list for the Chancellor. This was followed closely by calls for a reduction in VAT, cited by two-fifths (40%), while almost a quarter of firms (23%) want increased funding to help create new jobs and develop skills. 

Rising prices remain a key challenge for business. Almost half (46%) of respondents said they are concerned about having to increase the costs of goods and services and over one in ten (14%) stated that inflation is reducing profitability. Almost one in ten (9%) said rising prices had caused them to worry about having to make staff redundant and a further one in ten (9%) were concerned about not being able to pay their bills. 

To help specifically with rising prices Scottish businesses are asking the Chancellor for a VAT reduction (46%), while a third (35%) have called for grants to cover rising energy costs. A further quarter (23%) called for grants to support investment in energy saving measures. 

The data comes as businesses face continuing supply chain challenges, which are reducing the availability of stock (40%), causing hikes in freight costs (39%) and disruption through Rules of Origin and VAT requirements from EU suppliers (33%).

Fraser Sime, regional director for Scotland at Bank of Scotland Commercial Banking, said: “Rising prices are causing multiple challenges for businesses across Scotland and the pressure from inflation shows no sign of abating in the near-term.  

“As we wait for the Chancellor’s Spring Statement, we’ll continue to remain by the side of business in Scotland and support the country’s ongoing economic recovery from the pandemic.” 

Responding to the ONS public sector finances statistics for February  Chancellor of the Exchequer, Rishi Sunak said: “The ongoing uncertainty caused by global shocks means it’s more important than ever to take a responsible approach to the public finances.  

 “With inflation and interest rates still on the rise, it’s crucial that we don’t allow debt to spiral and burden future generations with further debt.”

 “Look at our record, we have supported people – and our fiscal rules mean we have helped households while also investing in the economy for the longer term.”

All will be revealed when the Chancellor delivers his Spring Statement (Budget) at Westminster tomorrow.