The pros and cons of an infrastructure boost post pandemic

economy growth Jul 14, 2020

The UK Prime Minister has signalled a massive infrastructure boost to help the country’s economy to recover post pandemic.

The details and plans for allocation of money are likely to be fleshed out in the autumn but in a speech at the end of last month he indicated that more than £5 billion would be spent on infrastructure projects, many of them in northern and central England as part of his pledge to tackle the imbalance between London and the South and the more deprived regions.

The projects will include spending on hospitals, roads, railways and schools, including what are called “shovel-ready” projects to help businesses and individuals to recover and address the expected mass unemployment.

Business directors should be planning now to take advantage of the proposals, especially those in the construction and tech sectors that are likely to be recipients of the government money.

I know of at least one company, supplying a unique range of thermally...

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Directors should be mindful of future investment and changing values post pandemic

Businesses planning their post-pandemic strategy are likely to be seeking future investment to shore up their balance sheets but directors will need to be mindful of the changing values of stakeholders and in particular those of their customers who in turn are influencing investors.

Before the immense disruption caused globally by the onset of the pandemic, climate change, global warming and the need for a more sustainable form of economics were a major preoccupation.

That preoccupation has not gone away.

While physical attendance at a second summit on ethical finance by international delegates from Government officials, financial institutions, consumer goods corporations, supply chain intermediaries and conservation organisations planned for Edinburgh this month has had to be cancelled, it has now been replaced by a virtual summit.

And this month, the UK’s Investors Association published a paper on the future of investment in which it, too, identified the importance going...

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Tech offers growth opportunities post lockdown

It is likely that there will be many growth opportunities for companies to embrace the use of technology after the Coronavirus lockdown.

Many organisations and businesses have had to switch to a remote way of continuing to provide their goods and services and this has affected everything from medical consultations to teaching, even more online shopping and whole offices now remote working.

Having discovered that it is possible to function in this way it is likely that many will carry on doing so when restrictions are eased and this will provide growth opportunities for tech companies.

Among the beneficiaries already have been providers of online tools including conferencing facilities, such as Zoom, Microsoft Teams and Skype, productivity and project management tools like Asana and Trello and online collaborative and co-creation tools like Miro and MURAL.

But for all their benefits there are also caveats in terms of speed and reliability of broadband, security and protection from...

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Is it time to stop propping up traditional so-called UK Key Industries?

The main UK Key Industries are often still considered to be aviation, aerospace, steel and car production.

As a result of the Coronavirus pandemic and subsequent lockdown the UK Government is working on a plan, called Project Birch, to provide short term bail-outs to those companies “considered strategically important” to the national economy.

However, how to define strategically important? Is it in terms of their contribution to UK GDP (Gross Domestic Product), or to the number of jobs they account for, or to their ability to be viable and profitable businesses that can operate in more normal times without state aid?

It would be reasonable for a Government to consider a business to be strategically important in terms of employment during a crisis, such as now, especially given that some of the above-mentioned Key Industries are in parts of the UK where there is traditionally high unemployment with few alternative job sources, especially when whole communities are...

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Will SMEs get more help from the Government?

growth small business sme smes Feb 19, 2020

Business pages are always full of articles claiming that SMEs need more help from the Government.

But equally, there have been a number of upbeat and positive reports that suggest the opposite is the case, so what is the truth?

According to the business lender Iwoca, lending to SMEs in deprived areas has dropped dramatically, by 8% between 2014 and 2018. Iwoca CEO Christoph Rieche has said: “It’s concerning that, in many parts of the country, major banks aren’t serving small and microbusinesses with the funding required to help them thrive. SMEs are vital for the health of the economy.”

The figures are borne out by UK Finance, which has revealed that small business loans and overdraft balances from big banks fell by almost 16% in the North West between the end of 2014 and September last year, from £9.8bn to £8.2bn, while loans and overdraft balances in London fell by only 2.3%. Wales saw a 14.2% drop, while Yorkshire and the Humber posted a 10.9%...

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The state of UK business activity

UK business activity is either in a woeful state, or slowly picking up speed following December’s general election, depending on who you are listening to.

Given the dire insolvency figures for 2019, which I covered in Tuesday’s blog, there is clearly plenty wrong in specific sectors of the economy.

The construction industry, High Street retail and the accommodation and food services were the worst-affected last year but it would be foolish to pretend that any business, from SME to large corporations had an easy time given the global economic slowdown and, more recently, figures revealing that the EU economy is near-stagnant.

Nevertheless, now that the withdrawal of the UK from the EU has passed its first hurdle and that the government has a clear mandate with a huge majority to implement its decisions for the next five years, there are signs of optimism.

The first Lloyds Bank Commercial Banking Business Barometer in 2020 showed a 13-point increase in business confidence,...

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Dire insolvency figures for 2019 – and little respite in sight?

growth insolvency Feb 04, 2020

The final quarter insolvency figures for 2019 make grim reading, as does the regular Red Flag update from insolvency and recovery firm Begbies Traynor.

The main messages from the latest insolvency figures, published for Q4 2019 by the Insolvency Service at the end of January, were that in 2019 underlying company insolvencies increased to their highest annual level since 2013 driven by a by 8.2% increase in CVLs (Creditors’ Voluntary Liquidations) which were at their highest level since 2009 and by a 24.0% increase in administrations, their highest level since 2013.

Construction, the wholesale and retail trade and accommodation and food services suffered the most, as they had been doing all year.

Begbies Traynor’s Red Flag update published last week also piled on the misery, with findings that a record 494,000 UK businesses are now in ‘significant financial distress’ with property, support services, construction and retail businesses suffering the most. These...

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What items are top of businesses’ post-election wish list?

Inevitably many promises were made during pre-election campaigning but how many will be delivered and what items are top of businesses’ post-election wish list?

There is no question that there are many urgent domestic issues that need tackling and were “parked” during the on-going wrangling over Britain’s referendum to leave the EU.

However, now that the so-called “party of business” has been returned with a solid majority, perhaps businesses will see some action on the issues that have left them feeling that they were overburdened and struggling to carry a heavy weight with little support.

While many business groups have been calling for the closest possible trade alignment with the EU post-Brexit it will be a year – or more – before the shape of any deal is known.

In the meantime, there are plenty of items on the business post-election wish-list that can be progressed.

Perhaps the biggest and most pressing burden needing attention is...

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Sector blog – The north of England and the future of the construction industry

economy growth insolvency Jan 09, 2020

There is no doubt that the construction industry has been having a torrid time in the last couple of years, especially since the collapse of the contractor Carillion with debts of £1.5bn at the start of 2018.

The most recently published insolvency statistics, for the third quarter of 2019, showed a 55% increase in the number of companies falling into administration, continuing an upward trend that had been going on all year.

There is little doubt that the political uncertainty since the UK voted in June 2016 to leave the EU has been a contributory factor to the industry’s woes, which are compounded by a shortage of people with appropriate skills. The skills shortage in the construction industry and its reliance on labour, often as subcontractors, has for several years been mitigated by the use of EU labour, particularly from Poland, but this, too, has been disrupted in the aftermath of Brexit as attitudes to migrants have become less welcoming.

...

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Addressing the UK skills shortage must be high on the new Government’s to do list

Businesses’ difficulties due to the UK’s skills shortage were high on their list for prompt Government action in the run-up to last week’s General Election.

The skills shortage was said to be inhibiting SMEs’ efforts to compete in global markets, particularly in areas related to digital and new technology.

A quarterly study by the BCC (British Chambers of Commerce) published in November found that 73% of firms that attempted to take on extra workers faced recruitment difficulties in Q3, up from the 64% recorded in Q2.

The skills shortage was compounded, according to Grant Thornton, by a low take-up of the cash available to businesses from the apprenticeship levy with almost half of eligible businesses having not yet spent the money available to them for workplace training.

This week, the Evening Standard carried a letter from Andrew Harding, chief executive – management accounting, at the Chartered Institute of Management Accountants, urging the new...

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