SME Business News

CPA – Prompting Punctual Payment

A weekly round-up of press news and comment affecting your business

Tuesday, 3rd April 2018
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OUTLOOK

SMEs focusing on upside to Brexit

FSB chairman Mike Cherry says in the Independent on Sunday that small businesses are confident following the latest developments in Brexit negotiations. He adds that Government promises to win an a comprehensive free-trade deal between the UK and EU must be delivered and access to markets via EU membership maintained, all the while exercising its freedom to agree new trade deals during the transition period. Access to EU staff remains a concern for small firms, and with only a year to go, they are keen to see other risks resolved soon to ensuring the upward trend continues, says Mr Cherry. Elsewhere, James Stewart, head of Brexit at KPMG UK, advocates a proactive corporate approach to Brexit, arguing that business is in danger of failing to prepare for something beyond a “damage limitation Brexit”. He comments: “Brexit offers the UK a chance to open new trade corridors, cut service sector based deals, and develop a new global identity. But these ambitions can only take off if we adopt a far bolder approach. There is no use to wai ting until after Brexit to start planning for that future.”

The Independent

 

How British industries are preparing for Brexit

The Standard’s writers assess British industries’ Brexit preparations so far and the key tasks that remain. The main concern for the aerospace industry is the additional bureaucracy that could come from shipping UK goods to the Continent and, while it is hard for banks to make any moves, the writers suggest, insurers have tried to mitigate the Brexit threat by setting up European hubs. Skills are still the biggest bugbear for the housing industry, reliant on overseas labour as it is, while around 7% of UK manufacturers are planning to move production to the EU and 6% to non-EU locations, according to the latest snapshot of EEF members. Retailers, particularly non-food, will want to avoid an intellectual property crisis as no safeguards are in place yet to protect unique designs EU-wide and prevent rip-offs, while property agents believe that “streamlining and simplifying leases” will become more popular.

Evening Standard

 

Family-owned business need support to flourish further

The annual UK Family Business Sector report, produced by Oxford Economics and the IFB Research Foundation, reveals that a million more family businesses have been created in Britain since 2010. Family companies contributed £519bn to the economy in 2016, £100bn more than in 2010 and created 2.3m jobs in the period bringing the total employed by such companies to 12.2m. There were 4.8m family-run firms in the UK in 2016, comprising 88% of all private sector organisations and contributing £149bn in taxes. However, about 10% said they had financing needs but were put off obtaining it by red tape and risk and the expectation they would be rejected. Elizabeth Bagger, executive director of the Institute for Family Business, said: “To ensure family businesses continue to flourish, we’re calling on the government to support them with policies that allow family firms to plan and invest for the fut ure.”

The Times

 

Mid-sized firms need support

BDO tax partner Jo Gilbey calls on the government to prioritise support for mid-sized businesses to help Britain thrive after Brexit. She says almost half (46%) of UK mid-sized businesses want government to support growth by tackling the UK skills gap, while 41% are calling for a simpler tax system to make doing business easier. Firms expressed support for aligning NI and Income Tax to create one simple payroll tax.

City AM

 

Britain banking on fintech boom

The Telegraph’s Lucy Burton considers how Brexit will affect the UK’s fintech industry. The government has introduced a swathe of new schemes to boost its presence in the sector, including a task force exploring the risks and benefits of digital currencies, a fintech partnership with Australia and an initiative to help companies comply with rules quicker. However, there are concerns Brexit could steer entrepreneurs away from the UK, with shadow City minister Jonathan Reynolds suggesting the vote has given the perception that Britain wants to lift up the drawbridge.

The Daily Telegraph

 

EMPLOYMENT

Fewer firms offer wage rises

Fewer employers are giving their staff a pay rise, according to data from the Recruitment and Employment Confederation. Just 50% of companies gave their staff an increase in the 12 months to February – down from 65% in the previous year and the lowest level since October 2016. The figures contradict economists’ predictions that pay rises would kick in as a result of low unemployment and intensifying skills shortages. Meanwhile, a study from the FSB has found 82% of its members reporting a steady or rising headcount, the strongest number since mid-2016. Separately, the Resolution Foundation has found that the share of people voluntarily moving jobs remains 14% below the average before the financial crisis, suggesting younger generations have been “permanently scarred” by the recession. Between 2012 and 2015, the proportion of people moving jobs rose by 54%, but it has grown by only 13% since then.

The Daily Telegraph The Times

 

Firms ‘fearful’ for future migration system

Businesses are concerned about their ability to recruit workers from the EU after Britain leaves the EU, according to a new report by the Migration Advisory Committee (MAC), which reveals that many employers surveyed expressed the view that migrants from the European Economic Area (EEA) are more reliable and more willing to work long and anti-social hours than UK born workers. The review, commissioned by Home Secretary Amber Rudd, canvassed 400 businesses, industry bodies, government departments and other organisations and found that, in low-skilled jobs, absenteeism rates were 40% lower among migrants from countries including Poland, Romania and Bulgaria, compared with British workers.

BBC News Evening Standard Bloomberg Financial Times Daily Mail The Guardian The Daily Telegraph The Times

 

Mid-sized firms ‘undervalued’

New figures from BDO suggest the contribution of mid-sized businesses to the UK economy is “overlooked and undervalued”. The firm found that mid-sized businesses have grown faster and generated greater profit growth over the past five years than small businesses and large companies. BDO said that mid-sized businesses were the country’s “economic engine”, accounting for only 0.5% of businesses but more than a third of revenues and 30% of private-sector jobs. Meanwhile, figures from Yorkshire Bank owner CYBG show a fall in its SME Health Check Index for a fifth successive quarter, suggesting a worsening business and macroeconomic environment since the EU Referendum. However, some 58% of London SMEs have also grown revenues since the Brexit vote, according to a survey by Citibase.

The Times City AM Yorkshire Post

 

Red tape and unfair terms leave SMEs struggling

Onerous red tape and unfair payment terms imposed on small firms by big business mean SMEs continue to struggle from late payments. A survey by the Institute of Directors found 52% of its members have faced issues of delays in the past year, with 31% blaming “excessively bureaucratic payments systems” and 23% claiming bigger firms were imposing “grossly ­unfair” terms on their payments. The IoD’s Edwin Morgan said the Government needed to do more to publicise the options small businesses have to tackle late payment, describing the current situation as “deeply disturbing.”

The Daily Telegraph

 

Workforce crisis as Brexit squeezes recruitment

Employment consultants Mercer have cautioned that the British workforce is expected to increase by just 820,000 by 2025, a huge decrease from the previous decade when almost two million entered employment. The most recent statistics reveal that net annual migration of EU nationals to the UK declined by 75,000 in the year to September, to the lowest level for five years.

The Guardian

 

MANUFACTURING

Exporters plan to avoid Brexit disruption

British factories have begun setting up distribution hubs in Europe to ensure that they can maintain sales on the Continent after Brexit. The Bank of England agents’ report found that as well as building warehouses in Europe, manufacturers are “considering investing in infrastructure to gain or maintain [trusted trader] status for UK facilities after EU withdrawal”. This month the Chartered Institute of Procurement and Supply found that one in seven EU businesses with UK suppliers had moved part or all of their business out of Britain “to reduce their exposure to any complications resulting from Brexit”. The agents’ report also shows factories are stepping up investment to capitalise on booming global trade. Strong demand has raised foreign sales, while the weak pound has made imports more expensive, boosting domestic demand. However, the cost of imported goods is now rising at the slowest pa ce si nce late 2016, with annual inflation falling to 2.7% in the year to February.

The Times Financial Times The Daily Telegraph

 

INVESTMENT

Brexit progress sees rise in business lending

The Bank of England has reported a rise in the amount of lending to firms in February, with annual growth at 3.2%, up from 3% in the month before. The figures may indicate that companies’ investment confidence has been boosted by advancements in the Brexit negotiations. Separately, figures on business investment for the final three months of 2017 were revised up from 0% growth to 0.3% growth by the ONS.

The Daily Telegraph

 

Government SME spending falls short

Small businesses could be missing out on £33bn worth of government spending over the next five years, according to research by Millstream. The procurement firm found that such spending has only grown by 1 percentage point – from 10 to 11% – in the past five years, despite a government pledge to channel £1 in every £3 of its spending to SMEs by 2022. Penny Godfrey, Millstream’s general manager, said that the figures belied a “missed opportunity” for SMEs and that the trends suggested that not enough SMEs were tendering for – let alone winning – government business.

The I

 

UK framework shelters startups from “flipping”

Amir Bozorgzadeh details how the UK is immune to problems facing European startups forced to look to US venture funds for investment. The US investors require EU firms to “flip” into subsidiaries of US-based parent companies as a condition of the deal, resulting in a mass migration of EU innovators to the US. Due to London’s now well established startup ecosystem, early-stage firms are less vulnerable to being “flipped”, while at growth stage (Series B or later) pressure on the startups to relocate due to funding-related requirements generally fades, says Bozorgzadeh.

Venture Beat

 

Global investors misreading UK prospects

Writing in the Sunday Telegraph , Richard Buxton, head of UK equities and CEO of Old Mutual Global Investors, contrasts the attitude to the UK equities market from global fund managers, who are withdrawing from British assets rapidly, and corporates and activists who remain quietly bullish. He says the latter are calling it right, identifying that “there is good value in the UK corporate sector, that the world is growing, continuing its post-financial crisis recovery, and that there are deals to be done and opportunities to pursue.”

The Sunday Telegraph

 

FINANCE

Banks back review of business dispute resolution

UK Finance has commissioned an independent study into dispute resolution for companies wronged by banks, in the wake of the scandal over RBS’s mistreatment of small businesses. Simon Walker, the former director general of the Institute of Directors, will lead the review, which will be financed by the banks but conducted independently of UK Finance. Recommendations are expected to be published this summer. Meanwhile, Starling Bank, TSB and Nationwide will be applying for grants from a £425m RBS fund intended to boost competition in the small business lending market. TSB chief executive Paul Pester has said that the grants present a “once in a generation opportunity to break the shackles” of the big banks’ dominance of the small business market.

The Daily Telegraph The Sun City AM

 

MPs examine financial justice for SMEs

MPs are considering an affordable route to justice for small businesses who believe they have been mistreated by banks. The All Party Parliamentary Group on Fair Business Banking has announced that a research project will be carried out into the best way of establishing an independent resolution mechanism for complex financial disputes.

Yorkshire Post

 

LendingCrowd raises £2m

LendingCrowd has secured an external funding round of £2m as looks to significantly boost investor numbers in 2018. The Edinburgh-based peer-to-peer lender said it is eyeing a “game-changing” 2018 following a year when loan deals amounting to about £16m were agreed with SMEs across the UK.

The Scotsman

 

ECONOMY

City keeps place as global financial capital despite Brexit

Stock market listings in London raised a combined £1.3bn in the first quarter of 2018, according to research by EY. The main market saw nine listings, which raised £1.15bn overall, while seven flotations on the junior AIM market raised £149m. The Big Four firm’s quarterly “IPO Eye” survey of IPOs showed a 38% fall on the same period a year ago, but the total raised by the deals was up by 6% in what analysts described as a “slow but steady” start to the year. With 11 of the deals IPOs of financial services businesses, accounting for 51% of the total proceeds, EY said this “confirms that London continues to hold its position as a global financial centre despite political uncertainty.”

Daily Mail The Daily Telegraph

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