April 2013

UK avoids ‘triple-dip’ recession

According to the ONS, the UK managed to dodge a dreaded triple-dip recession in Q1 2013. GDP figures exceeded economic forecasts and registered a 0.3% rise in output. Year on year, GDP rose by 0.6%, the greatest rise seen since Q4 2011. Services were stimulated by activity in distribution, hotels and restaurants and rose 0.6% Q4 2012 when compared to Q3 2012. Production increased by 0.2 per cent and was led by a 3.2% spike in mining and quarrying while construction dropped 2.5 per cent – with the construction sector suffering most in Northern Ireland. However, the US, German and Canadian economies have exceeded their pre-recession levels of output but the UK’s GDP remains 2.6 per cent below its Q1 high of 2008. Britain is still caught in its longest peacetime slump since 1920. 

Seedrs reaches £1m funding milestone

Seedrs, the UK-based equity crowdfunding platform, has just reached its £1m fundraising milestone. The site was launched in July last year and to date has helped 21 startups reach their fundraising targets. In the last three months it has raised £700k.

Companies to have received investment operate across a range of sectors, although software and online publishing businesses seem to have been particularly successful. Seedrs itself acts as the custodian of the investors’ equity stakes to minimise costs for start-ups and to protect the interests of shareholders.

Peer-to-peer lenders 'could break banks' stranglehold'

Peer-to-peer lending (P2P), a mechanism that links debtors and lenders directly without the intermediary input of traditional sources of finance (like banks), could account for 15% of the SME lending market if untapped demand is realised, says Nesta.

The charity collected data from Funding Circle, which has facilitated £93.5m worth of debt between small businesses and investors, predicting that P2P lending has the potential to provide £12.3b in loans. 

Although Nesta found that awareness of P2P lending is lacking amongst small businesses, bank sourced finance has been difficult for SMEs to obtain – net borrowing from banks fell by £2.4b in Q4 2012 highlighting. If the Government’s Funding for Lending Scheme fails to stimulate lending then P2P debt might fill void.

UK industrial production beats expectations

According to the Office for National Statistics (ONS) industrial output for February exceeded expectations. Output rose by 1% compared with January yet remained 2.2% below February 2012.

Growth in industrial production was driven by the largest rise in the production of electricity and gas since October — a trend encouraged by the recent spate of cold weather. Indeed, all the sectors that form components of industrial production – including mining and quarrying, energy supply and waste management – demonstrated signs of expansion, the first such occurrence since July 2012.

Despite these encouraging signs, is still at the same level as it was in September 2012 and the UK’s trade rose from £2.5b in January to £3.6b in February. Clearly the economy has some ground to make but a rise of 0.8% in manufacturing has waylayed fears that the UK is to enter a historic triple-dip recession for the moment.

UK service sector sees solid growth

The UK service sector grew at its fastest pace for seven months in March, according to the Markit/CIP purchasing managers’ index. Services increased by 0.6, from 51.8 in February to 52.4 last month — figures above 50 indicate growth. Since the service sector accounts for approximately 75% of the UK economy, the trend established by the sector in the previous few months suggests that 2013 might conclude more optimistically in terms of overall economic growth — although it is too early to make any stronger claims.

Oil and gas sector workforce woes a thing of the past

This week, following lobbying efforts from key players in the oil and gas industry, the government will make employing skilled immigrant workers in the sector easier. Companies have been complaining of a severe skill shortage that is inhibiting their prospects for growth and long-term planning. The normal immigration regulation limiting the influx of skilled labourers into the country has had particularly damaging effects in the oil and gas arena due to the national shortage of engineers with relevant experience. In practice, a company may hesitate to bid for new business, knowing that it may not be able to contract in the necessary staff if successful.

In response to this, 20 job categories will be added to the shortage occupation list (SOL), a register of jobs exempt from the usual strict immigration rules. Included are mechanical, electrical and production engineers. Hopefully this move will provide firms with the opportunity to build a stable future.