Bank of England’s interest rates policy now hitting East Midlands businesses
The impact of high inflation and rising interest rates is now being felt in the economy as demand slows for East Midlands businesses, new data shows. Research from East Midlands Chamber shows both domestic and international sales, as well as advanced orders, have dipped in recent months.
While growth in the workforce remained similar in the three months to September compared to the previous quarter, future prospects for employment have dropped by a third – suggesting the region’s low unemployment rate could be set to rise slightly.
The business representation group’s Quarterly Economic Survey (QES) for Q3 2023, delivered in partnership with the University of Leicester School of Business, also shows investment intentions – a key ingredient in driving forward productivity and reducing inflation – remain low and business confidence is subdued.
East Midlands Chamber’s director of policy and insight Chris Hobson said: “Following a strong first half of the year, the results of the latest Quarterly Economic Survey suggest the impact of 14 consecutive interest rate rises between November 2021 and this summer may be starting to have effect, as we can see with slowing sales activity and employment projections.
“In a further sign the heat has come out of inflation, the percentage of businesses anticipating they will need to put up prices has fallen to 30% – almost half of what it was 12 months ago. The pressure from the price of raw materials, utilities and labour costs has all softened, with only a small increase in businesses reporting greater price rise pressures from the fuel pump.
“For several quarters now, the results of this survey have run counter to the wider mood music in the economy. However, for the first time since the start of the year, the Chamber’s State of the Economy Index – a barometer measuring a combination of activity and sentiment indicators – has dropped back, albeit only slightly.
“With regards to what this all means, next quarter’s results will be telling. The September decision by the Bank of England to keep interest rates as they are has been welcomed by many businesses. They feel the Bank’s desired impact – to soften demand – is already being felt, with a lag time between rate decisions and any actual effect taking hold.
“Key now will be to see how far the slowdown will go. Any talks of a recession are premature, and with inflation now coming down steadily – and the uncertainty of a General Election on the horizon – it is important the economy can find its new level quickly and confidence can return to consumers and businesses alike.”
Key findings from the Quarterly Economic Survey Q3 2023 for the East Midlands, which was completed by 296 organisations between 21 August and 14 September 2023, included:
· UK and overseas sales each fell by a net 2% and 14% respectively between the second and third quarters of the year, with no movement in advanced UK orders growth and a net 1% drop in international advanced orders
· 63% of businesses added to their headcount in Q3 2023, compared to 62% in the previous quarter and 60% before that to illustrate a slight growth in the region’s workforce. However, employment prospects look weaker going forward with the proportion of businesses expecting to recruit falling by a net 8%
· Many employers continue to face challenges with filling job vacancies – 58% of organisations attempted to recruit and, of those, two-thirds (67%) experienced problems in finding suitable staff
· Rising prices resulting from cost pressures for energy, raw materials, people and fuel continue to ease, with a net 27% of businesses expecting they will be forced to raise their own prices – down from a net 31% the previous quarter and net 52% in the first three months of 2023
· Worries over access to cash also eased slightly, with a net 1% increase in firms saying cashflow was up
· Intentions to invest in plant and equipment increased for a net 4% of companies, but was down by a net 4% for investment intentions in people
· Business confidence shows a mixed picture, with confidence in turnover prospects down by 2% compared to the previous quarter but up by 1% for profitability expectations.
Professor Mohamed Shaban, associate dean for business and civic engagement at the University of Leicester School of Business, said: “The findings from the Quarterly Economic Survey Q3 2023 for the East Midlands are unsurprising and almost identical to our expectations in the second quarter, after the increase in the base rate trend to curb inflation in the past few months.
“Most investors envisage marginal or no increase in the interest rates soon. The critical question that currently swirls inside investors’ heads is how long interest rates will stay at such a level. The longer the period, the longer the economic slowdown will be, as investors will opt to delay investments until they observe a reverse in the upward trend.
“For the next few quarters, we expect investors and consumers to discount political signs and hints more in their investment and consumption decisions than monetary policy actions.
“It will be all about the political climate and financial market stability at home and abroad, particularly in the United States, in the next two quarters. Many people will identify signs of a U-turn on UK green policies, including a delay on a plan to boost the number of electric cars on Britain’s roads.
“Political uncertainty will play a somewhat augmented role in the firms’ decisions to invest and recruit. If we add the current high levels of interest rates and tense financial markets to such an unfavourable formula, the result is concerning – and we can expect little or no improvement in the business sentiment or growth indicators for the next quarter.”
Midlands manufacturers eye demand uptick as optimism lags behind wider sector
Leaders in the Midlands’ manufacturing sector are the least optimistic about experiencing an uplift in demand in the next 12 months, according to new research from specialist business advisory firm FRP.
Three quarters (75%) of manufacturers surveyed in the region were confident that demand for their products would increase over the next 12 months – below the national average of 87%. Despite a challenging year for the sector, nine in 10 (90%) Midlands businesses are confident they will be able to continue trading over the next 12 months.
The results feature in a new national FRP report, Against the odds: The future of UK manufacturing, which points to a resilient sector that is looking to invest in advanced technologies to help stimulate new growth. FRP conducted a similar study at the end of 2022, which found that manufacturers were far less optimistic about their prospects.
Investment confidence returns
With inflation beginning to ease, the vast majority of FRP’s respondents in the Midlands – which range from SMEs to major employers – are convinced of the robustness of their supply chains, with the vast majority (85%) expecting suppliers to continue trading successfully through the year ahead.
Their top investment priority is increasing output and/or productivity through the creation of new jobs (31%), which speaks strongly of manufacturers’ willingness to develop the sector’s workforce, while over a quarter (27%) plan to seize the opportunity presented by automation and AI.
While just over one in 10 (13%) say they are already using AI, machine learning or automation to its full potential, 58% believe there is the potential to apply it more widely in their organisation.
Still, challenges remain for Midlands manufacturers – chiefly increasing energy costs (46%), the cost of materials (29%) and the availability of labour (21%).
In response, manufacturers are planning a range of measures including increasing prices for customers and distributors (46%), extending terms with suppliers (31%) and – more positively – introducing or expanding the use of automation or AI in production (27%).
Raj Mittal, partner in the Restructuring Advisory team at FRP in the Midlands, said: “The past year has been a difficult one for the region’s manufacturing sector, so it’s encouraging to see such a high proportion of respondents confident in their ability to successfully trade through the next 12 months – this despite confidence in future demand lagging that of manufacturers in other regions.
“There is still uncertainty though, particularly within the automotive sector, which had made great strides towards meeting the initial 2030 ban on petrol and diesel combustion engines ahead of the Government’s decision to extend the deadline.
“Experience shows that businesses which continue to invest through economic uncertainty usually emerge best positioned to benefit from more stable conditions, so it’s encouraging to see such a strong appetite to do so amongst the region’s manufacturers.
“Looking at the results of this report, I’m confident that manufacturers have the plans in place to succeed, with a singular focus on their long-term growth and prosperity.
“The results reflect what we are hearing anecdotally across FRP, as many of the supply issues firms reported last year have now been resolved to a large extent, with the most pressing concerns now on the demand side of the scale. We would hope to see at least a small recovery in demand as inflation eases and consumer confidence stabilises.
“While we await those changes to take effect, it’s heartening to see manufacturers exploring the potential of new technologies, including Artificial Intelligence. The cost of adopting AI can be high and include a lengthy payback period. But, for those that have access to funding, it is something they should be looking at to drive efficiencies and free up human resource.”
Hear about changes to the way the self-emloyed and those in business partnerships are taxed
A webinar taking place this week, on Thursday 12 October (11.00am – 12.00pm), will discuss the changes to the way the self-emloyed and those in business partnerships are taxed.
HMRC, His Majesty”s Revenue and Customs, has introduced changes to the basis period, the defined timeframe used to calculate the taxable profits for taxing the self-employed and those in business partnerships. The changes relate to this tax year, 2023/24 and beyond.
This special webinar, led by Streets tax partner Michael Ball, aims to provide a clear understanding of what the basis period is, the recent changes, who it affects, when it takes effect and considerations for those affected.
This presentation will be recorded and available on demand for those not able to join us live. Simply register to receive a link to watch on demand.
Learning Curve Group acquires White Rose Beauty Colleges
Learning Curve Group (LCG) has acquired White Rose Beauty Colleges, which has an education and training centre in Chesterfield.
White Rose was founded in 1996 and has helped thousands of learners gain the skills and experience they need for successful careers in the beauty industry. It delivers a wide range of Beauty Therapy, Holistic Therapy, Sports Massage and Make Up Artistry courses.
LCG, which already had hair and beauty academies across the North East of England and London, saw the addition of a further 3,500 learners each year in nine new locations and 170 employees as part of the transaction.
Amber Massey, Director of Hair and Beauty Academies at LCG, said: “We saw the acquisition of White Rose as a huge growth opportunity, which would also cement our position as one of the country’s largest, most diverse and fastest growing training providers.
“The acquisition allowed us to also expand geographically, hitting a region that we didn’t previously have a huge presence in. But we now have over 60 locations across England, adding to our apprenticeship, community and adult education offerings.
“Our Learning Curve Group Hair and Beauty Academies were awarded Hair and Beauty Apprenticeship Provider of the Year at the 2021 AAC Awards, and Training Provider of the Year at the 2023 VTCT Awards.
“We want to leverage our expertise in the industry, with White Rose’s expertise in beauty therapy and makeup artistry to establish ourselves as the UK’s leading Hair and Beauty provider.
“We have now successfully rebranded White Rose Beauty Colleges to come under our umbrella brand of Learning Curve Group Hair and Beauty Academies. So, our academies have now had a makeover of their own with their names and branding completely changed.”
New help to support manufacturing SMEs to slash energy costs
The High Value Manufacturing (HVM) Catapult has launched its pilot Manufacturing Energy Toolkit nationwide to support UK manufacturing SMEs with their energy costs.
As the winter sets in, the cost of energy will be a key concern for businesses of all shapes and sizes across the UK. With the Manufacturing Energy Toolkit, the HVM Catapult is opening its doors to help manufacturers make their processes more energy efficient, cutting their energy costs and greenhouse gas emissions while improving profitability.
The Manufacturing Energy Toolkit is a guided assessment or roadmapping process undertaken by HVM Catapult experts. The aim is to build a full understanding of an SME’s energy usage and energy sources in production, as well as potential efficiency-boosting solutions.
HVM Catapult experts begin with a fully-funded visit to an SME production site for an in-depth assessment of its energy mix and usage. Using technology from the pilot’s supplier Pressac, the experts identify key energy inefficiencies in the production line and offer energy-saving suggestions. HVM Catapult also analyses the greenhouse gas emissions of an SME’s energy usage, providing data that can help build a stronger market position on sustainability.
In a regional pilot run by WMG, an HVM Catapult industry innovation centre based at the University of Warwick, the Manufacturing Energy Toolkit saved SMEs between 12% and 46% of their energy costs. Manufacturers save on average 21% of their energy costs, and in one notable case, HVMC experts achieved a 90% energy saving from a single machine.
Katherine Bennett CBE, CEO of the High Value Manufacturing Catapult, said: “SMEs are the backbone of the UK economy, but they often have to shoulder the greatest burden under external pressures like seasonal energy price rises. That’s why the HVM Catapult is offering free support to help manufacturers become more efficient – both environmentally and financially.
“The Manufacturing Energy Toolkit will give SMEs the expert insights they need to make smarter, more sustainable choices in their factories and on their production lines. The results speak for themselves, with companies saving over 20% of their energy costs on average.
“The HVM Catapult is ready to help manufacturers up and down the UK to save money and become greener with easily-adopted, cost-effective solutions.”
Mark Lawrance, director of strategic accounts at Nottingham-based Pressac, said: “Pressac are pleased to be involved in this great initiative and firmly believe the use of our technology combined with the expertise of the HVM Catapult will deliver tangible benefits. This is a great example of British technology supporting and strengthening British manufacturing in the global transition to the net zero economy.”
Leicester & Leicestershire Property & Construction Luncheon sees success
The first property networking event held in Leicester on October 6th was a resounding success, with positive feedback from industry executives. The event, held at the City Rooms in Leicester, was an opportunity for property professionals to network, share insights, and learn about the latest developments in the city.
The event was attended by over 90 delegates from various sectors, including developers, investors, consultants, contractors, architects, and agents. The attendees heard from two key speakers: Richard Sword, strategic director at Leicester City Council, and Andrew Smith, director of planning, development and transportation at Leicester City Council.
The pair presented the programme of change for the city along with the impending masterplan, encouraging businesses to shape the future strategy.
Richard Sword said: “Leicester is undergoing a transformational-change, with ambitious plans to create a vibrant, inclusive, and sustainable city. We are delighted to have the support and involvement of the property industry in delivering our vision. This event was a great platform to showcase our achievements and aspirations, and to hear from the experts and innovators who are driving the sector forward.”
Andrew Smith added: “Leicester has a lot to offer, with a diverse and growing economy, a young and skilled population, a rich cultural heritage, and a strategic location in the heart of the country. We are committed to creating a high-quality built environment that enhances our city’s identity and attractiveness. This event was a valuable opportunity to begin engagement with the industry and to seek their input and feedback on our plans.”
Sponsoring the event was the multi-disciplinary consultancy firm Pick Everard. Matt Hall, national director at Pick Everard, said: “We are proud to sponsor this event and to support the property networking initiative in Leicester & Leicestershire. As a firm that has been operating in the city for over 157 years, we work extensively with our supply chain partners and have a strong commitment to the city and the county.
“We have delivered many successful projects in the city and across the region, working collaboratively with our clients and partners. We look forward to continuing our involvement in the growth and regeneration of Leicester and Leicestershire.”
The event was organised by Met Events in partnership with Team Leicester, a non-for-profit organisation that aims to provide a platform for knowledge sharing, relationship building, and business development for its members in the property sector.
Rob McGuinn, chairman at Team Leicester, said: “We are thrilled with the outcome of our first property and construction event. It was a fantastic turnout and we received very positive feedback from our attendees and speakers. We hope that this event will be the start of many more to come in Leicester & Leicestershire and continue to foster our strong and dynamic property community.”
The event was attended by the corporate executives of all the county local authorities, who are keen to showcase their areas at future events. The next Property and Construction Luncheon is to be held on March 6th, 2024, with further details to be announced in the coming weeks.
102 new homes set for Radcliffe-on-Trent
102 new homes are to be delivered in Radcliffe-on-Trent, Nottinghamshire, after planning permission was granted for a £61m development.
Called Hackett Grange and located off Nottingham Road, the 13-acre development will include a mix of two-, three-, four- and five-bedroom homes.
Of the 102 homes, 30 per cent have been designated to affordable housing. Avant Homes has also committed to a community contribution of £950,000 to support education and local services, and a sustainable travel plan.
Work at Hackett Grange is anticipated to start this December with the first residents expected to move into their new homes in autumn next year.
Avant Homes East Midlands Managing Director, Ben Felton, said: “Radcliffe-on-Trent’s proximity to key motorway links and strong local community means there is high demand for new homes in the locality.
“Our development at Hackett Grange will aim to satisfy this demand, so we are pleased our plans have been approved by Rushcliffe Borough Council.”
Historic Leicester city centre streets set for revamp
Three city centre streets, at the heart of Leicester’s historic Old Town, are set for a revamp with work beginning on Grey Friars.
Leicester City Council will carry out work to improve the look and feel of St Martins, Hotel Street and Grey Friars as part of its extension of the city centre pedestrian zones.
All three streets were originally made traffic-free on a temporary basis in summer 2020, as part of a range of measures to help cafes, restaurants and other businesses in the area bounce back from the Covid-19 pandemic.
The changes have helped to create new outdoor seating areas and more space for shoppers in the historic streets close to St Martins Square and Leicester Market.
Since then, the changes have proven popular with visitors and businesses and, following consultation, the city council successfully secured legal permissions to make the temporary measures permanent in August 2022.
Now, the city council is set to invest over £1million in a range of improvements to the area, to bring the popular streets up to the same standard as nearby Peacock Lane and neighbouring streets in the Old Town area, linking to Leicester Cathedral and the King Richard III Visitor Centre.
Work will begin on Grey Friars on Monday (9 Oct), where footpaths will be widened and the main carriageway raised to improve access and safety for people who are walking, wheeling or cycling. Grey Friars will be closed to all traffic during the works, which are expected to take around nine weeks to complete. Well signed diversions will be in place. Access to shops, business and homes will be maintained.
Work will pause for the busy Christmas period, before improvements begin on St Martins and Hotel Street early in the new year. This will see the main carriageway of St Martins resurfaced in high-quality porphyry stone to match streets in the Cathedral precinct. Hotel Street will be improved with a raised carriageway to improve pedestrian access and connections to Leicester Market.
Deputy city mayor Cllr Adam Clarke, who leads on climate, economy and culture, said: “St Martins and the nearby Lanes are home to a great many brilliant independent businesses. It is vital that we continue to support local businesses like these by investing in high quality, people-friendly streets and spaces.
“These historic streets, at the heart of the city’s Old Town, close to the market, cathedral and Richard III Visitor Centre are also an important and popular destination for visitors to the city.
“By investing in these improvements, we will create a much safer and more attractive environment and encourage more people to walk, wheel or cycle to, in and around the city centre. We know that creating healthy streets like this can increase retail spend by as much as 30%, as well as provide cleaner air that’s good for people’s health and good for the planet.”
Council launches £300,000 grant scheme to support local economy growth
Melton Borough Council has developed the Discretionary Business Grants Fund which will see £300,000 worth of grants go to supporting business start-ups, business growth, the high street and retail sector and developing the tourism economy.
The new growth fund is utilising money that was secured through the UK Shared Prosperity Fund (UKSPF) and Rural England Prosperity Fund (REPF). Through the scheme local qualifying businesses will be able to apply for capital grants of up to £15,000.
The fund has been designed to support businesses with projects that meet certain criteria, details of which are available on the council’s website. It provides opportunities for businesses in the area to access the financial support needed to help grow their business and create job opportunities for local residents. Applications are welcomed from all sectors across the borough.
Applications have opened for submission from local businesses across the borough and will close on Wednesday 1st November 2023 at 11:59pm.
Logistics hub plan knocked back
An outline planning application for a new logistics hub at St Johns, Enderby, has been rejected by Blaby District Council planning committee members.
The decision was made to refuse permission for the Enderby Logistics Hub at the meeting on Thursday 5 October.
The application, from the Drummond Estate and Inverock Trust, included plans for four warehouses, offices, gatehouses and, potentially, a training and education centre.
The hub would have been used as a storage and distribution centre with new access off Leicester Lane.
The site had been assessed and earmarked for employment use during the last local plan accepted in 2019.
However, after lengthy discussion and representations from objectors as well as the applicant, planning committee councillors decided to reject the proposal.
Councillor Lee Breckon, chairman of the planning committee, said: “While the recommendation from officers was for approval, Councillors were not satisfied with the proposals before them and the potential impact on the local community. Disappointingly, the majority decision was to refuse the application.”
