IBISWorld presents a collection of fast facts for the different sectors of the UK economy.
Table of Contents
Agriculture, forestry & fishing
Transportation & warehousing
Accommodation & food services
Finance & insurance
Real estate rental & leasing
Professional, scientific & technical activities
Healthcare & social assistance
Arts, entertainment & recreation
Agriculture, forestry & fishing
- According to Defra, the price of agricultural inputs increased by 28.3% in the 12 months to October 2022. This exceeded the rise in the price index for agricultural outputs, which increased by 22.3% over the same period.
- According to Defra, the number of cattle and calves in England decreased by 0.7% between 2021 and 2022 and stands at 5.1 million animals as at June 2022. In 2022, the total number of pigs in England decreased by 3% to just over 4.1 million animals. The total number of sheep and lambs increased by 2%, to 14.9 million in 2022. The total number of poultry decreased by 1.6% to 139 million in 2022.
- According to the Defra, the area of agricultural land owned in England increased by 1.3% to 6.2 million hectares between 2021 and 2022. The total area of arable crops saw little change over the same period, remaining at 3.7 million hectares.
- According to the Office for National Statistics (ONS), gross weekly full-time earnings increased by 5.8% in the agriculture sector between 2021 and 2022. Earnings increased at an annualised of 3.8% rate between 2019 and 2022.
- The first ever Welsh Agricultural Bill has been laid before Welsh Parliament. The Bill includes plans to rewards farms in Wales for environmental work such as planting trees, restoring peat bogs and wildlife habitats and deploying sustainable methods of food production.
- According to provisional estimates published by Defra, total income from farming in the United Kingdom increased by 14.4% in 2021 to approximately £6 billion.
- According to the ONS, agricultural output remained broadly flat in October 2022.
- According to data published by the Defra, the total number of people working on agricultural holdings in England increased by 1.3% to 301,000 in June 2022, compared with the same month in 2021. Casual workers increased by 7.3% between 2021 and 2022, having previously seen decreases in each year since 2018.
- According to a report published by Defra, the total area of land farmed organically increased by 3.6% in 2021. This was driven by a 34% increase in the area of in-conversion land.
- According to data from the ONS, mining and quarrying output fell by 0.5% in October 2022. It was the smallest contributor to negative production over the month, with all industries within mining falling. Over the three months to October 2022, mining and quarrying output fell by 5.3%.
- The UK government has given the go-ahead for the UK’s first coal mine in 30 years. The £165 million mine will be located in Cumbria and is expected to employ 500 people, according to The Financial Times. The announcement has faced strong opposition from environmentalists, as the new coal mine will produce 400,000 tonnes of greenhouse gas emissions a year from mining operations alone, according to The Guardian.
- In the Autumn Statement, the new Chancellor, Jeremy Hunt, raised the windfall taxes on the profit of oil and gas companies (known as the Energy Profits Levy) from 25% to 35% until 2028. The measures will come into place from the 1 January 2023 and the levies on the oil and gas sector will raise about £10 billion in 2023. The move has faced backlash from oil and gas producers which state that it may impede and make them reconsider investment in the UK. Representative body Offshore Energies UK (OEUK) states that the tax changes would have an effect on North Sea operators as well as hundreds of companies in the supply chain, which will face cutbacks or be driven abroad if investment suffers.
- Leading offshore energy producers are urging the government to reconsider the windfall tax, when oil and gas prices fall back to normal levels, as the tax risks causing a plunge in investment and jobs, as well as in production.
- Harbour Energy, one of the Britain’s largest oil and gas producers, has taken the decision not to submit bids for new licences in the North Sea due to French energy company TotalEnergies saying it would cut planned investment in UK oil and gas projects by a quarter, or about £100 million, following the increase in the UK’s windfall tax.
- Recently, OEUK reported that the UK North Sea contains oil and gas reserves equivalent to 15 billion barrels of oil equivalent, which would be enough to fuel the UK for 30 years. However, it claims more investment in exploration is needed; just four exploration wells have been drilled in 2022 compared with 16 in 2019.
- Greenpeace has launched a legal challenge against the UK government in a bid to stop new oil and gas explorations in the North Sea.
- According to the ONS, manufacturing output increased by 0.7% in October 2022, after remaining broadly flat in August.
- The IHS Markit/CIPS UK Manufacturing Purchasing Managers’ Index (PMI) edged up to 46.5 in November 2022, from a 29-month low of 46.2 in October. This represented the fourth consecutive month of downturn in the manufacturing sector, with business sentiment falling to its lowest point since April 2020.
- Motor vehicle manufacturer Ford has announced planned investment of £150 million in its Halewood plant in Liverpool to expand production of electric vehicle This means that by 2026, more than two-thirds of electricity vehicles made by Ford in Europe will rely on parts manufactured at Halewood.
- There were 411 registered company insolvencies in the manufacturing sector in England and Wales over the three months through September 2022. This represents an increase of 41.7% on the same period in 2019, the last comparable year prior to the effects of the COVID-19 pandemic and related support measures.
- According to the CBI’s Industrial Trends Survey, UK manufacturing output fell over the three months through October 2022.
- According to the British Chamber of Commerce’s Quarterly Recruitment Outlook, the manufacturing sector faced the most severe recruitment challenges of any UK sector in Q3 2022, with 82% of construction firms reporting recruitment difficulties.
- According to data published by the Department for Business, Energy and Industrial Strategy (BEIS), the number of private sector businesses operating in the UK manufacturing sector decline by 9.6%, from 270,000 to 244,100, between the start of 2021 and the start of 2022. Turnover in the sector declined by 9.2% over the same period, from £635.9 billion to £577.3 billion.
- The Make UK/BDO Manufacturing Outlook survey Q4 2022 forecasts a 3.2% fall in manufacturing output in 2023. This comes on the back of a forecast 4.5% contraction in 2022.
- According to the Society of Motor Manufacturers and Traders, UK car production fell by 10.8% in the first 10 months of 2022, compared with the same period in 2021. Parts shortages, rising costs and disruption caused by the Russia-Ukraine conflict have hampered the sector’s ability to raise production. Nonetheless, motor vehicle manufacturing output was up 7.4% in October 2022 compared with October 2021.
- According to the ONS, gross weekly full-time earnings increased by 4.4% in the manufacturing sector between 2021 and 2022. Earnings increased 2.9% at an annualised rate between 2019 and 2022.
- In the ONS Business Insights and Impact on the UK Economy survey conducted in November 2022, 30.4% of companies currently trading in the manufacturing sector reported that their revenue was lower than would normally be expected for the time of the year, while 21.5% reported an increase in turnover during the month.
- ONS data shows that electricity, gas, steam and air conditioning supply decreased by 2.4% in October 2022.
- Renewable generation recorded a year-on-year rise of 10.6% to account for 42.1% of overall electricity generation in the first half of 2022. This increase was primarily driven by a 24.9% increase in wind generation, supported by increased generating capacity and favourable weather conditions.
- In the Autumn Statement, the chancellor announced that the Energy Price Guarantee will be maintained at £2,500 through the winter, before rising to £3,000 per year from April 2023 to the end of March 2024.
- According to ONS inflation data, gas and electricity prices increased by 128.8% and 65.7% respectively in the 12 months to October 2022, leading to a 2.59 percentage point contribution to the annual inflation rate from electricity, gas and other fuels.
- Announced on 21 September 2022, the Energy Bill Relief Scheme will provide a discount on wholesale gas and electricity prices for all non-domestic customers from 1 October 2022 to 31 March 2023. The Supported Wholesale Price set by the government is expected to be £211 per MWh for electricity and £75 per MWh for gas, less than half the wholesale prices anticipated this winter.
- According to analysis conducted by RenewableUK, the 19GW of wind farm capacity that won Contracts for Difference support will generate the equivalent of 30% of current 30% of annual UK electricity generation at present. This will cost a total of £5 billion, representing a cost saving of more than £20 billion compared with sourcing that electricity from gas. This could save each UK household £246 every year.
- The government has announced a new temporary 45% Electricity Generator Levy, which will be applied to the extraordinary returns being made by electricity generators from 1 January 2023. It was also announced that the Energy Profits Levy will be increased by 10 percentage points to 35% and extended to the end of March 2028.
- The government is setting a national ambition to reduce energy consumption by 15% by 2030, with new government funding worth £6 billion for energy efficiency to be made available from 2025 to 2028.
- On 17 October 2022, the government launched the Energy Markets Finance Scheme, a £40 billion state-backed liquidity support package aimed at providing a backstop to large energy firms facing short-term liquidity challenges. Applicants must be of good credit quality and make a material contribution to UK electricity and gas markets, though smaller firms are currently urging the government to expand access to the scheme.
- According to the ONS, construction output increased by 0.9% in October 2022, following growth of 0.4% in September 2022. The rise in output came from increases in both new work and repair and maintenance.
- According to data published by BEIS, the price of UK construction materials increased by 15.5% between November 2021 and November 2022.
- The IHS Markit/CIPS UK Construction PMI increased to 50.4 in November 2022, down from 53.2 in October 2022. This represented the third consecutive month above the 50 no change mark, though it pointed towards the weakest performance since August. Commercial work was the only segment to register growth during the month, while housebuilding remained broadly flat and civil engineering contracted.
- According to data published by BEIS, the number of private-sector businesses operating in the UK construction sector increased by 0.1%, from 913,820 to 914,475, between the start of 2021 and the start of 2022. Turnover in the sector declined by 7.3% over the same period, from £358.7 billion to £332.5 billion.
- In its latest quarterly forecast, the Construction Products Association (CPA) forecast growth of 2.5% in construction output in 2022 and 1.6% in 2023. The CPA expects strong growth in warehouses and infrastructure to be offset by a slowdown in private housing and a fall in private housing repair, maintenance and improvement in 2022.
- According to the ONS, gross weekly full-time earnings increased by 5% in the construction sector between 2021 and 2022. Earnings increased at an annualised rate of 3% between 2019 and 2022.
- According to the Construction Industry Training Board’s latest report, more than 250,000 extra construction workers will be needed by 2026 to support the UK industry’s growth.
- In the ONS Business Insights and Impact on the UK Economy survey conducted in November 2022, 22.2% of companies currently trading in the construction sector reported that their revenue was lower than would normally be expected for the time of the year, while 7.8% of companies reported an increase in turnover during the month.
- According to the RICS construction and infrastructure monitor for Q3 2022, construction activity is expected to slow over the next 12 months, owing to credit constraints and shortages of labour and materials limiting growth.
- There were 1,000 registered company insolvencies in the construction sector in England and Wales over the three months through September 2022. This represents an increase of 29% on the same period in 2019, the last comparable year prior to the effects of the COVID-19 pandemic and related support measures.
- The ONS states that output in the wholesale and retail trade and repair of motor vehicles and motorcycles sector grew by 1.9% in October 2022, the largest positive contribution within the services sector.
- Major wholesaler Bestway has stated that medicine suppliers must prioritise convenience stores amid availability issues as demand surpasses supply at the start of the flu season.
- Pharmaceutical wholesalers have been restricted by the Department of Health and Social Care from exporting or hoarding some antibiotics used in the treatment of strep A as pharmacies face soaring demand.
- Food and drink wholesaler Hyperama has sold two depots to wholesaler Dhamecha; this follows Hyperama’s recent sale of another depot to Holland Bazaar.
- Fast-moving consumer goods wholesaler Pricecheck has signed an exclusive distribution agreement with Church and Dwight, which includes products such as Femfresh, Nair and Batiste, as reported by The Grocer.
- Independent wholesaler Kitwave has acquired food-service wholesaler WestCountry Food for £29 million.
- Large warehouse and logistics facilities operators are set to experience a surge in their bills following a revaluation of commercial properties announced in mid-November 2022.
- Citing Home Office data, The Grocer reports that UK wholesalers are hiring more high-skilled workers from outside of the European Union, many of which from South Asian countries such as India.
- The British Retail Consortium’s annual Payments Survey found that cash usage fell to just 15% of all transactions that year compared to 30% in 2020. Almost 90% of retail spending, and 82% of transactions, were carried out using either debit or credit card payments, forcing retailers to spend a total of £1.3 billion to accept payments from customers in 2021. The costs associated with accepting these payments have also been rising with debit card fees rising by 28% in 2021.
- Sales growth failed to keep pace with inflation as sales volumes dropped. According to the ONS retail sales index, the volume of retail sales in fell 0.4% between October and November 2022, following a rise in the previous month when there was a bounce back from the additional bank holiday in September due to the Queen’s funeral. Food store volumes were the only category to rise (0.9% increase) as consumers stocked up ahead of Christmas. Non-store retailing (aka online sales) fell 2.8% in November 2022 as people returned to shopping in store – though levels still remained above pre-pandemic levels.
- According to Springboard, footfall in the week to 17 December 2022, a critical Christmas trading period, was 0.9% lower than last year and 20.1% lower than the 2019 level amid a host of rail strikes and snowfall. Several British retailers, including department store Marks & Spencer and clothing retailer Primark, have cautioned on the outlook, highlighting the stress felt by households as the cost-of-living crisis eats into their finances.
- To combat inflation, retailers – particularly supermarkets – are investing into lower prices for the future. For example, Sainsbury’s has pledged to invest £550 million to keep prices low over the next two years and shoppers can expect to see price matching on weekly products. Similarly, Asda has capped produce prices and continued to roll out its new Just Essentials range, with 267 products available. Pharmacist and beauty retailer, Boots, has launched a new Everyday range of essential products at the lowest prices. The lines – all priced at £1.50 or less with prices starting from 50p – include 60 everyday items across toiletries, skincare, dental, haircare and period products, and announced a price freeze on 1,500 own brand products.
- Luxury retailer Watches of Switzerland has seen revenue rise 31% on for its first half of 2022 and has said it is sticking to its full-year guidance for 2023, with continued strong demand for luxury timepieces and jewellery, with the growth down to price rises.
- According to returns management specialist Rebound, returns hit an all-time high in November 2022, as the number of returns jumped 26.6% across the month – although the last three days saw the most returns as Black Friday shoppers sent back unwanted orders. Some retailers, such as online clothing retailer Boohoo and high-street clothing store Zara, have introduced returns charges to discourage shoppers from sending products back as growing return rates hit.
Transportation & warehousing
- According to the ONS, the transportation and storage sector expanded by 1.2% in October 2022.
- Revised estimates released by the ONS indicate a larger negative effect of the pandemic on the transport sector than previously thought. In the second quarter of 2022, the contribution of the transport sector to GDP remained 10.8% smaller than in the final quarter of 2019.
- According to the ONS, passenger transport increased from pandemic-induced lows on each mode of transport apart from cycling in 2021, with overall passenger kilometres up 17.5% during the year. However, passenger kilometres remained 22.3% below pre-pandemic levels, with cycling the only mode of transport used more than it was prior to the pandemic during the year.
- According to data published by BEIS, the number of private-sector businesses operating in the UK transportation and storage sector increased by 9.1%, from 310,550 to 338,725, between the start of 2021 and the start of 2022. Turnover in the sector declined by 15.2% over the same period, from £214.2 billion to £181.6 billion.
- According to data published by the DfT, total port freight tonnage increased 1% to 111.6 million tonnes over the three months through September 2022, compared with the same period in 2021.
- According to the ONS, gross weekly full-time earnings increased by 4.2% in the transport sector between 2021 and 2022. Earnings increased 3.3% at an annualised rate between 2019 and 2022.
- In the Autumn Statement, the government confirmed that the core Northern Powerhouse Rail, East West Rail and HS2 to Manchester schemes are all set to go ahead.
- In the ONS Business Insights and Impact on the UK Economy survey conducted in November 2022, 9.7% of companies currently trading in the transportation and warehousing sector reported that their revenue was lower than would normally be expected for the time of the year, while 10% of companies reported an increase in turnover during the month.
- In the Autumn Statement, the chancellor announced that electric vehicles will no longer be exempt from vehicle excise duty from April 2025.
- According to data published by the Civil Aviation Authority, the total number of terminal and transit passengers passing through UK airports was 17.9% below 2019 levels in October 2022.
- According to data published by the Department for Transport the volume of goods lifted internationally by UK-registered HGVs declined by 20% in 2021.
Accommodation & food services
- The ONS states that the accommodation and food service activities sector grew by 0.02 percentage points in October 2022, contributing to the rise in services output over the month.
- Leading audit, tax and advisory firm Mazars states that closures of UK restaurant businesses have increased by 60% over the 12 months through September 2022, to 1,567 insolvencies. This shows that restaurants are going bankrupt at a faster rate than during the height of COVID-19, and this is due to soaring energy costs, labour shortages and lower bookings amid the cost-of-living crisis. Restaurant insolvencies reached 453 in the three months to September 2022, up from 395 in the previous quarter.
- The hospitality sector is taking a significant hit from the cost-of-living crisis, with the Future Living Report by Vita Group finding 48% of 8,000 people surveyed in September 2022 saying they had planned to spend less on eating out to save money.
- According to GfK’s consumer confidence index, UK consumer confidence has tumbled to its lowest level in nearly half a century amid high recession fears and stretched finances from the cost-of-living crisis.
- An independent survey of 2,000 UK adults by Peckwater Brands has found that the average amount consumers spend each month in restaurants, pubs and takeaways has fallen since the start of 2020, with restaurants the worst off.
- According to the EY Future Consumer Index from late November 2022, 43% of UK consumers expected to spend less over the festive season compared with 22% for the same period last year. Additionally, 42% plan to spend less on holidays.
- Transport strikes over December 2022, which is when many hospitality businesses make about a third of their annual sales, will compound issues for the sector. UKHospitality, the hospitality industry trade body, forecasts the strikes will cost businesses about £1.5 billion in lost sales and other knock-off effects, as reported by The Guardian.
- UKHospitality claims that nearly 250,000 jobs in the sector are at risk unless the government extends its support for businesses with soaring energy bills.
- The BBC reports that despite relatively relaxed UK entry rules, the number of people arriving at Portsmouth ferry port from France has more than halved after Brexit, from 338,000 arrivals in 2019 to just 155,000 in 2022, according to ferry firm Brittany Ferries.
- The ONS states that the information and communication sector increased by 0.03 percentage points in October 2022, contributing to services output growth over the month.
- According to the latest Connected Nations report from telecoms regulator Ofcom, about 70% of UK properties can now get 5G reception from at least one mobile operator. This is up from about half of all UK households in December 2021. Meanwhile, mobile phone access to 5G has doubled in the past year, reaching one in five handsets, though consumers still face connection speed issues, as reported by the BBC.
- Amid growing concerns that the cost-of-living crisis has made consumers more vulnerable, a report by the House of Lords’ Fraud Act 2006 and Digital Fraud committee recommends the British government should introduce a new corporate criminal offence to hold accountable Big Tech and telecoms companies for failing to tackle online financial crime.
- Following backlash from tech groups and privacy advocates, the UK government has decided to remove the measure forcing internet companies to take down ‘legal but harmful’ content from the Online Safety Bill.
- Telecoms leader BT Group has urged the government to extend the super-deduction tax relief as the group raised its cost-savings target and warns of job losses amid severe inflationary strain. According to BT, the scheme has been highly successful, enabling the creating of 4,000 jobs since it was introduced in March 2022.
- At the start of November 2022, telecoms regulator Ofcom stated that it has started the process to scrap the requirement for BT to provide dedicated landlines for fax machines at affordable prices.
- Amid soaring inflation and need to cut costs, Openreach will limit its investment in the roll-out of ultrafast fibre broadband, as reported by The Financial Times.
- BT’s Openreach is planning to cut rates for its wholesale clients, like Sky and TalkTalk, which do not have their own fibre networks in an attempt to attract new customers and force more people to switch to full fibre networks. This move has faced backlash from full-fibre rivals, including Virgin Media O2 and CityFibre, which argue the move could price out smaller companies.
- The House of Commons science and technology committee has warned that the UK’s national security is at risk from the government’s failure to obtain reliable satellite access. The UK lost full access to the EU’s Galileo navigation satellite system following Brexit.
- The UK government is set to begin trialling Starlink satellites technology to help meet its target of providing ultrafast internet to all households across the country.
Finance & insurance
- Buy-now-pay-later usage soars as the cost-of-living crisis continues. A survey by Forbes discovered that 70% of BNPL shoppers have turned to these services more frequently in the last six months. According generations, consumers aged 18-24 have been the most reliant on BNPL services, with 80% upping their spend.
- According to price comparison site Nerd Wallet, unsecured loans are second only to credit cards as the UK’s most prevalent form of debt. 30% of consumers admitted to having some form of unsecured loan, with consumers aged 65 and over the biggest unsecured loan users at 43%. For this group unsecured loans exceeded use of credit cards (40%), payday loans (25%), and BNPL (10%).
- Rising base rates continue to filter through to mortgages. According to FCA data and the House of Commons, the average Standard Variable Rate (SVR) for mortgages was 9% in November 2022, up 2.3 percentage points on a year ago. The average two-year fixed mortgage rate was 6% in November 2022, up 4.4 percentage points on a year ago. It is unsurprising that UK mortgage approvals fell by 10% month-on-month in October 2022.
- Data from MoneySuperMarket indicates the cost-of-living crisis is driving searches for debt help across the UK. At the same time, the Office for Budget Responsibility has warned UK households will spend £83 billion in servicing debts (mortgages, credit cards and personal loans) in 2023-24, a 52% increase on the previous year.
- According to research by insurance company Vitality, UK adults are considering cancelling life insurance in light of the cost-of-living crisis, as people are thinking about where and how they can save money. Only three in 10 of those surveyed said insurance was a non-negotiable financial priority. The research also shown that 37% of adults in the UK have never switched or cancelled a life insurance policy, with a quarter having never switched or cancelled an income protection policy or serious illness cover policy. Despite this, approximately 20% of respondents noted they are currently considering switching these policies. More than 10% would consider cancelling all together.
- On 17 November 2022, the Chancellor confirmed plans to reform the prudential regulatory regime for the UK insurance and long-term savings sector. The Treasury plans to cut the difference between an insurer’s best estimate of its liabilities and the market value of its liabilities, known as the risk margin, for long-term life insurers by 65%. By reducing the capital requirement thresholds and allowing greater flexibility in where insurers can invest their assets, the reforms will result in a ‘material release of possibly as much as 10% or even 15% of the capital currently held by life insurers’ and unlock capital for long-term productive investments, including infrastructure. The Association of British Insurers welcomed the changes to the Solvency II Regime, which will allow the UK insurance and long-term savings sector to play an even greater role in supporting the levelling up agenda and the transition to net zero.
Real estate rental & leasing
- The ONS reports that real estate activities increased by 0.01 percentage points in October 2022.
- According to major bank Nationwide, annual house price growth was 4.4% in November 2022, down from 7.2% in October 2022. Prices fell 1.4% month on month and the average house price was £263,788. This is the largest monthly decline since June 2020.
- Elevated interest rates for new mortgages have caused the market to lose momentum, with housing affordability taking a hit from supressed household finances amid soaring inflation. Nationwide’s report forecasts the market will remain slow as inflation will remain high and the Bank of England will likely raise the bank rate further to relieve domestic price pressures.
- In the Autumn Statement 2022, chancellor Jeremy Hunt announced that the cuts to stamp duty in England and Northern Ireland will be phased out from March 2025, prompting criticism from property experts. In September 2022, former chancellor Kwasi Kwarteng doubled the threshold at which stamp duty would begin to apply to £250,000. Additionally, first-time buyers are exempted from paying tax on the first £425,000 of their purchase, up from £300,000.
- Mortgage provider Halifax has reported that UK house prices have fallen at the fastest pace since the financial crisis in November 2022 due to rising borrowing costs.
- ONS figures reveal that house prices in London fell 0.9% in October 2022, with the capital being the only region in the UK to see a decline. Across the UK, house prices rose by 0.3%.
- Higher mortgage rates and looming recession have plummeted demand for homes according to UK housebuilder Taylor Wimpey, which states that over the second half of the year it has been selling homes at half the pace it was in the first six months of 2022.
- Government figures show that stamp duty receipts on residential properties surged to £3.6 billion in the third quarter of 2022, marking the highest level on record and a rise of 21% compared with the second quarter of the year.
- UK Landlord Landsec has reported a pre-tax loss of £192 million for the six months through September 2022 as the valuation of its portfolio of national offices and shops plunged by 2.9% to £10.9 billion. By comparison, Landsec recorded a £275 million profit in the same period last year. Interest rate rises are to cause further issues for the commercial landlord in the coming months.
- Analysis by law firm Boodle Hatfield has found that nearly 20 million square feet of workspace was lost to use in 2021-22, with England’s stock of office space falling at the fastest rate for 20 years as new construction stagnates and employers cut back on office space.
- According to office management company ISS, the surge in energy bills is causing UK businesses to ditch office space to save money, with companies considering ways to reduce power consumption. Property consultancy Lambert Smith Hampton says that the cost of occupying office space has hit its highest ever level, rising 13% in the past year. Remit Consulting states that the UK average occupancy rate is still just at 30%, half pre-pandemic levels.
- The value of commercial property is falling across the UK as a result of higher interest rates weighing on valuations. According to Capital & Counties, the valuation of Covent Garden fell 2% to £1.8 billion in the three months through September 2022, with other property in the West End suffering similar fate.
Professional, scientific & technical activities
- According to the ONS, output in the professional, scientific and technical activities sector increased by 0.02 percentage points in October 2022, contributing to services output growth during the month.
- AccountancyAge reports that the Financial Reporting Council has published a policy paper at the start of December 2022, which outlines plans to stimulate competition and resilience in the UK audit market, as well as urging the government to publish the draft audit reform bill.
- The UK government estimates that the cost of plans to break the dominance of the Big Four accounting firms by forcing the largest UK companies to hire two sets of auditors, which is known as the managed shared audit proposal, has surged to £1 billion, representing a fivefold increase over 10 years, as reported by the Financial Times.
- Demand for tax advisers recorded a consistent growth in 2022, with higher vacancies compared to 2021 levels, according to Accountancy Daily.
- Leaders at FTSE 100 companies are calling for the Big Four firms to cut costs of audits and avoid further significant increases as their prices increased 22% in four years, as reported by The Financial Times.
- From 16 December 2022, the UK government has extended the ban on provision of auditing services to Russia.
- The VAT Practitioners Group, which brings together tax agents from across the UK, states that HMRC’s new online VAT system, which all tax agents registering businesses for VAT have had to use since August as part of the government’s Making Tax Digital scheme, has led to severe delays and has faced criticism.
- A report by the Law Society of England and Wales has found that run-down courts are exacerbating trial delays, which have reached over 62,500 at the end of September 2022, from just over 41,000 in March 2020.
- In the Autumn Statement 2022, Jeremy Hunt scaled back R&D tax credits. This has drawn strong criticism from small companies, particularly those that are research-intensive and tech start-ups. The Federation of Small Businesses says that the cut to R&D tax credits would have a significant negative effect on innovation and growth.
- The Financial Times reports that the UK is coming close to laying out plans for rules to regulate the crypto industry. Rules will include limits on foreign companies selling into the UK, provisions for how to deal with the collapse of companies and advertising restrictions. Recently, the incoming FRC chair Ashley Alder has claimed that crypto platforms were evasive and facilitated money laundering at scale.
- The chair of the Migration Advisory Committee has warned universities may struggle to survive financially if minsters impose a cap on foreign students on “low-value degrees” to bring down net migration figures. The cap could prove particularly problematic for smaller regional universities and negatively affect the levelling up agenda.
- The government has proposed plans to remove the charitable status of independent school, subjecting them to VAT on fees. The objective is to bring an additional £1.7 billion in funding to be redistributed across the national education system. The proposal has faced much criticism, including putting 200 private schools at risk of closure and worsening educational equality as an estimated 90,000 children would be priced out of their schools.
- Changes to the skilled worker visa system mean that applicants are no longer required to hold a degree level qualification to apply. Students who can secure a job offer from a Home Office approved employer, can then apply to switch from the student route visa to the skilled worker visa immediately, without any need to complete their degree. The new route offers a cheaper and faster pathway to full-time employment in the UK compared with the graduate route. Despite being a legitimate pathway, some have voiced concerns surrounding how the new system will affect university finances. Non-continuation costs the UK higher education sector more than £300 million per year and more than 100 universities are each losing more than £1 million annually in undergraduate tuition fees alone from students who drop out, according to pre-pandemic data from the Higher Education Statistics Agency.
- An Ofsted report published in November 2022 suggests there is a lack of access to specialise help means more primary school children with additional needs are being referred to alternative provision (AP). Primary-age children are referred to alternative provision when schools are unable to manage their physically or verbally violent behaviour, with negative effects on other children and staff. However, the report found most primary-age pupils only stayed in AP for a few weeks or months, and usually attended part time, and AP staff may be unable to meet their needs fully in the meantime. This absence of appropriate teaching and specialist support could have long-term consequences for these vulnerable children.
- In the Autumn Statement, the Chancellor set out in his speech that schools will receive £2.3 billion of additional funding in both 2023-24 and 2024-25 to push up school standards and support schools as we catch up on lost learning after the pandemic. The statement also noted over the winter months all schools will continue to benefit from the Energy Bill Relief Scheme, reducing how much they need to spend on their energy and giving them greater certainty over their budgets. The chancellor also stressed the importance of skills to driving long-term economic growth and taking forward major reforms set out in the Skills for Jobs White Paper – like delivering T levels, rolling out bootcamps and introducing the Lifelong Loan entitlement from 2025 – all of which are key priorities for the department.
Healthcare & social assistance
- UK social care is starting to feel the effects of Brexit. Shutting off the relief valve of EU migration has put additional pressure on staffing challenges in the system, which has relied heavily on EU and international recruitment and without an effective domestic training and retention plan. The effect has been felt most on efforts to recruit care workers, dentists, and specialist doctors, while pressures on the supply of medicines and medical devices have steadily increased since the EU referendum. because of the currency depreciation and trade barriers, according to the Nuffield Trust.
- The Levelling Up Secretary, Michael Gove, has unveiled a £59.5 billion package for councils in England for the next financial year to ensure that councils can continue to deliver vital frontline services, a 9% increase on the previous year. Health and social care services are being prioritised with additional grants of around £2 billion.
- Serious shortage protocols (SSPs) were issued across the UK for three penicillin medicines on 15 December 2022. Issuing an SSP allows pharmacists to legally supply a specified alternative medicine, removing the need for the patient to return to the prescriber – which saves time in GP practices and inconvenience for patients. Demand for penicillin has risen recently as it is used to treat strep A and scarlet fever, and the increased demand means that some pharmacists are experiencing temporary and localised supply issues.
- NHS hospitals and ambulances declare ‘critical incident’ over staff pressure. Hospitals are seeing a rise in emergency admissions of those suffering with respiratory conditions such as flu and trauma injuries due to the cold weather. The spike in demand has knock-on effects including extending waiting times in A&E, as well as postponing planned operations that require overnight stays as patients with the most urgent critical care needs are prioritised.
- The government has proposed to reform the NHS pension plan, allowing those who have left the NHS to re-join the NHS pension plan, in an attempt to draw back retired medical staff and stop more from quitting. Other proposals include formalising access to allow primary care workers – like GPs, nurses and clinical pharmacists – access to the retirement scheme. Previously these groups have had to apply for time-limited access on an ad hoc basis.
- Figures released in the autumn statement indicate that £12 billion has been allocated to the Department of Health and Social Care (DHSC) for its capital budget in 2022-23, which is used for research and development as well as long-term investment in building and maintaining NHS buildings, facilities and equipment. Moreover, £11.7 billion has been promised for the following year; however, plans by the government to construct and renovate 40 hospitals in England could be delayed as the DHSC’s capital spending budget faces a real-terms cut of £700 million next year.
- In November 2022, the government outlined plans on the £500 million Adult Social Care Discharge and Workforce Fund to support discharge from hospital into the community and bolster the social care workforce. £300 million will be given to integrated care boards to improve bed capacity and £200 million for local authorities to bolster the social care workforce, increasing capacity to take on more patients from hospitals.
Arts, entertainment & recreation
- UK gambling company Rank Group has issued its second profit warning this year. On 16 December 2022, Rank cut its profit guidance from approximately £40 million to £10-20 million for the year end June 2023, citing poor performance at its 51 Grosvenor casinos nationwide.
- According to the Gambling Commission’s 2022 Young People and Gambling report, 31% of children have stated they had spent their own money on gambling in the last 12 months. The vast majority indicated their gambling was legal or did not feature age restricted products. Examples of this include playing arcade gaming machines, which include penny pusher or claw grab machines (22%), placing a bet for money between friends or family (15%), or playing cards with friends or family for money (5%). A minority of children stated their gambling was on fruit and slot machines (3%), betting on eSports (2%), National Lottery Scratchcards (1%), playing National Lottery online instant win games (1%), placing a bet through a betting website or app (1%), or playing casino games online (1%).
- Payment service provider Worldpay expected UK betting to rise 15% during FIFA World Cup compared with the Euros 2020. The increase will be driven by home nations with historical data indicating betting volumes for England can be up to 20% higher when compared with other matches in the group stages of the competition. The time of day for the match also has a marked effect on betting volume, with data from the Euro 2022 noting payments per minute were 15-20% higher in the evening compared with early afternoon and midday kick-off times.
- A YouGov poll shows 81% in UK feel the cost-of-living squeeze. Interestingly, however, gym memberships and streaming subscriptions, such as Netflix and Disney+, are some of the last services that consumers say they’d cut when looking for savings on household expenses – opting to sacrifice nights out and new clothes instead.
Source from IBISWorld
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