The Chancellor to speak and GDP and unemployment predictions – business news 8 July 2020.
8 July 2020.
James Salmon, Operations Director.
We cover the latest on Covid-19 and the markets, new predictions on GDP and unemployment, potential new measures to be announced by the chancellor, the effects of furlough and other business news.
Here are CPA we want to share the business news stories we have seen that we think will affect our members and readers. Many of us are busy fighting to protect our businesses and therefore might have missed some of the news that could impact small businesses, their owners and those that sell on credit.
Covid-19 general news
US President Donald Trump has formally started the withdrawal of the US from the World Health Organization, making good on threats over the UN body’s response to the coronavirus, officials said Tuesday. The US is the largest financial contributor to the WHO.Stripping funding from the WHO during the crisis who are coordinating global efforts will undoubtedly have an extremely negative effect on the international fight against covid-19.
And the WHO conceded that airborne transmission of covid-19 “cannot be ruled out”, in response to a letter signed by 239 scientists citing evidence that exhaled aerosols spread the infection. The organisation had maintained that the virus is spread mainly via larger droplets, which sink to the ground. The Change in view will have implications for social-distancing guidelines.
Jair Bolsonaro, Brazil’s president, said he had tested positive for the coronavirus. He has consistently played down the risks of the virus, and clashed with regional governors who maintained local lockdowns, which he says damage the economy. Mr Bolsonaro says he was tested after mild symptoms—a cough and a low fever—and is “perfectly well”.
Melbourne, Australia’s second-largest city, will reinstate lockdown measures from midnight on Wednesday for six weeks. On Monday 191 new covid-19 cases were identified in the state of Victoria, after it lifted many restrictions in June. People in its capital will be allowed to leave their homes only to buy necessities, exercise and go to work if they cannot do so remotely.
New Zealand suffered a breach of its quarantine rules, positive tests jumped again in Florida, and Sweden is seeing infection rates decline as citizens adhere to social distancing measures.
Markets.
Markets gave up gains from earlier in the week as a jump in US cases brought a wave of pessimism despite better than expected job data (JOLTS) in the US. Both oil and Gold dipped as well. The FTSE100 fell 1.5% while US stocks fell around 1% and the pound strengthened above 1.25 US dollars, ignoring the brexit negotiations deadlock.
GDP to fall 11% this year, providing there’s no second wave
A report by BDO and the Centre for Economics and Business Research forecasts GDP will fall 11% this year – but only if there is no large-scale second wave of coronavirus or another national lockdown. It warns that another peak in the pandemic and lockdown would send Britain’s GDP tumbling 19% and see exports fall by 23%. Peter Hemington, head of M&A at BDO, said: “We should assume that the full extent of economic damage will not be revealed until the Government’s job retention scheme comes to an end in October.”
One in ten small firms making redundancies
A new study by the Federation of Small Businesses (FSB) of more than 1,000 firms has found that small businesses are having to make redundancies, cancel training programmes and scale-back investment following weeks of COVID-19-linked disruption. The research finds that 67% of UK small firms have furloughed staff as a result of the pandemic, while others have been trimming back capital investment (37%), reducing working hours (25%) and cutting training initiatives (14%). One in ten have had to make staff redundant. Ahead of the Chancellor’s intervention, the FSB is urging the Government to take broad measures to aid job retention and creation, including cutting Employer’s National Insurance Contributions (NICs), or uprating the targeted Employment Allowance, while extending NICs holidays.
Sunak to unveil ‘kickstart jobs scheme’ for young people
Rishi Sunak will today announce a new scheme to stave off youth unemployment as part of attempts to revitalise the economy following the COVID lockdown. A new £2bn “kickstart scheme” will subsidise six-month work placements for people on Universal Credit aged between 16 and 24, who are at risk of long-term unemployment. The Government said it would lead to “hundreds of thousands of new, high-quality government-subsidised jobs”. The Chancellor is expected to make his summer statement at 12:30 BST after PMQs, with changes to stamp duty and VAT also expected, alongside a £3bn programme to make homes and public buildings more environmentally friendly.
Unemployment could reach 15% if second wave strikes
The Organisation for Economic Co-operation and Development (OECD) says joblessness in the UK could hit 15% by the end of the year if there is a second wave of COVID-19. The OECD says the UK is in any case headed for an unemployment rate of 11.7% by the end of this year due to the pandemic and lockdown. Self-employed people, younger workers, women and those on low pay will be the worst affected, the OECD said. The OECD also urged governments to start scaling back emergency wage subsidy schemes to encourage workers to move out of shrinking sectors as it predicted steep rises in unemployment.
Eurozone
The Eurozone Economy will sink deeper into recession than previously thought due to the effects of the coronavirus pandemic, the European Commission has said. The bloc will contract a record 8.7% this year before growing 6.1% in 2021. It compares with the European Commission’s May forecast of a 7.7% slump and 6.3% growth.
Furlough scheme inflicts massive damage on productivity
Latest official data for the first quarter of the year show that productivity measured by output per worker plunged 3.1% compared to a year earlier – the biggest decline over a single quarter since 2009. The headline measure of output per hour fell 0.6% in January to March from a year earlier, the ONS said, and unit labour costs grew 6.2%, the biggest increase since 2006. The Government’s furlough scheme has led to a disparity between the otherwise closely aligned output per hour and output per worker measures by causing employment to stay in line with pre-pandemic levels, whereas hours worked have declined.
Plans to force workers to pay for COVID-19 tests scrapped
The Chancellor has dropped plans to force workers to pay income tax on coronavirus tests if their employers order them. HMRC guidance published this week had made clear that employees will face a taxable benefit in kind for private tests carried out in the workplace. Mel Stride, chair of Westminster’s Treasury Select Committee, said: “This new guidance is unclear and will worry a large number of workers. If these tests are to be treated as a taxable benefit in kind, the tax bill for workers could soon mount up.” The Government last night removed all references to the tax on tests from its website. A Treasury spokesman said: “Given the importance of widespread testing, we want to ensure that all employers who wish to provide third-party testing to their employees can do so without increasing their tax liability. So, we will introduce a new income tax exemption for COVID-19 antigen tests provided by employers. HMRC will amend its guidance a s soon as possible to reflect this change.”
Crisis creates platform for radical tax changes
The Telegraph’s Jeremy Warner says the coronavirus crisis provides the Government with an opportunity to push through radical tax reforms. He goes on to consider three proposals: wealth taxes, a point-of-sales tax partially or wholly to replace the increasingly broken business rates system, and the transformation of national insurance into a fully hypothecated system of social insurance to fund health and social care.
Banks lend £31bn in Bounce Back Loans
New government data indicate that UK firms have received £30.9bn worth of Bounce Back Loans to help support them following the impact of COVID-19. The figures from the Treasury show that 1.01m such loans have been made. The Treasury also said that more than 53,500 Coronavirus Business Interruption Loans have now been approved, providing £11.5bn worth of funding, and 783 applications worth more than £2.5bn have now been approved for larger firms using the Coronavirus Large Business Interruption Loan Scheme (CLBILS). Meanwhile, the Times reports that fintech firm Tide has been forced to stop lending under the Bounce Back Loan Scheme because third-party funders were not willing to provide the capital. Finally, HSBC has left small businesses waiting a month or more for their loans, according to a report in the Mail.
Bookkeeping: auditors in the crossfire
The FT’s Due Diligence briefing reports on the renewed calls for accountability for auditors after the Wirecard scandal and the Financial Reporting Council’s demand that the Big Four separate their audit practices by 2024. Separately, a letter to the FT suggests Wirecard’s supervisory board should take more of the heat for the company’s fraud.
Chain restaurants forced to revise business model
The coronavirus pandemic is accelerating an inevitable decline in the casual dining sector, experts say, with figures from UHY Hacker Young showing over 1,400 restaurants collapsed into insolvency in the 2018-19 financial year, a quarter more than the previous 12 months. Although insolvencies have slowed in recent months due to the Government’s moratorium on winding-up petitions and a temporary ban on business evictions, UHY Hacker Young expects this number to increase as government support begins to taper off. Christian Mole, EY’s head of hospitality for the UK and Ireland, adds: “The thing to say about the casual dining sector is that unlike a lot of hospitality, it was a sector that was struggling way before Covid anyway. In a similar way that you could argue that the pandemic has accelerated a move within retail from bricks and mortar to the internet – it’s accelerating the fallout that was always lik ely to happen in the casual dining sector.”
Chancellor to announce immediate stamp duty cut
Rishi Sunak is expected to announce an immediate cut to stamp duty to boost the housing market. However, it is not yet known whether the temporary tax break will apply just to first-time buyers or all house purchases. The Chancellor is expected to raise the threshold from £125,000 to £500,000 – properties costing £500k accounted for nine in 10 of all transactions last year.
SJP clients have questions about potential wealth tax
St. James’s Place says it has been getting “lots of questions” from clients about the possibility of a wealth tax being introduced to pay for the coronavirus crisis. SJP’s private client director Alex Loydon said that the prospect of a wealth tax is a “hot topic” for clients. She added that business in the private client space for the wealth manager is “ahead of where it was this time last year” and the firm has seen an “awful lot of activity” in the area. Ms Loydon continued: “What we are saying to clients is don’t make any rash decisions. And this is where the value of advice comes in and having a financial adviser there to sort of hold your hand, for want of a better phrase, in times of uncertainty.”
Italian mafia bonds sold to global investors
Documents seen by the FT show how international investors bought bonds backed by the crime proceeds of Italy’s most powerful mafia. In one case, consulting services were provided by EY
Don’t let Covid-19 bust your business!
It will if your cash flow dries up, either sooner or later.
The Credit Protection Association (CPA) has been assisting thousands of UK businesses to get paid since 1914. We have seen many financial crises, this one will be particularly deadly for suppliers for sometime to come.
CPA eases cash from tardy debtors – Efficiently, Effectively, Economically and Ethically. Above all tactfully, because maintenance of goodwill is paramount.
To meet the needs of creditors in the current crisis, we have designed a “critical care” package especially tailored for the situation.
- The annual package costs start at very low rates
- A minimum performance warranty is provided
- Several complimentary services included
Clients instruct CPA on-line via their PC or phone, completely user-friendly. Your late paying customers are told to pay you direct (not to us).
A very recent report shows a 23% increase in the number of unpaid invoices since March 11th THIS YEAR – are you getting a build-up of late payers?
Right now, overdue accounts must be a concern and CPA has a great track record of encouraging slow-payers to pay their suppliers quickly.
It takes less than 17 minutes to see how you would benefit, do you have the time now?
No face-to-face meeting required – just call Peter Uwins, CPA’s National Sales Manager, on 020 8846 0000 (business hours) or email nsm@cpa.co.uk today.
When you see your money come in, you will be so glad you used CPA.
Do you sell on credit?
With pressures on the cash flow it is essential that you stay on top of the credit limits you grant customers and watch carefully for any late payments.
Those customers will look for the easiest option to boost their cash-flow. Don’t let it be you.
You can’t just assume your customers can and will pay you eventually, no matter how big their name is.
It is essential to have credit management systems in place to monitor and check your customers credit worthiness.
It is also best practice to use a trusted third party like CPA to make sure you are paid on time by customers, no matter how good a name they have.
About CPA
The Credit Protection Association can help!
Formed in 1914, CPA has been providing credit management services to SMEs for over 100 years.
At the Credit Protection Association, we provide first class credit information that can help you avoid being over extended to customers who are at risk. Our monitoring service can flag up warning signs long before the end, giving you the chance to adjust and reduce your exposure. We provide recommended credit limits and credit scores on a traffic light system and can help you set appropriate credit policies for your customers.
We regularly publish lists of the latest insolvencies but by then it is too late. Our credit reports however predict approximately 96% of company insolvencies long before they arrive.
Companies in trouble usually have very bad cash flow and they try to deal with it by delaying payment to their suppliers, increasing your exposure to them.
If you supply on credit, help us help you identify the risks.
Why use a third party collector?
As a third party collector, we can also get your payments prioritised over those who are not as hot on collections. When your customer receives a letter from the Credit Protection Association regarding their outstanding account, they are going to want to get that resolved as a priority. Our overdue account recovery service can get your unpaid invoices to the top of their “to do” list and get your invoice paid.
Over the years we have collected billions in overdue invoices for our customers.
Our debt recovery and credit management services give our members the financial freedom needed to grow and prosper, while our new Late Payment Compensation department could unlock hidden potential and offer the compensation needed to springboard your business to success.
You might be hesitant about contacting a debt collection agency. What are they going to be like?
Can they help your particular type of business?
There is no need for concern. CPA are courteous, helpful and very probably have had direct experience of working with your type of business.
Debt collection agencies are not all alike.
Success lies in both recovering money and keeping customers happy. The Credit Protection Association was founded in 1914 and has helped tens of thousands of UK businesses to collect outstanding payments and reduce the risk of incurring bad debt. We believe that creditors deserve to be paid for the work or goods they have supplied but we fully understand the need to maintain
the best possible relationship with customers!
At The Credit Protection Association, we provide solutions, advice and back-up in all areas relating to the supply of services or goods on account. Client-members receive everything they need from a single source to reduce debtor days and write-offs.
The Credit Protection Association has helped has assisted tens of thousands of UK businesses with their credit control requirements, since the First World War.
We are polite, firm and efficient when it comes to recovering outstanding debt.
“We have used CPA for a number of years now. The website is easy to navigate around with lots of helpful reports. The staff are always at hand and very friendly. CPA has helped us reduce our debt over the years and keep track of potential issues with our customers.”
~ CPA client in Buckinghamshire
“The service from CPA has proved to be everything that you said it would be. We have already seen a huge benefit. We have had a number of overdue accounts paid promptly and directly to us. It is also a huge weight off our mind to know that once we have passed an overdue payment over to you, you take care of everything whilst keeping us informed.
~ Credit Controller client in Warrington
The Credit Protection Association – Prompting Punctual Payments – Ethical, Effective, Efficient, Economical collections
Ready to speak to an advisor?
For help or advice on credit management, entirely without obligation.
Call us today
0330 053 9263
CPA is passionate about late payment
The Credit Protection Association has been protecting smaller firms against poor payment practices for over 100 years.
We are extremely passionate about breaking the late payment culture that holds back the UK economy and threatens many SMEs with cash flow difficulties being the single biggest killer of Britain’s small businesses.
If you were regularly paid late we can help. Those former customers used you to boost their own cashflow, regularly paying you late.
As a result you had extra costs, you had the distraction of having to chase payment, you had opportunity costs because your capital was tied up in their late invoices.
Under little used legislation, you are entitled to compensation for those late payments.
Now you can boost your own cash-flow.
CPA can help unearth the those hidden treasures.
We have the technology to reveal the compensation you are due and we have the extensive experience and expertise to then turn those claims into cash.
Yes, CPA can help you boost your business cash-flow.
Don’t let your bankers control you, contact CPA today.
The Credit Protection Association – Prompting Punctual Payments – Ethical, Effective, Efficient, Economical collections
Do you realise you could be sitting on a fortune?
Late payments often result in a cash flow crunch and leave SMEs in need of a cash injection.
If you sold B2B on credit then there may be a hidden source of capital you can call on.
If you fancy an bit of extra cash in your business, rather than jumping through hoops with your bank, you could look to uncover the resources from an unexpected source within your own business.
Not many are aware but there could be a hidden fortune within your business, sitting there, just waiting to be uncovered and released.
We can help you uncover the pile of gold, you didn’t even know you were sitting on.
If you trade with other businesses and were often paid late then you could be entitled to significant compensation.
Under little known and under-utilised legislation your business could be due huge amounts in compensation that you didn’t even know about.
Let’s be clear – this is not a way to weaken any customer relationships you value. It is one that identifies who’s been paying late and then recover the potentially significant sums in compensation using Late Payment Legislation from businesses where the relationship has already ended.
You can pick and choose who you want us to follow up – but once we’ve agreed which companies you’d like to pursue compensation from it’s a fast process and there’s no financial outlay to you whatsoever. My team at CPA put its expertise to work to recover the compensation due and fight late payment culture.
That compensation could provide the cash boost your business needed.
But don’t delay, that compensation evaporates if not claimed within six years of the late payment.
How can CPA help?
CPA has developed a unique technology to dig into your accounting records and discover the cash injection you are due by means of compensation. The software does all the hard work. Our software interacts over the cloud with over 300 different software packages, working directly with your accounts package, just so long as it’s stored on a computer.
We recognise that most companies do not have the resources to spend time on the identification and calculation of Late Payment Compensation. Our service can produce an Analyses within just a few days with (usually) less than 30 mins of co-operation from our clients. We work directly with over 300 accounting packages but can also work with bespoke accounts packages. Indeed, speed is essential as the oldest invoices may fall foul of the 6-year time limit.
Once the Sales Ledger Analyses is made available to clients, all that is required is that management decide which commercially sensitive ex-customers to remove from the list and return it to us.
CPA then uses its years of collection experience to explain and recover the Late Payment Compensation Claims. Clients do not handle any part of the recovery process as our team will take all communications from the companies against who the claims has been made. Often, it’s simply a case of explaining the legislation, sometimes we have to go all the way and enforce the legislation through the courts.
The result is that we are realising clients’ claims worth tens and sometimes hundreds of thousands of pounds which, of course, is pure net profit. You may also be among the recipients of “hundreds of thousands of pounds” should you elect to take advantage of our services.
We do the work, you receive the cash.
If you have supplied goods and services to businesses on credit and were regularly paid late then you could be due significant sums in late payment compensation.
We are talking to companies and unearthing claims in the hundreds of thousands from former business customers who paid them late. Large business customers who abused their power to inflict unfair and sometimes illegal payment practices.
We are helping business owners who are looking to boost the returns from their business before they retire. We are helping businesses who have lost major clients after years of loyal service to get properly compensated for systematic late payment. We are helping companies that were looking to close down, who looked insolvent and finding that cash injection they need to avoid insolvency.
Those former clients who regularly paid you late can finally be made to pay.
Ready to speak to an advisor?
For help or advice on credit management, entirely without obligation.
Call us today
0330 053 9263
The Credit Protection Association is a credit management company established in 1914. If you supply goods or services on credit then we can help you!
The Credit Protection Association – Prompting Punctual Payments – Ethical, Effective, Efficient, Economical collections
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The Credit Protection Association – Prompting Punctual Payments – Ethical, Effective, Efficient, Economical collections