Business news 1 May 2024
Households see rise in disposable incomes. Markets, Royal Mail, Immigration, house prices, mortgages, National insurance, insolvencies & more business news that we thought would interest our members.
James Salmon, Operations Director.
Households see rise in disposable incomes
Households in the UK have experienced a year of growing disposable incomes, indicating that the cost of living crisis is being alleviated by falling inflation and rising wages. According to a report by Asda and the Centre for Economic and Business Research (CEBR), average family budgets have improved by 10.1% over the past year, with a weekly increase of £21.50. The sustained rise in disposable income can be attributed to a decrease in inflation and a record-high growth in nominal wages. While the UK economy fell into recession last year, recent data suggests that the downturn ended in the first quarter of this year. Economists predict that the UK economy will gain momentum as households increase their spending due to improved budgets.
Markets
The FTSE 100 was flat yesterday as markets await the US Federal Reserve meeting results. Gold sank, the dollar rebounded and U.S. Treasury yields ticked higher after a report from the Labour Department showed hotter-than-expected first-quarter employment cost growth, which is unlikely to alter the Fed’s hawkish stance.
Overnight stock markets edged lower and the dollar rose on renewed concern about higher-for-longer US interest rates, in the US the S&P 500 fell 1.57% to 5035.69, the Nasdaq fell 2.04% to 15657.82. The pound is currently worth $1.2496 and €1.1710. Brent is at $85.17, Gold is at $2288.9. The FTSE 100 is up 0.21% at 8161 and the Eurostoxx 50 is down 1.2% at 4921.
Royal Mail
International Distributions Services outlined a modernisation programme for the Royal Mail, via reform of the postal firm’s universal service obligations. The proposal is based on three key principles: that reforms are good ‘for customers and growth’; for ‘financial sustainability’; and ‘for our people’. If successful, the Royal Mail would continue to deliver a one-price-goes-anywhere universal service and a choice of first and second class services, with first class letters still delivered six days a week.
Visa curbs bring fall in immigration
Visas issued to skilled workers, health and care staff, and students have fallen by a quarter compared with last year, leading to a decline in Britain’s record levels of immigration. The number of visas granted to these groups decreased from 184,000 to 139,100 in the first three months of this year. The tightening of rules on foreign students bringing family members has led to an 80% fall in dependant visas while the number of study visas issued also decreased significantly. The decline in visas for health and care workers is attributed to measures to strengthen the rules for companies sponsoring visas in the sector. Experts suggest that most of the decline would have happened even without the new policies. Labour said the policy changes had come too late and that they lacked accompanying measures to boost skills in the domestic workforce to fill labour shortages.
House Prices
UK House Price Growth slowed last month, numbers from Nationwide showed. UK house prices rose 0.6% on-year in April, easing from a 1.6% surge in March. On a monthly basis, they fell 0.4%. They had declined 0.2% in March from February. “UK house prices fell by 0.4% in April, after taking account of seasonal effects. This resulted in a slowing in the annual rate of house price growth to 0.6% in April, from 1.6% the previous month,” Nationwide analyst Robert Gardner said.
Mortgage approvals hit highest level since September 2022
Mortgage approvals have reached their highest levels in 18 months, indicating a return of confidence to the property market, according to Bank of England data. In March, there were 61,300 net mortgage approvals, the highest since September 2022. Gross mortgage lending also rose to £20.1bn, the highest in 13 months. However, mortgage approvals are likely to slow over the next couple of months, reflecting higher mortgage rates as traders have pushed back their expectation of when the Bank of England will start cutting interest rates.
Second NI cut will hit payslips from today
The UK Government’s cut to National Insurance will give millions of workers a significant boost in their payslips from today. National Insurance has been reduced from 10% to 8%, meaning everyone earning over £12,570 will receive more of their wages, with a maximum of £750 depending on their earnings. The National Insurance cut is the second reduction this year, following a similar two percentage point reduction in February. Combined, these reductions mean that workers could see a maximum of £1,500 more in their pay packets.
UK workers suffering the longest pay squeeze in more than 200 years
The Trades Union Congress (TUC) has revealed that millions of workers in the UK are currently experiencing the longest pay squeeze in over 200 years. TUC analysis of official statistics shows that real terms average pay has decreased in 212 out of 340 local authority areas this year. The TUC blames this wage stagnation on the austerity policies implemented after the 2008 financial crisis. The research indicates that if wages had grown at pre-crisis levels, the average UK worker would be £10,400 a year better off, equivalent to £200 a week. TUC general secretary Paul Nowak said the figures were “a damning indictment” of the Conservatives’ economic record and called for a new approach to achieve decent pay growth.
GSK
GSK posted first-quarter revenues and earnings above City forecasts and hiked its outlook. Sales rose 6% to £7.4 billion, or 13% excluding Covid-related medicines, while core earnings per share came in at 43.1p, up 16% and better than the 36.5p consensus. Boss Dame Emma Walmsley now expects 2024 turnover growth towards the upper part of the previous 5% to 7% range, with core operating profit growth of 9% to 11% (up from 7% to 10%), with core EPS growth of 8% to 10% (up from 6% to 9%).
Next
Next reported first-quarter sales growth ahead of guidance, which won’t surprise many followers. The clothing chain said full-price sales in the thirteen weeks to 27 April rose 5.7% on last year, slightly ahead of guidance for a 5% increase and last year’s growth of 4%. Online sales were up 8.8% and in-store sales were flat. Sales in the second quarter are expected to be down 0.3%, which is implied by full-price sales guidance for the first half as a whole remaining at 2.5%.
Amazon
Amazon reported 13% revenue growth to $143 billion in Q1. Ai boosted its web services with Amazon’s cloud unit reporting its strongest sales growth in a year, however, the overall sales forecast fell short of market expectations as the e-commerce unit reflects concern over consumers.
Chancellor warns FCA against ‘naming and shaming’ businesses
Jeremy Hunt has urged the Financial Conduct Authority to revisit its decision to name companies under investigation following a furious backlash from the financial services sector. UK Finance was among 15 trade groups to write to the Chancellor on Friday calling on him to intervene and block the measures. UK Finance warned the plans could “harm the UK’s competitiveness and attractiveness as a financial centre.”
Eurozone bounces back from recession
The eurozone’s “big four” economies – France, Spain, Germany, and Italy – have shown signs of recovery with a stronger than expected growth of 0.3% in the first quarter of 2024. This marks the best growth performance for the eurozone since Q3 2022. Lower energy prices, falling inflation, rising real wages, and the prospect of interest rate cuts have contributed to the boost in activity. While Germany and France grew by 0.2%, Italy and Spain posted growth of 0.3% and 0.7%, respectively. Analysts believe that the lower inflation rate opens the door for interest rate cuts in the coming months.
Everton call in advisers over 777 takeover
Everton has enlisted the help of a leading firm of restructuring and insolvency advisers amid uncertainty surrounding the proposed takeover of the Premier League club by 777 Partners. The club is still waiting for a further £15m of loans from 777, which would have taken the total borrowed from the American firm to over £200m. However, 777 is experiencing financial difficulties, with its low-cost airline Bonza entering voluntary administration in Australia. The company has also fallen behind on paying its UK PR advisers. These developments cast doubt on whether 777 will be able to complete the takeover and how Everton will be funded until the end of the season. Teneo, a global financial advisory firm, has been approached to advise Everton and its directors. Everton owner Farhad Moshiri’s control of the club is also in question, as another set of creditors could use their security to take control.
Bitcoin Jesus arrested in Spain for tax evasion
Early bitcoin investor Roger Ver, known as the “Bitcoin Jesus,” has been arrested in Spain on charges of tax evasion. The US Department of Justice alleges that Ver evaded paying at least $48m in taxes. Ver, who renounced his US citizenship in 2014, is accused of undervaluing his companies and bitcoins in his expatriation-related tax returns. He later sold 70,000 bitcoins for $240m in 2017 but prosecutors say he failed to pay the taxes owed on the distributions from his US companies. Ver’s lawyer has stated that they look forward to establishing his innocence in court.
Latest Insolvencies
Appointment of Administrator – FARLEIGH (READING) LIMITED
Appointment of Administrator – ATLAS WORCESTER WARRIORS RUGBY CLUB LIMITED
Appointment of Liquidators – NPLAHA LTD
Appointment of Liquidators – WHAT EVER NOW ! LIMITED
Appointment of Liquidators – TEN ARROWS CONSULTING LIMITED
Appointment of Liquidators – FAIRWIND PROPERTIES LIMITED
Appointment of Liquidators – LUDGATE HILL DEVELOPMENTS LIMITED
Appointment of Liquidators – SHONA PRENDERGAST LIMITED
Appointment of Liquidators – TD BAILEY LTD
Appointment of Liquidators – LAMBDASOFT CONSULTING LIMITED
Appointment of Liquidators – GONCALO BICHO ENGINEERING LIMITED
Appointment of Liquidators – MAC AUTOMATICS LIMITED
Appointment of Liquidators – GREY WOLF HOLDINGS LTD
Appointment of Liquidators – DE MATTIA LIMITED
Appointment of Liquidators – PABULUM PUBS LIMITED
Appointment of Liquidators – AD-HOQUE SOLUTIONS LTD
Appointment of Liquidators – JACON LIMITED
Appointment of Liquidators – CLERKENLEAP PROPERTY DEVELOPMENTS LIMITED
Petitions to wind up (Companies) – CH FARMS LTD
Petitions to wind up (Companies) – LS CONTRACTS LIMITED
Winding up Order (Companies) – APPPAY COLLECTIVE LIMITED
Appointment of Liquidators – SCAAN (FIH) LIMITED
Appointment of Liquidators – SPHERE KNOWLEDGE LIMITED
Petitions to wind up (Companies) – BG ENGINEERING INNOVATIONS LIMITED
Petitions to wind up (Companies) – MONTREAUX MAIDENHEAD PHASE 2 LTD
Appointment of Liquidators – ACCOUNTWORKS LIMITED
Appointment of Liquidators – PORTHMEOR GROUP LIMITED
Appointment of Liquidators – MRJ LETTINGS LIMITED
Appointment of Liquidators – WAY2WORK LTD
Appointment of Liquidators – SELINA INVESTMENTS LIMITED
Appointment of Liquidators – RAJ-ANSH CONSULTANTS LIMITED
Appointment of Liquidators – MIBAR FARMING UNLIMITED
Petitions to wind up (Companies) – HAXLY LONDON LIMITED
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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.
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The Credit Protection Association – Prompting Punctual Payments – Ethical, Effective, Efficient, Economical collections.