Wednesday 12th August 2020
Home Weekly Business<br />E-newsletter ebusiness weekly news 27/07/2020

Growth forecasts cut but prospects for 2021 brighten

A major forecasting group has downgraded its short term economic outlook and warned of a fall in long-term investment although it believes prospects for 2021 are looking slightly brighter. The EY ITEM Club summer forecast is now assuming UK gdp will shrink by 11.5 per cent this year, which compares with an 8 per cent contraction it was expecting only a month ago. With hopes of a V-shaped recovery fading, it now believes the economy shrank by a fifth in the second quarter, partly driven by weakness in May as Covid-19 took its toll on the services sector. Unemployment is set to more than double to 9 per cent by late 2020 and business investment is set to fall by more than a fifth. However, the group’s growth forecast for 2021 has been raised to 6.5 per cent up from 5.6 per cent previously. Howard Archer, chief economic advisor to the EY ITEM Club, said : “Even though lockdown restrictions are easing, consumer caution has been much more pronounced than expected. The UK economy may be past its low point but it is looking increasingly likely that the climb back is going to be a lot longer than expected.”

Stuart Wilkinson, office managing partner at EY in the East of England, said: “With lower demand and margins under pressure because of the need to spend on modifying workplaces, products and consumer experiences so that they’re Covid-safe, there’s a risk that the current uncertainty could lead to a fall in long-term investment. While short-term support measures announced so far have been unprecedented, more direct support is likely to be needed in the future. Policies such as VAT cuts are welcome, but they aren’t a complete solution, as they don’t resolve the concerns consumers may have about going to restaurants and bars in the first place.”

Plan for new Norwich hotel to attract ‘hundreds of visitors’ to city centre

Plans have been submitted for a new 91-bed multi-million pound hotel with a bar and restaurant in a landmark building in Norwich city centre which it is hoped will attract hundreds of visitors and create at least 28 new jobs. The plans for the new seven-floor hotel at Chamberlain House on Guildhall Hill -  which originally housed Chamberlin & Sons department store – include retaining the ground floor retail units (which include Tesco Metro), a new hotel entrance on Dove Street and the retention of Victorian façades. John Walker of property consultants Ward Hill Walker said: “This is a very exciting proposal which makes superb and appropriate use of a very high profile and underutilised building, in the heart of the city. The whole of the block will be brought into use to create a landmark hotel facility with superb views of Norwich. It will bring hundreds of visitors right into the city centre, whilst also creating at least 28 new jobs in the hotel.” He added: “This will be excellent news for the retail and leisure sectors in the city and help fill the shortage of hotel beds in central Norwich. The city has strong year round occupancy levels, with annualised occupancy higher than that of the wider UK regional market”.  Norwich-based CAM Architects has been retained to design the new hotel - and the hope is that work can start in the first or second quarter of 2021 with completion in autumn 2022. A number of hotel operators have shown interest and talks are well advanced.

Suffolk manufacturer plans major extension to boost capacity

Suffolk-based Caribbean Blinds is planning a major 10,000 sq ft extension which will more than double storage capacity at its factory site in Sudbury. Work is due to start in October and complete next spring. The extra space will support ambitious plans for growth at the shading systems manufacturer and enable it to create more products and keep lead times short. Caribbean Blinds managing director Stuart Dantzic (right) said: “As the fastest growing external shading company within the UK, this extension will allow for our ongoing development and provide us with the production capacity to supply expected demand. This investment has also enabled us to remain on our current site and in Sudbury for the foreseeable future, continuing Caribbean Blinds’ two-decade long residence in the area.” Initially, the company will recruit a further six technicians and plans to double its workforce from 24 to 48 over time. Founded in 1987, Caribbean Blinds won the people’s choice award for the East and East Anglia region at this year’s Family Business of the Year Awards in June.

Mid-market firms plan to make new business models permanent

The majority of UK mid-market businesses, some 88 per cent, have made fundamental changes to their business model during the pandemic which a half plan to continue with, according to research in Grant Thornton’s latest international business report. The report for the first half shows that some 42 per cent of UK mid-market firms have adjusted their business strategy and almost half have implemented home or flexible working. But over a third have reduced capacity or closed/suspended operations and have had to make redundancies. Although growth expectations are at a record low and despite uncertainty, many UK mid-market businesses are starting to look ahead and prepare for market recovery. Many firms are looking to make changes to their business strategies with digital transformation ranked as the top area for improvement. Changes to organisational flexibility, crisis management and supply chain resilience are also planned. Tim Taylor (right), East Anglia practice leader at Grant Thornton UK, said: ”Now is a critical moment for businesses, as lockdown continues to ease and more companies start to re-open, to decide how they want their business and their people to operate and work moving forward. And for many, this may not be a return to the ‘old normal’, as our research has found a continued, fundamental shift in the business models of the UK mid-market.”

See Profile Grant Thornton UK LLP

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Suffolk firms planning redundancies

Suffolk businesses are steadily re-opening but almost a third are thinking of - or will be making - staff redundant and a quarter will be making up to five staff redundant, according to the sixteenth Suffolk Chamber Covid-19 survey. Taken early last week, it showed that 60 per cent of firms have now fully re-opened with a further 23 per cent saying that there is nothing stopping them from trading. Over half of firms have adopted flexible working and nearly 37 per cent are rotating staff to meet guidelines. But a quarter of business owners/managers are feeling anxious and stressed at work. Paul Simon, Suffolk Chamber’s head of communications & campaigns, said: “Whilst these survey findings suggest a continuation of the steady re-opening of Suffolk businesses of recent weeks, the potential of significant job losses is an immediate cause of concern. The threat is especially acute in specific sectors and for younger workers more generally.”

Parent of Ipswich-based nuts and fruit distributor in international deal

A Spanish food company, Importaco, is buying a 51% stake in Italian company Besana,  which has a major operation in Ipswich. The group believes the deal will reinforce its competitive position as the European leader in the nuts and dried fruits market and reinforce its international presence in natural food products such as hazelnuts, cashew nuts, almonds, peanuts and seeds. Besana has had a presence in the UK since the 1980s and moved its first factory from the Cotswolds to new offices and a factory in Ipswich in 2014 from where 10.1 metric tons of product are packed and distributed for the UK market. The group supplies all the major supermarket chains. Following the integration, the group will have cumulative sales of €770 million, 1,950 employees, factories in five countries and more than 600 suppliers.

Warning of winter spike in corporate insolvencies

Corporate insolvencies may increase this winter and a steep rise could start in October according to insolvency trade body R3. The majority of R3 members expect corporate insolvency numbers to rise over the next year, with over half predicting an increase in the third quarter. Rent payments or arrears, trade debts, tax payments or arrears and wages were expected to be the main triggers. R3 Eastern chair Alistair Bacon, of AMB Law in the region, said: “It’s clear from the survey results... that it’s a question of when, not if, corporate insolvency numbers increase. The support available to businesses has deferred, rather than deterred, the rise in corporate insolvencies expected in our current economic climate."

Surge in profit warnings at quoted groups

The number of profit warnings issued by East of England listed businesses in the first half rose to 12, a four-fold rise in the period last year and with three quarters of firms citing Covid-19 according to EY’s latest profit warnings report. Adrian Bennett, a partner at EY in the East, said : “…the immediate and significant impact of Covid-19 has been most acutely felt by companies whose existing structural challenges have been exacerbated by the pandemic. …Many businesses that were essentially sound before the virus struck, have markedly suffered too, being forced to reassess their expectations and business plans. It’s vital that businesses in the East of England don’t underestimate the depth and extent of both the immediate and long-term challenges ahead.” EY pointed to signs of an improving picture with profit warnings in the East of England dipping slightly from seven in the first quarter to five in the second quarter.

Law firm assists on major regional office deal

Law firm Birketts has advised M7 Real Estate, a pan-European investor and asset manager, on the acquisition of a portfolio of office buildings across several major UK cities. The deal involved three transactions on properties totalling over 208,262 sq ft and occupied by investment grade tenants, including Everything Everywhere, Scottish Power and Samsung Electronics. M7 has over 215 employees in 14 countries across Europe and manages around 830 retail, office and industrial properties worth over €5bn. The deal was led by commercial property partner and head of real estate investment Cameron Barlow (right). Birketts acts for M7 on its in-house managed funds in England and Wales.

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New engineering courses at college

East Coast College has added to its range engineering courses and secured funding for phase two of the offshore wind centre at its Great Yarmouth campus this year. New courses for September include apprenticeships in project management, pipe fitting and boat building as well as a new foundation degree course in energy and environments and a bespoke engineering programme alongside A levels at L6FC at the sixth form college in Lowestoft. The Merchant Navy Training board is also working with the college in hosting deck cadetships for young people seeking a career in the maritime industry.

Cleaning firm gains recognition

Cambridge cleaning provider Atkins Gregory has gained international recognition for its quality management and environmental procedures. The firm, which delivers contract cleaning services to the commercial, industrial and scientific sectors, has been awarded ISO 9001:2015 and ISO 14001:2015 certifications. Atkins Gregory business services manager Andy Flatman said: “ISOs are international standards recognised across the globe as a hallmark of best practice, in achieving them all customers can be confident that they are assured consistent quality and a green clean whenever they choose to work with Atkins Gregory.”

Consultancy shortlisted for national award

Property and construction consultancy Ingleton Wood, which has offices across the East of England, is a national finalist for an industry award for the design of its new London office to help embrace a culture of agile working and remote working. The practice has been shortlisted at the Mixology20 Awards in the project of the year category (Workplace Interiors Category 1 – sub 5,000 sq ft). Stuart Norgett, architect and partner at Ingleton Wood’s London office, said: “We had a fantastic reaction to our new showcase London office. We were keen to invest in, and make use of, the efficiencies in productivity that can be achieved through truly agile and flexible working practices like home working, as well as economies in floor space and improvements in staff wellbeing. We were achieving all that before Covid-19.”

See Profile Ingleton Wood