Business news 1 July 2022
James Salmon, Operations Director.
Financing drought stalling growth. BCC urges Chancellor to deliver support for businesses. Disposable incomes hit by record squeeze. Goldman: Recession risk has risen. And more business news.
Financing drought stalling growth.
New research from Manx Financial Group has revealed that 22% of SMEs have needed external finance and/or capital over the last couple of years were unable to access it. Indeed, 27% have had to stop or pause an area of their business because of a lack of finance.
- Biggest barriers in sourcing finance were cost, processing times and lack of flexibility with repayment terms
- 34% of SMEs are concerned that their business will not grow in the next 12 months, however, with appropriate external finance, SMEs believe their business could grow by around 17%
- The Recovery Loan Scheme deadline is today (30th June) meaning capital-starved SMEs will need to source alternative forms of lending
The research also revealed that SMEs have been forced to pause or stop activities such as expanding into new markets, hiring the right personnel and marketing, because of lack of financing. Manufacturing, Finance & Accounting, Retail and IT & Telecoms were the sectors that were affected the most because of a lack of external finance and/ or capital.
If you are searching for cashflow, talk to CPA. We have been improving cashflow through effective credit management for our members for over 100 years. And our late payment compensation service has been unlocking cash inflows from former business customers who owe you compensation for all the times they paid you late. Our specialist service has been unlocking, calculating and collecting this compensation for our clients, providing invaluable additional finance.
BCC urges Chancellor to deliver support for businesses
Shevaun Haviland, director general of the British Chambers of Commerce (BCC), has urged Rishi Sunak to announce a package of financial support for firms struggling with a “perfect storm” of rising energy prices, chronic staff shortages and supply chain problems. She said the Chancellor needs to put fresh support for businesses in place immediately, adding: “We are on limited time. The Government has until the autumn budget to reset, rethink and get their house in order.” Mr Sunak, speaking with Ms Haviland at the BCC’s annual conference, said the Government will announce investment incentives to support companies in the autumn budget. He insisted: “We know how important business investment will be to our recovery, so we want to make sure that the autumn budget will continue to support that.” Mr Sunak also revealed that officials are working on plans to replace the super deduction scheme, which offers companies relief on their tax bills when they invest in productivity boosting technology and assets.
Disposable incomes hit by record squeeze
Families are officially suffering the worst squeeze on record, with real disposable incomes falling for the fourth quarter in a row. Real household disposable income was down 0.2% between January and March, as income growth of 1.5% was outstripped by household inflation of 1.7%. With finances failing to keep pace with inflation in Q1, it marks the longest sequence of declines since official records started in 1955. The Office for National Statistics (ONS) has confirmed its earlier estimation that GDP rose by 0.8% in Q1. This marked a decline in growth from 1.3% in the previous three months, but means GDP remains 0.7% above the last quarter of 2019, before the pandemic struck. Darren Morgan, director of economic statistics at the ONS, said: “Both household incomes and spending rose in cash terms in the first quarter, leaving the rate of saving unchanged. However, once taking account of inflation, incomes fell again, for the fourth consecutive quarter.” Martin Beck, at the EY Item Club, said: “The squeeze on household spending power has further to run, with the second quarter having seen both the energy price cap increase by more than 50% and a rise in personal taxation, while a further large rise in the energy price cap looking likely in October.” He added that families using their lockdown savings to prevent a slump in spending is “a far from certain prospect.”
Goldman: Recession risk has risen
Economists at Goldman Sachs say the chances of a UK recession have risen, coming closer to 50-50. Analysts at the US investment bank said: “We think a recession is more likely in the UK than in the euro area (40%) and the US (30%), and recession risks are more front-loaded in the UK, with the current quarter likely in contractionary territory.”
How family businesses survive hard times
The FT looks at family-owned companies, citing a 2021 KPMG study of 3,000 companies showing that such businesses laid off fewer people globally during the pandemic (8.6%) than other companies (10.2%).
Recruiters warn ministers against hiring agency staff to replace strikers
Britain’s biggest recruitment and staffing companies have written to the Business Secretary in protest over Government plans to replace striking workers with agency staff. In a letter to Kwasi Kwarteng, bosses of firms including Adecco, Hays, Randstad and Manpower warn that such a move would further inflame strikes. They urge officials to reconsider plans to repeal a ban on using agency workers to cover for picketing staff. The letter, which was sent by Sarah Thewlis, chair of the Recruitment & Employment Confederation, said: “We can only see these proposals inflaming strikes – not ending them.” It added: “We strongly believe it has the potential to cost our businesses – as we will be held responsible for sending strike breakers across a picket line and putting our workers in harm’s way. It will not matter if our individual businesses choose not to supply – the industry will be called into disrepute.”
Six in ten staff are looking for a new job
A poll by recruitment firm Aspire shows that 60.8% of employees are currently looking for a new job, with 59.8% saying there are lots of roles open. Just under 7 in 10 respondents felt they were more likely to be paid more if they move jobs. Almost 40% pointed to the cost of living crisis as the biggest external factor affecting the jobs market. Paul Farrer, founder and chairman Aspire, said: “With 1.3m job vacancies in the UK and pay in some industries rising by more than a third year-on-year, arguably there’s never been a better time to change jobs.” He added: “Employees want to work for companies that offer flexibility and better pay, and if they don’t feel valued, they’ll find a workplace where they are.”
Average house prices hit record high but growth slows
The average UK house price hit a new record of £271,613 in June, according to Nationwide, with this marking a 10.7% increase on the typical price recorded in June 2021. However, growth has slowed, with the year-on-year increase seen in June down on the 11.2% rise recorded in the year to May. Month-on-month, prices rose 0.3% between May and June. This also suggests growth is slowing, with the increase short of the 0.9% growth posted between April and May. Robert Gardner, Nationwide’s chief economist, said: “There are tentative signs of a slowdown, with the number of mortgages approved for house purchases falling back towards pre-pandemic levels in April and surveyors reporting some softening in new buyer inquiries.” However, he added that the housing market “has retained a surprising amount of momentum given the mounting pressure on household budgets from high inflation.”
PM: UK to spend 2.5% of GDP on defence by 2030
Boris Johnson has announced that the Government will spend 2.5% of GDP on defence by 2030, a sum that equates to a further £55bn. The Prime Minister said spending targets set by NATO members a decade ago – with every country pledging to spend 2% of GDP on defence – “were then set for a very different era.” NATO asks members to keep its defence spending above the 2% threshold, but Mr Johnson said the 2% rate was always meant to be “a floor, not a ceiling.” Foreign secretary Liz Truss and Defence Secretary Ben Wallace have both publicly called for an increased military budget in the wake of Russia’s invasion of Ukraine.
Bunzl
Bunzl said it expects to deliver “very strong” growth over the six period to June 30, reflecting the “resilience and strength” its business model. Bunzl said revenue in the first half is expected to increase year-on-year by 16% at actual exchange rates and by 12% to 13% at constant exchange rates, with inflation continuing to drive underlying revenue growth and acquisitions further supplementing growth.
Why should you become a CPA member!
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 some time to come.
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When you see your money come in, you will be so glad you used CPA.
The Credit Protection Association – Prompting Punctual Payments – Ethical, Effective, Efficient, Economical collections
Do you have a commercial late payer that is causing you grief? Use CPA’s no-win, no-fee, commercial debt recovery service!
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The Credit Protection Association – Prompting Punctual Payments – Ethical, Effective, Efficient, Economical collections.
Get compensated for previous late payments
Have you been paid late by business customers in the last six years?
Maybe you no longer work with them. Under legislation, you are entitled to compensation you for those late payments you have suffered.
You put up with the PAIN – now claim the GAIN!
Claim late payment compensation (LPC) from former business customers who paid you late in the last six years!
CPA (LPC) Recoveries is using our bespoke software and decades of experience to do just that for our clients
The Credit Protection Association – Prompting Punctual Payments – Ethical, Effective, Efficient, Economical collections.