• CFOs expect interest rates to almost double to 2.5% by June 2023, with the majority (86%) anticipating inflation to exceed 2.5% in two-years’ time
• Finance leaders report a sharp rise in financing costs, with credit seen as more costly than at any time in the last ten years
• CFOs are responding to higher input costs by passing on price rises, improving cash flow management and through a reduction in margins
• CFOs are taking a more defensive balance sheet stance with cost reduction their top priority
• Despite headwinds, investment intentions are still at above average levels
• Moreover, CFOs are positive on prospects for raising productivity plus increasing investment in skills and digital technology and assets over the next three years
Amid rising inflation and intensifying economic headwinds, finance leaders assign a 63% probability to experiencing a recession within the next year, according to Deloitte’s UK CFO Survey Q2 2022. Over two-thirds (68%) believe high inflation will continue – anticipating it to remain higher for longer – and to exceed economists’ expectations.
The majority of CFOs (86%) now expect inflation to exceed 2.5% in two-years’ time (up from 78% in Q1) – the highest reading on record.* More than a third (39%) think inflation will settle between 2.6% and 3.5% in two-years’ time and almost half (47%) expect it to remain above 3.5%.
CFOs’ expectations for interest rate rises have also sharply increased. They now anticipate rates to almost double over the next 12 months with the Bank of England’s base rate reaching 2.5% in a year’s time (up from 1.5% in Q1).
Conducted between 16 and 30 June 2022, Deloitte’s latest quarterly CFO Survey captured sentiment amongst the UK’s largest businesses, against a backdrop of historic UK inflation rates and the sharpest tightening of monetary policy since the 1980s. The latest survey saw 77 CFOs participate, including CFOs of 15 FTSE 100 and 32 FTSE 250 companies. The combined market value of the 49 UK-listed companies that participated is £392 billion, approximately 16% of the UK quoted equity market.
Impact of rising costs
This quarter’s survey asked CFOs how they are responding to the highest levels of inflation seen in 40 years. The top three corporate responses to rising costs are passing on price rises to customers, improving cash flow management and absorbing higher inflation through a reduction of margins.
Increases in the Bank of England’s base interest rate since the start of the year are also having a pronounced effect on corporate financing costs. Almost a quarter (24%) of CFOs report credit as fairly or very costly, the highest reading in ten years.
The outlook for operating margins also continues to deteriorate. The overwhelming majority of CFOs (87%) believe operating margins will be squeezed over the next 12 months. This compares to 71% expecting a fall in operating margins in Q1. Nonetheless, 54% of CFOs expect revenues to rise over the next year.
Finance leaders are placing greater emphasis on defensive strategies. They are now most focused on reducing costs and increasing cash flow, but continue to rate introducing new products and services or expanding into new markets as a priority.
Ian Stewart, chief economist at Deloitte, says:
“The Chief Financial Officers of the UK’s largest companies are braced for a recession. Finance leaders have edged towards more defensive balance sheet strategies, particularly cost control and building up cash.
“Yet CFOs are not in batten down the hatches mode. Risk appetite is only slightly below average levels, and well above the lows seen in the financial crisis, at the time of the EU referendum and during the pandemic.”
Labour shortages, recruitment difficulties and supply chains
Over a third (40%) of finance leaders report that their businesses have faced significant or severe recruitment difficulties in Q2 – a slight increase from Q1 (35%). CFOs anticipate labour shortages will persist, with a third saying these will be significant or severe in a year’s time.
In Q2, 31% of CFOs reported significant or severe levels of supply chain disruption. A modest improvement in conditions is expected, with around a fifth of CFOs (22%) anticipating similar levels of disruption in a year’s time.
Risk and outlook
The majority of CFOs (61%) say that the level of uncertainty facing their business is high or very high. Geopolitics, further interest rate rises, rising inflation and persistent labour shortages, respectively, rank at the top of the list of CFO concerns.
However, increasing capital spending remains a strong priority for 19% of CFOs, remaining above the five-year average of 14%. CFOs are optimistic about medium-term prospects for investment and most expect business productivity, spending on skills and investment in digital technology and assets to speed up in the next three years.
Richard Houston, senior partner and CEO of Deloitte, comments:
“It’s interesting that CFOs remain optimistic on investment – despite rising inflation and recessionary risks. They remain convinced that growth and resilience will only come through increased spending on digital technology – and the skills to use it.”
An app to help the owners of shared properties repair their buildings in the Capital has been so successful in its first year it is already being rolled out by two other local authorities in Scotland.
Developed by the City of Edinburgh Council with tech company Novoville, a new app launched in April last year has been helping more than 500 tenements with nearly 5,000 properties across Edinburgh in carrying out £700,000 worth of much needed repairs to improve their buildings.
The app has been so popular that Perth and Kinross and East Ayrshire Councils have announced today they are launching it as well.
Born out of the Scottish Government’s CivTech Accelerator programme, the app was designed to make it easier for residents living in shared properties to keep their buildings in good condition. It’s attracted twice as many privately owned tenements in a year as the Council usually deals with in that time frame.
The repairs carried out range from £50,000 for extensive roof repairs down to £200 for new door locks, through to £20,000 improving stonework, £5,000 repainting stairwells to £2,000 on new gutters. Around 150 trusted traders are listed on the app but you can use it with your own trader as well.
Councillor Mandy Watt Finance and Resources Convener said:
Edinburgh is leading the way in this work in Scotland and it is great news that two other councils are now about to launch it in their area as well. Our Shared Repairs Team is doing a fantastic job helping people who live in shared buildings through the steps they need to take to carry out repairs to their properties.
The app helps people take greater control of the process. It’s very accessible and easy to use.
Edinburgh has around 170,000 tenement flats and other shared buildings with multiple owners. It’s great to see so many property owners already engaging with the app, as many of these buildings are in need of urgent repair.
The feedback I’m getting is that without the app, some people say they wouldn’t have had the confidence to approach neighbours and get the repairs done, or the process would have taken a lot longer due to communication breakdowns and uncertainties about the correct course of action.
Louis Daillencourt from Novoville said:
It’s been a pleasure to work with Edinburgh proprietors in the last year to help them fix often longstanding issues, keep their buildings safe, and make them more comfortable. Thanks to their feedback, we’ve learnt a lot and invested towards making the app ever simpler to use.
This year, we’re progressing on multiple fronts. First, we’re deploying in more local authorities, collaborating with their private sector housing teams to make the app available to more and more owners around the country. We’re also continuing to work with consultants, architects and surveyors to ensure proprietors get the programme of work and maintenance plan their building needs. But in the wake of COP26, we’re also working on an absolutely critical development: making energy-efficiency upgrades accessible through the app.
App user Julia Morrison said:
Truth be told, our stair is quite analogue – particularly older landlords! Despite my best efforts, I was only able to get a few folks signed up directly to the Novoville app. However, the app is designed so that you can use it with owners who don’t want to sign up to the app directly. This means you can still use it to download a suite of template letters, organise your processes, and – most importantly – your payment collections. And for those that did sign up, it was a really smooth process and easy to use. Very few glitches/fixes for a new product. I work in digital communications and I know how rare this is, Novoville have done excellently! The best thing about the app was feeling really supported in doing something that felt quite difficult and that didn’t come naturally to me. The team at Novoville had my back the whole time.
App user Lizzie Crawford said:
I started using the app for one property in a tenement block where I am the landlord, and now I’ve got all three of mine in there! It’s much, much easier to look after the tenements where I own and let out a flat. The app is helping me create a bit more of a community feel in those blocks as well. I really recommend it to any proprietor. Apps can be daunting, but this is actually easy to use.
Further information on the app – http://sharedrepairs.novoville.com
Commenting on the Office for National Statistics inflation figures for June 2022, Director of Policy and Public Affairs, Alex Veitch, said:
“The rise in Consumer Prices Index inflation to 9.4% is the ninth monthly increase in a row and another record high.
“That represents a huge amount of cost pressure that businesses and households across the UK have had to absorb. These costs are set to rise further with surges in energy bills coming down the track.
“This squeeze on businesses’ operating costs is also reflected in the latest Producer Price Inflation figures which show a 24% rise in the year to June 2022, the highest level since records began in 1985.
“Against that background it is no wonder that two out of three firms are telling us they expect to raise their own prices, and three quarters are reluctant to invest.
“It is vital that Government sends business a clear signal that despite political upheaval it can still take action on the economy. Beginning a long-promised review of the Shortage Occupations List to ease the incredibly tight labour market would be a start.
“The autumn budget must then be the main priority of the new Prime Minister and Chancellor – a chance for them to reset, rethink and get their house in order.
“This inflationary surge sits alongside a poor economic outlook and unless the Government acts with urgency the chances of a recession will only increase.”
Professional services firm Pinsent Masons’ new Edinburgh office has become the first building in Scotland to be awarded a prestigious distinction certifying its well-being credentials.
The firm’s 25,000 sq ft office in Capital Square – home to 200 lawyers and business operations staff – has received WELL Certification by the International WELL Building Institute (IWBI).
The WELL Building Standard in the world’s premier accreditation which focuses on enhancing people’s health and well-being through the buildings where they live, work and play, and is the result of seven years of rigorous research and development working with leading physicians, scientists and industry professionals.
The Standard is a performance-based certification which marries best practice in design and construction with scientific research, and covers seven categories of performance, including air, water, light, nourishment, fitness, comfort and mind.
Pinsent Masons’ design team introduced measures including Circadian lighting systems which work in harmony with occupants’ 24-hour biological clocks, ensuring there is ample access to daylight and when daylight is comprised the system compensates to create a healthier and more naturally lit environment.
Air quality standards have been enhanced with increased air filtration and an air flush programme was carried out before occupation of the building, while greater focus has been put on healthy nutrition and mindful eating, with organic and sustainable products available in the office café.
A biophilic approach to the office design was used to create a harmony between modern architecture and the natural world with sustainable materials used wherever possible, and a large well-being zone and contemplation room was created with a library of materials covering mindfulness, stress management and healthy habits.
Other features include a third of workstations designed to be height-adjustable for standing and sitting and staff can take advantage of a range of fitness activities in the office, including yoga classes.
Luke Richards, Pinsent Masons Head of Facilities, UK & Ireland, said: “From the outset we wanted to take our people-centric workplace approach up a notch by targeting a globally-recognised standard, such as WELL, and challenging ourselves to deliver a more sustainable office fit-out project. We researched and sought out elements which created an amazing space that supports the wellbeing of the colleagues who work here, while minimising our impact on the environment throughout.
“This is the first project of its kind that Pinsent Masons has undertaken and we are delighted to be leading the way in Scotland as occupying the first building to have been awarded the WELL Certification.”
Ongoing monitoring and reporting will ensure the WELL standards achieved within the first six months of taking occupancy in the Morrison Street building will be maintained and improved, and other measures which meet the WELL benchmark will be introduced as part of a rolling programme.
Ewan Alexander, Partner and Head of Office in Edinburgh, said: “It was our objective to achieve WELL accreditation and to meet the IWBI’s incredibly high standards and we are delighted to have done so.
“Working closely with the design experts, we were able to adjust certain features during the fit-out to make better use of space and design in light of post-Covid working preferences. The result is a stunning fit-for-purpose office which underlines our commitment to fully supporting our clients engaged in multiple sectors across Scotland and in international markets.”
Audrey Ferrie, Consultant and licensing specialist at Pinsent Masons
All eyes are on St Andrews this weekend as the world’s best golfers battle it out on the Old Lady’s hallowed fairways and greens to win the 150th Open Championship.
Behind the scenes, legions of hospitality workers also have a fight on their hands to maintain Scotland’s hard earned reputation for offering a warm welcome and outstanding hospitality as the university town welcomes a record-breaking 290,000 fans.
The hospitality sector – and particularly the licensed trade – is at breaking point, as underlined with a recent Scottish Tourism Alliance survey which revealed that 20% (45,000) of Scotland’s estimated 230,000 tourism jobs remain unfilled.
The industry body, UK Hospitality, recently warned operators were facing a 95% hike in energy charges, 19% in labour costs and a 17% and 14% rise in food and drink prices, which along with changes to VAT would cause havoc in consumer confidence.
Cafes, restaurants, pubs and hotels, have been forced to close or in many cases reluctantly reduce operating hours because of staff shortages. Last week in peak-summer tourist season, a colleague was told the kitchen at an iconic Edinburgh bar was closed because there was “no staff” and thereafter found it impossible to find anywhere offering dinner after 9pm in Cockburn Street and the Royal Mile.
Staff who continue to work contend with longer shift patterns and potentially suffer burn-out, and there is little time to train new entrants to the high standards required if Scotland is to maintain its reputation as a world leader in hospitality.
The cause is – and was – in plain sight. A Brexitdus of international workers on which the sector relies on was predicted and indeed materialised, as core staff upped pots and pans, cocktail shakers and aprons, to find work in more welcoming and friendly countries.
The Covid-19 pandemic forced the long closure of virtually all premises, with thousands of workers moving into other sectors when business reopened or choosing not to return because hospitality is not viewed as a particularly attractive or secure career option.
Another factor is at play following May’s local council elections, which resulted in licensing boards up and down the country changing members and political hue. Unfortunately, there have already been some examples of boards trying to impose conditions on licences which are arguably ultra vires, but hopefully this is a short-lived phenomenon and things will settle down.
Fresh ideas and innovative thinking would be welcomed from newly elected (and veteran) licensing board members who have an important role to play in supporting the hospitality sector, which is central to helping reinvigorate Covid-blighted towns and cities across Scotland.
Never before has there been such a need for a collaborative streamlined approach which brings together decision makers in licensing, planning and transport – often all three are needed to secure permission for operators to provide a basic service.
Our licensing representatives need to call time on the drawn-out processes which make obtaining all the necessary approvals to provide services more difficult than a hole in one at St Andrews.
As the largest and most widely accredited certification body and provider of audits, certification and performance assessments, we have produced five new short videos on the most ubiquitous internationally recognized ISO standards.
The videos explain why the respective standards exist and list the various business benefits of attaining them, including some which may not otherwise be immediately obvious.
The standards described are:
• ISO 9001 – the de facto quality management system (QMS) standard with over a million certifications in 170+ countries (https://www.youtube.com/watch?v=EzpOwniJoiY)
• ISO 14001 – demonstrates environmental responsibility, supports an organization-wide sustainability culture whilst helping to improve regulatory compliance and reduce operating costs (https://www.youtube.com/watch?v=-1b3pbHkIHI)
• ISO 45001 – specifies the requirements for an occupational health & safety management system whilst supporting corporate accountability, legal compliance and a company-wide health & safety culture (https://www.youtube.com/watch?v=ejtktwZdDKw)
• ISO/IEC 27001 – specifies the requirements for an information security management system (ISMS) in support of improved data protection, reputation, profitability and regulatory compliance (https://www.youtube.com/watch?v=YjzcitreGJk)
• ISO 50001 – the international standard governing how to establish, implement, maintain and improve an energy management system (https://youtu.be/46DB4NqP5_M)
The videos describe in brief how we work in partnership with organizations to support them on the journey to certification and beyond, with a key element being a UK-wide network of friendly, knowledgeable and highly experienced auditors. Certification to all of the standards listed is ideal for organizations of any type or size and business sector.
Our SGS Academy is also put under the spotlight in the videos. Specializing in high quality training to provide upskilling and professional development, it helps organizations to reap the many benefits of structured employee training, and individuals to work more effectively and realize their career aspirations.
A serial entrepreneur is harnessing the power of young digital creators and performers to breathe new life into an historic steading development in East Lothian. For the second year in a row, Scottish tech entrepreneur, George Mackintosh is providing an award programme which will see new creative talent help transform Papple Steading into an impressive agricultural heritage centre which celebrates the rich history of the agricultural revolution.
Papple Steading is thought to be one of Britain’s finest historic model farms of the Agricultural Improvement Movement, designed and built in the mid 19th century. Once part of the Whittinghame Estate, whose Laird was AJ Balfour, the British Prime Minister between 1902 and 1905, the farm fell into disrepair with the buildings unused for decades.
Rising like a phoenix out of the ashes as it undergoes an extensive restoration, Papple Steading is currently being transformed into an inspiring countryside venue which will not only communicate the historic importance of the agricultural revolution in Scotland, but will provide tourism, business and community opportunities.
Under George’s leadership and vision, the ambitious plans to develop an agricultural heritage centre, heritage reference library, cafe, shop and auditorium, as well as an artist’s studio, meeting rooms, private dining areas and accommodation cottages, are moving forward at speed. With a passion for all things tech, George is harnessing the talents of filmmakers, media experts and creatives at Queen Margaret University to showcase the Papple Steading offering in new and exciting ways. The aim is to use creativity, filmmaking, storytelling and drama performance through digital means to captivate and entertain new and diverse audiences, encouraging them to learn about Scotland’s rich agricultural past.
George said: “Papple Steading is developing into such a new and exciting facility that we want to use modern, innovative and creative ways of connecting people with Scotland’s fascinating agricultural past. I am passionate about nurturing young talent and exploring the use of technology to enhance what we have here at Papple Steading’s heritage centre. By working with students and new graduates at Queen Margaret University we can use digital media to blend the new with the old, allowing us to share our history, our traditions and our contemporary facilities with wider audiences across Scotland and beyond.”
Now in its second year, the Papple Media Prize @ QMU, funded by Papple Steading, is seeing QMU students pitch their creative concepts as part of a competition. The students were given a creative brief and had the opportunity to choose from themes focused around global agricultural development and food production arising from the achievements and innovations of the people of the Lothians and Scotland.
Sir Paul Grice, Principal of Queen Margaret University, said: “We are honoured to be involved in such an inspirational and innovative development which showcases an important and transformational period in Scotland’s history. We admire George Mackintosh’s vision for Papple Steading and his foresight in the use of student and graduate talent to enhance and communicate the Papple Steading offering. The awards present outstanding opportunities for QMU graduates to showcase their skills while making a valuable contribution to the transformation of an important historic but contemporary facility for Scotland.”
There are two group winners this year, each who will receive £4,500 to progress their creative project.
Alexandra Gilbert & Jourie Fraser-Harris will create a multimedia project based on sheep farming. The project, which centres around the use of local school children, will be a fun, light-hearted film which communicates the history and facts of sheep farming and its impact on agriculture in the local areas. This project builds on the style of filming that Alexandra and Jourie produced in 2021 when they created ‘Our heritage of oats’. The film featured lighthearted interviews with pupils from Stenton Primary School discussing their knowledge of oats.
Stuart McPherson and Shannon Dalyare also winners of this year’s Papple Media Prize @ QMU. Their project ‘Come the spring’ is a coming of age story, set against a backdrop of the agricultural revolution in East Lothian. This will focus on the fictional character, Mary, who is a gamekeeper and bondager in the mid 1800’s. The work will highlight the female voice from around this time period.
Both groups of winners will bring their concepts to life this summer, with their final pieces of digital being ready by October.
Edinburgh, 13 July 2022: Global law firm Clyde & Co’s team in Scotland has participated in a trio of charity events to raise money for important causes.
Across May, June and July this year, the team sought to make a real difference to the lives of young people living in Edinburgh, the Lothians, Fife and Falkirk. 18 members of the team completed the ‘5K a Day’ challenge every day in May, exploring both their local neighbourhoods and further afield and generating £401 in the process. All funds raised stay local – with an emphasis on alleviating poverty, supporting disability assistance and improving quality of life.
The strong charitable efforts didn’t stop there as brave team members once again took part in the Cateran Yomp in June – a gruelling 7000 foot and 54 mile climb in the foothills of the Cairngorm Mountains which lasted nearly an entire day – 23 hours and 18 mins to be precise! This heroic effort raised an impressive £5,125 for ABF The Soldiers’ charity, including a £1,600 contribution from Clyde & Co.
The Scottish team continued this fantastic momentum as they conquered Tough Mudder Scotland 2022, a 15km muddy obstacle course at Drumlanrig Castle in Dumfriesshire. Their heroic efforts mean the fundraising target of £2,000 for Place2Be, a UK children’s mental health charity, is within touching distance.
Overall, the team have so far raised over £7,000 across the three events.
Vikki Melville, Managing Partner for Clyde & Co in Scotland, comments: “I’m very proud of the efforts of the teams in their charitable endeavours, which I know have been undertaken following several dedicated weeks of training and preparation. As a law firm it’s also hugely important that we give back and contribute to our local communities and these events are great examples of our local support.”
UK and leading Scottish law firm, Brodies LLP, has been recognised for its expertise in advising clients on high value personal and family matters, in the annual Chambers UK High Net Worth Guide.
The firm has maintained its band 1 rankings for private wealth law services in Aberdeen, Glasgow and Edinburgh, and has again held its band 4 UK ranking for family/matrimonial law – one of only two law firms in Scotland to be included in the list.
The Chambers UK High Net Worth Guide – which bases its rankings on detailed research into firms and lawyers, and feedback from clients and legal peers – also ranks Brodies band 1 for its expertise in private wealth law as a national leader outside London and recognises seven of its personal and family lawyers in the individual rankings.
Mark Stewart, partner and head of personal and family at Brodies, said: “These latest rankings demonstrate our colleagues’ commitment to providing a high-quality service to our clients, often at a time of particular sensitivity or complexity in their own lives.
“In the last 12 months, the practice has continued to evolve. Following the promotion of Sarah Lilley and Susie Mountain to partner, we were also delighted to welcome our new partner, Jacqueline Stroud, to the firm earlier this year.
“Alongside, Susie becoming a solicitor advocate, and an additional six accreditations being awarded to colleagues in the practice, this underpins our continued focus on delivering a comprehensive service across Scotland.”
Partner Shaun George, who leads the family practice, added: “We continue to develop and expand our team for the future, whilst looking to the challenges and circumstances facing our clients today. Our lawyers have worked closely with our clients over the last year, navigating what are often unique circumstances. We are proud that we continue to provide specialist and cost-effective advice to all those with whom we work, across the length and breadth of Scotland.”
Five-star homebuilder, Miller Homes has announced that it will be bringing 109 highly anticipated new homes to Fife this year, with its brand-new Leven Mill development in Glenrothes launching Saturday 16 July.
Leven Mill will offer buyers a selection of stunning two, three and four-bedroom energy efficient homes, perfect for those looking to put down roots in the area. There will be a selection of detached, semi-detached, and terraced homes available at the development, providing options for growing families, young professionals and those looking to downsize.
Located in the town of Glenrothes in Fife, Leven Mill has fantastic amenities nearby. There are plenty of picturesque walks to enjoy in the area, with paths giving access to the River Leven for a stroll, and Riverside Park for a family day out, as well as an abundance of green spaces and parks nearby, including the leafy Balbirnie Park which is popular for dog walks. The Kingdom Shopping Centre is located just two miles from the development, ideal for everyday needs, and both Fountain Spa Leisure Club and Balbirnie Fitness Centre are a five-minute drive for gym goers and leisure seekers alike. Glenrothes also has great connections to the major cities in the East of Scotland via public transport and by car.
Regional Sales Director for Miller Homes, Lynsey Brown said: “Following the success of our sell-out Fife development, Lapwing Brae, we are pleased to be announcing our Leven Mill development in the vibrant town of Glenrothes.
“We’ve seen high demand for quality new-build homes in Fife, with the area proving popular with couples, young professionals, and growing families alike. Leven Mill marks our second new development launch in Fife this year, following Victoria Wynd in Kirkcaldy, which launched in June.
“The location of Leven Mill makes it extremely desirable, as it has fantastic connections across the East of Scotland, with Dundee, Perth, and Edinburgh all easily accessible, and the local amenities and picturesque scenery making it excellent for buyers of all ages and stages.”
Building work at Leven Mill is due to begin imminently, with a four-bedroom Greenwood showhome due to launch in 2023.
Leven Mill is being sold from First for Homes Estate Agents in Glenrothes. Interested buyers can speak to a Development Sales Manager on 03330 608 561, or visit millerhomes.co.uk for more information.
