Business news 1 June 2022
James Salmon, Operations Director.
Ministers to rethink transparency rules for SME’s. Mortgage borrowing falls by 36%. Credit card borrowing rises at fastest rate in 17 years. Eurozone inflation hits record high. And more business news.
Ministers to rethink transparency rules for SME’s
The Government has launched a review which could see a reform of transparency rules on what information small companies must publish. Ministers will review how micro-enterprises are defined, with officials saying the current definition “could be forcing too many of Britain’s smallest businesses to spend time and money preparing accounts to a level of detail only needed for larger companies.” The Government warned that current rules are “distracting” firms from focusing on growth and creating jobs. Ministers will also consider the reporting requirements on smaller public interest entities “to help attract high-growth firms.”
Mortgage borrowing falls by 36%
The number of mortgages approved by UK lenders has fallen to its lowest since June 2020, with 65,974 mortgages approved in April. This was down from 69,531 in March and 73,220 in January. The figures from the Bank of England also show that net mortgage borrowing dropped to £4.1bn last month from £6.4bn in March. Mortgage approvals for house purchases also fell, from 69,500 to 66,000. The average rate for a new mortgage rose to 1.82% in April, up from 1.5% in December after the Bank of England raised interest rates four times over the period to reach a 13-year high of 1%. Martin Beck, chief economic adviser to the EY Item Club, said the figures showed slowing demand, adding that he expects housing market activity to continue to cool through 2022, with price growth “decelerating.”
Credit card borrowing rises at fastest rate in 17 years
Bank of England data shows that credit card borrowing is rising at its fastest annual rate in 17 years. The annual growth rate for credit card borrowing hit 11.6% in April – the highest figure since November 2005. The figures also reveal that the rate for all consumer credit increased to 5.7% in April, up from 5.2% in March. This marks the fastest rate of growth since before the pandemic. UK consumers have now put more than £3bn on credit cards in the past three months – and another £1.6bn on other forms of credit, such as car finance and personal loans. Individuals borrowed an extra £1.4bn in consumer credit in April, exceeding the £1.3bn increase recorded in March. April’s increase was made up of £700m extra on credit cards and £700m on other forms of credit. Thomas Pugh, economist at RSM UK, said the figures “suggest that consumers are increasingly borrowing more to protect their lifestyles from the surge in inflation.” Karim Haji, head of financial services at KPMG, commented: “Growth in credit card borrowing remained at double digits in April, perhaps indicative of some households smoothing their consumption against the backdrop of lower disposable incomes.” The Bank of England figures also show that £5.7bn was saved by bank and building society account customers in April, with a further £600m stashed in National Savings and Investments accounts. The increase in the amount held in savings is well over the pre-pandemic average of £4.6bn, but lower than the £6.6bn in extra savings recorded in March.
Eurozone inflation hits record high
Annual inflation in the 19 countries that use the euro hit a record 8.1% in May, passing the previous peak of 7.4% reached in March and April. The figures from EU statistics agency Eurostat will add to pressure on eurozone officials to raise interest rates in an effort to rein in rising prices.
Nationwide House Prices
UK House Prices have seen growth for the tenth month in a row, according to the latest figures, though costs are continuing to slow in their steamroll. The average price of a home in the UK grew 11.2 per cent to £269,914 in May, slowing slightly from the more than 12 per cent growth reported in April, Nationwide’s House Price Index has revealed today. It means properties, on average, have grown nearly £2,300 more expensive in just one month.
Misguided snapped up
Frasers Group has snapped up beleaguered online retailer Missguided, the British retail giant confirmed in a regulatory filing today. The Mike Ashley-founded group, which owns House of Frasers and Sports Direct, has bought Missguided for £20m, following its collapse earlier this week.
Dr Martens
Dr Martens posted strong performance in Americas and EMEA this morning, with reported revenue up 29 per cent and 19 per cent respectively for the full year. Despite supply chain concerns and pricing woes, ecommerce revenue was up 11 per cent for the iconic British brand, which was up 92 per cent compared to 2020 figures.
Think-tank questions tax relief for oil and gas firms
Climate think-tank E3G says a tax break for investment in oil and gas production worth up to £5.7bn could have insulated 2m homes. It says the support, which was announced last week as part of the Government’s emergency cost-of-living package, could have been used instead to “supercharge an energy efficiency drive that brings household bills down once and for all.” While the Chancellor has announced a windfall tax on the soaring profits of oil and gas companies that will raise an estimated £5bn, Rishi Sunak also doubled the relief companies can get for investing in new oil and gas extraction, raising it to 91p for every £1 they invest in the UK. The New Economics Foundation think-tank says tax relief on investment in oil and gas extraction will cost the taxpayer around £1.9bn a year.
HMRC hands out £571m in fines
Penalties handed to taxpayers by HMRC have jumped by nearly a third in a year, from £445m to £571m. The increase was driven by the tax office increasingly clamping down on tax avoidance as part of its efforts to make up for revenue lost during the pandemic. According to the Public Accounts Committee, the Government has lost at least £15bn in tax-related fraud and error due to Covid. While HMRC took a more lenient stance towards individuals falling behind on their tax affairs in the wake of the coronavirus crisis, it has started to come down harder on those who fail to pay. Kevin Igoe, Managing Director at PfP – the tax investigation insurance firm which analysed the HMRC data – said: “The huge spike in penalties shows HMRC is ramping up pressure on taxpayers in arrears. It is likely the number of tax investigations will rise as a result.” It is suggested that HMRC could potentially boost its income by moving taxpayers that have made a mistake from one category of penalties to a harsher one, with it noted that the taxman has some leeway to decide whether an individual should face a penalty for failing to take “reasonable care” or a bigger penalty for making a deliberate error.
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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.
Get compensated for previous late payments
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The Credit Protection Association – Prompting Punctual Payments – Ethical, Effective, Efficient, Economical collections.