TERRY MURDEN picks out a number of key developments likely to make headlines in the coming year
Forecasting is very difficult, especially when it involves the future, said Yogi Berra, the legendary American baseball coach. As for economic forecasting, it was Ezra Solomon, one of President Nixon’s advisers, who said its only function was to make astrology look respectable. Those conditions aside, it is always tempting at this time of year to consider what lies ahead and how we may prepare ourselves.
There are some events that are scheduled to happen during 2024 – Edinburgh following Glasgow with a low emission zone, and Scotland’s first artificial surfing lagoon opening in the autumn. It looks like the fire-ravaged Elephant House cafe that gave birth to Harry Potter will also reopen.
Daily Business broke news in August of the collapse of the digital training academy CodeClan, which blew a big hole in the tech ecosystem. CodeClan 2.0 is being shaped in partnership with industry and is expected to launch in early 2024 as the government’s chief entrepreneurial adviser Mark Logan tries to keep his digital strategy on track.
There are some events we’d like to see happen: a dose of good fortune to land upon the Ferguson Marine shipyard and the hollowed out Sauchiehall Street in Glasgow. Perhaps a buyer will step forward for the collapsed Scotgold mine in the Trossachs, or the assets of failed battery firm AMTE Power that will recharge its plan for a megafactory in Dundee.
On the wider stage, expect the Chinese to take a greater share of the electric vehicle sector and don’t be surprised to see the launch of alcohol free bars to cash in on a growing consumer market.
What else lies in the in-tray of possible outcomes? Here are some of my tips for 2024:
Sale of Edinburgh Airport
An upturn in world travel has encouraged owners of airports to cash in their chips. Global Infrastructure Partners (GIP) – which owns Edinburgh Airport – has instructed advisers to seek a buyer. As a private equity outfit, GIP was always going to move the asset on. Sovereign funds are potential buyers and since GIP acquired it in 2012 there has been substantial growth supported by a growing retail offering and a direct tram link to the city.
Since 2010 capacity has risen by more than 44% and the airport is within a percentage point of recovering to 2019 capacity levels. Forecasts put it ahead of 2019 levels by this time next year.
Thirty-eight scheduled airlines have operated from Edinburgh this year, compared to 25 in 2010. It will welcome the return of a direct service to Beijing this summer via Hainan Airlines. However, some carriers including Emirates have yet to return and American Airlines will only restart services in 2024.
A buyer will have to stump an estimated £2.5 billion and the challenge will be how much more capacity can be squeezed out of it.
Sale of taxpayers’ stake in NatWest (formerly RBS)
Since the bailout of Royal Bank of Scotland by the late Alistair Darling, the taxpayers’ stake in what is now NatWest has shrunk to 38%. In his Autumn Statement, current Chancellor Jeremy Hunt recalled the privatisation of British Gas in the 1980s to say he favours a “Tell Sid” campaign to sell the remaining shares to the public.
If he wants to oversee the sale he will need to get a move on as a general election has to be called by December. Nothing is yet determined and there is no word on whether an incoming Labour government would follow through. One obstacle could be the prospect of getting back less than half of the £45.5 billion that was spent keeping RBS in business.
Alison Rose, the first female CEO of a UK clearing bank when she took the helm of NatWest, was made a Dame in last year’s New Year Honours, but by July she had gone after admitting her part in the Nigel Farage de-banking row. Her successor Paul Thwaite will deliver his first full year results in the first quarter. He will want to re-focus attention on the bank’s day-to-day performance, but questions about the share sale are bound to come up.
Sale of Innis & Gunn
Not a certainty, but after hosting the brewer’s October AGM in one of its pubs, founder and master brewer Dougal Sharp told Daily Business that he hoped to sell the company and that “the most likely outcome is a trade sale”. He was somewhat coy about whether the Edinburgh-based company was in talks with a potential buyer.
His comments were later played down. But that’s what he said. The rest of the media had already reported that the company was in growth mode and making a profit while Daily Business dug out the figures from Companies House that showed it made a whopping £2.37 million loss. That will focus more attention on its immediate future.
Revival of deal activity
Cheaper borrowing is on the horizon, though the Bank of England cautions about an early interest rate cut. Its hand may be forced if inflation continues to fall more quickly than some of the more pessimistic forecasters who also (wrongly) predicted a 10% plunge in house prices.
Mere talk of a lower cost of debt should enliven the property market and the corporate finance community which has seen a downturn in deals during 2023. The highly-leveraged tech sector in particular has suffered a difficult year but there are known to be a number of high quality transactions in the pipeline.
The tech sector will also be encouraged that after the EIE pitching event for growth companies was cancelled last year (another Daily Business exclusive) it will return at the end of April and will take place at a number of venues, including Edinburgh Castle.
Scottish Enterprise to appoint a chair
Daily Business noted the delay in appointing a chair to replace Lord Smith back in May 2022. He left at the end of July that year since when there has been no luck in finding a successor, leaving former banker Willie Mackie in situ on an extended interim basis. We reported in October that the search had been restarted with the hope of having someone in place in April.
The role comes with a pay package of £49,224 for 91 days per year, representing a slight increase on the £49,049 advertised in 2022. That was 10.2% higher than Lord Smith’s remuneration of £44,520. The new incumbent, assuming there are no further setbacks, will therefore get a higher pay package to oversee an agency whose budget has just been cut.
Time for new bank
Alba Bank was founded in Glasgow by Scottish entrepreneur Jim McColl in 2018 and has been promising ever since to fill a gap in the market for SMEs. It has got its licence and has been putting the pieces together to start operating.
In September it announced that banking veteran Robert Sharpe, who has chaired Metro Bank, HTB and Pollen Street, would take over as chair, replacing former Scottish Financial Enterprise CEO Graeme Jones who stepped down in April after just eight months to take on other challenges. Alba has been hiring a number of key players and it’s time for it to start delivering.
Craneware on bid horizon
2024 marks 25 years since Craneware CEO Keith Neilson set up the software company in Edinburgh, serving the US healthcare market where it has become a dominant player. He is one of the longest serving CEOs on the London Stock Exchange and the company was for a time a (largely unnoticed) unicorn worth $1 billion. It is currently valued at £620 million and one analyst believes it will be in a target for predators.
Alasdair Young of Panmure Gordon says the likelihood of upgrades will increase throughout the calendar year and says Craneware’s “leading position in US hospitals combined with its annuity revenue and high margins make it a likely bid candidate.”
More immediately, the future of Smart Metering Systems will be decided after the Glasgow firm received a £1.3bn bid from Kohlberg Kravis Roberts. SMS founder Steve Timoney and two fellow shareholders oppose the deal, but the odds must be on it getting the nod early in the new year.
Euro24, the Olympic Games, a hot summer…and a general election
Scotland’s opening tie at Euro24 against out-of-form hosts Germany was greeted by astonishingly optimistic football analysts as a “dream draw”. So the cup’s as good as won.
In reality, it’s too much to expect Scotland to return from Germany as champions because, as the SNP reminds us, Westminster is holding the country back and only through independence can Scotland achieve sporting greatness. So let’s park those dreams for another year.
Even so, our footballers and athletes can give the nation a summer to remember and provide a welcome boost to the hospitality sector which tends to benefit during tournament years.
A hot summer is also predicted, giving further help to food and drink firms, and could follow a general election as early as May. Forecasters have so far managed to mention every month until the end of the year for the big poll. All we know is that there will be an election in 2024 (January 2025 is long odds) and barring any more Starmer slips it is likely there will be a Labour government in Westminster… unless Mr Hunt pulls a few vote-winning rabbits out of his Budget hat on 6 March.
Inflation and interest rates are falling, along with energy costs, and if the economy manages to stay out of recession the gloom may lift. The addition of a few tax cuts may help the Tories hold on to more votes than the pollsters expect. After all, one thing of which we can be certain is that the experts will get their forecasts wrong.
Terry Murden held senior positions at The Sunday Times, The Scotsman, Scotland on Sunday and The Northern Echo and is now editor of Daily Business