Business news 2 January 2025
Some of the business news that we thought would interest our members.
James Salmon, Operations Director.
Insolvencies could surge as costs climb
Experts have warned that the retail and hospitality sectors could see a rise in insolvencies as firms are hit by higher taxes and rising energy prices. Analysis from Begbies Traynor shows that the number of UK retailers in financial distress rose to 2,124 in Q4, up from 1,696 in Q3. Nicky Fisher, a former president of insolvency and restructuring trade body R3, said: “The December period will either be a lifeline or the tipping point for a number of businesses – especially those in the retail and hospitality sectors, who have had a challenging year of continued rising costs coupled with cautious customer spending.” Looking ahead, David Kelly, a partner at PwC, said 2025 “is poised to bring fresh challenges, including navigating the implications of the Autumn Budget measures and responding to the evolving actions of clients and suppliers.” Overall, Office for National Statistics data shows that company insolvencies were up 13% month-on-month in November, although they were lower year-on-year.
Retailers brace for record closures
The retail sector is braced for a challenging year, with a record 17,349 shop closures forecast for 2025, according to the Centre for Retail Research. This would surpass the previous record of 17,145 in 2022. Last year, 13,479 shops closed, marking a 28% increase from 2023. Retailers are particularly concerned about the impending rise in business rates, which will more than double the average shop’s bill to £8,613. Alex Probyn, president of property tax at Altus Group, described the reduction in business rates relief as “foolhardy,” especially for smaller retailers. The Centre for Retail Research predicts that 85% of the upcoming closures will be independent shops.
Bank expected to cut rates four times in 2025
Economists expect the Bank of England to cut interest rates at least four times this year as officials look to boost economic growth. A Times poll of 51 economists found that they believe the base rate will fall to at least 3.75% in the year ahead, from the current rate of 4.75%. While 35% said the base rate would be lowered to 3.75%, 15% said it would drop to 3.5% and three believe the rate will fall to 3.25% before year end. The remaining 22 respondents expect the base rate to be lowered to between 4% and 4.25%. On inflation, just two respondents expect it to fall below the Bank’s 2% target in 2025 and 37% suggested that wages would be the single biggest driver of inflation. It was also shown that 70% believe that annual earnings growth will be in the 3%-5% range.
Households optimistic over their finances
The majority of households are entering the new year feeling financially secure, according to KPMG’s UK Consumer Pulse survey. The analysis shows that 57% of people feel financially secure, while just a fifth (21%) feel insecure. While half of those polled said they could spend freely, just 3% said they could not pay essential bills or were incurring debt to do so. While respondents were optimistic about their own finances, sentiment for the overall economy was less positive, with 4 in 10 saying the economy was worsening. Just a quarter said it was improving.
Economists split on tax hikes
A Times poll of 51 economists shows that they are split on whether Chancellor Rachel Reeves will increase taxes further, having set out £40bn in hikes in her first Budget. While 40% said more increases are likely, 60% do not expect taxes to go up again. Philip Shaw, chief economist at Investec, said: “Although the Government wants to avoid another tax hike like the plague, there is a scenario where it is forced into it and in such a case it would probably opt to get it over and done with quickly and cross its fingers and pray that the economy improves ahead of the next election.” On employment, Barret Kupelian, chief economist at PwC UK, said “there might be a more rapid cooling of the labour market because of policy changes” such as the rise in employers’ National Insurance contributions.
Musk: Firms unlikely to invest in the UK
Tesla boss Elon Musk has suggested “very few companies” would be willing to put money into the UK under “the current administration.” However, Downing Street has rejected the claim, insisting that the Government has taken an “unashamedly” pro-growth and pro-business approach. The Prime Minister’s official spokesman added: “You’ve seen the Government respond to some of the businesses’ key concerns in the UK, which is lack of stability, and the Government’s brought back that stability, both politically and economically.”
Bank of England pulls back on ‘Britcoin’
The Bank of England has reportedly grown sceptical over the idea of creating a “digital pound,” with officials said to be concerned over user privacy, the costs of creating the technology, and conspiracy theories about central banks controlling people’s access to their finances. The Bank and the Treasury have been carrying out a two-year consultation on what has been dubbed Britcoin, with an update due in Q1. While sources say that policymakers are split over the merits of launching the digital pound, Bank governor Andrew Bailey and Chancellor Rachel Reeves are set to make the final decision. A Bank spokesperson noted that “any decision to proceed with a digital pound would be accompanied by the introduction of primary legislation, which would guarantee users’ privacy and control of their money.”
Graduates face salary squeeze
According to the Resolution Foundation, white-collar graduates in the UK are experiencing a significant decline in real earnings. Accounting graduates, the study shows, make £3,400 less than they did at the start of 2017 once adjusting for inflation. The report reveals that annual salaries for typical recent graduates have fallen by 4% in real terms since 2001 and now average just over £34,000. The Resolution Foundation highlights that the legal minimum wage has surged by nearly 60% since 2001, reducing the salary premium for graduates from £22,000 to £12,400. Jack Kennedy from Indeed said: “It speaks to employer caution. They are taking the view that in a weak overall market, people are going to be keen to secure any graduate role they can, so there is no need to go too hard on salaries.” The research also shows that around two in five British workers are in jobs they are overqualified for.
Nationwide boss in WFH warning for women
Nationwide chief executive Debbie Crosbie has warned that women are at risk of missing out on opportunities at work as they are less likely to go into the office than men. Ms Crosbie told BBC R4’s Today programme that while flexible working can be useful for those with caring responsibilities, it is important for career growth to have a “physical presence” in the workplace. Ms Crosbie, who said she “benefited enormously” from observing and interacting with leaders, also stressed the need for businesses to support female leaders. While previous Nationwide chief executive Joe Garner had championed 100% remote working, Ms Crosbie has brought an end to the building society’s “work anywhere” policy for its 13,000 non-branch staff, asking most full-time workers to attend twice a week.
Deadline looms for self-assessment
Nearly half of self-employed individuals in the UK have not yet completed their tax returns, with the HMRC self-assessment deadline approaching on January 31. A survey by GoSimpleTax revealed that about 2.1m self-employed people are still to file, with 25% planning to start their submissions with less than three weeks remaining. Failure to file on time can result in a £100 fine from HMRC. Additional fines for longer delays can push the total to £1,600.
UK House Prices
UK House Prices were up 4.7% year-on-year in December, improving from the 3.7% increase in November – though prices were still just below the all-time high recorded in summer 2022. On a monthly basis, which is seasonally adjusted, prices rose 0.7%, adding to the 1.2% gain the month before.
London house price growth slows
House prices in the UK are experiencing a notable shift, with declines in London contrasting with increases in the North West and Yorkshire. London has a house price to earnings ratio of 8.22, significantly higher than the national average of 6.55. According to Halifax, seven of the ten areas with the lowest house price growth from 2023 to 2024 are in London, where prices in Ealing and Southwark fell by 4.9% and 4.8%, respectively. Overall, the South East’s growth lagged at just 1.8%, highlighting the regional disparities in the housing market.
Overseas tax evasion admissions jump 22%
UK tax evasion disclosures on foreign assets rose by 22% in 2023/24, with 5,643 people telling HMRC they had failed to pay enough tax on their overseas assets.
HMRC calls for R&D tax relief overpayment disclosure
HMRC has launched a disclosure service for companies that have overclaimed research and development tax relief. The service is targeting companies that have claimed too much R&D relief in error but did not amend their tax return, rather than those which deliberately overclaimed. This comes with analysis showing that errors and misuse of the tax break have cost the Treasury more than £1bn in missing revenues, with almost £1 in every £4 provided under the scheme lost to fraud and error between 2020 and 2021. HMRC has warned that the relief has been an “attractive target for organised criminal gangs and wider non-compliance.” Dawn Register, a tax dispute resolution partner at BDO, said: “If a company now realises that past R&D claims prepared for them by such agents were, shall we say, ‘speculative’, then a voluntary disclosure is certainly the way forward.”
HMRC reveals ‘digital-first’ aim
HMRC is collaborating with private sector companies to enhance the taxpayer experience and address ongoing customer service issues. Complaints about HMRC’s accessibility have surged in recent times, with average phone wait times increasing from five minutes in 2018/19 to nearly 23 minutes in 2023/24, according to the National Audit Office. With little evidence that the expansion of digital services has improved the situation, ministers have instructed the tax office to work with the private sector on how to improve the situation. A spokesman for HMRC said: “Learning from these conversations will help accelerate our work to become a digital-first organisation, giving our customers quicker and easier ways to manage their tax affairs.”
Millions unaware of pension IHT
Many UK adults aged 55 and over are unaware of new rules that will subject pensions to inheritance tax (IHT) as of April 2027. According to Canada Life, around 8.5m people are oblivious to these changes, with only 6% having adjusted their financial plans. The change is expected to nearly double the number of estates liable for IHT, generating an estimated £1.46bn for the Treasury by the 2029/2030 tax year. Stacey Love, a tax and estate planning specialist at Canada Life, said: “Although it seems like a long time away, many people may not yet realise that these changes could draw them into the inheritance tax net.” The research also highlights a significant lack of awareness regarding existing gifting rules that could mitigate IHT liabilities. Ian Dyall, head of estate planning at Evelyn Partners, notes that the wealth management firm has already seen an increase in savers wanting to know how to offset the rise in inheritance tax.
IHT Tax hike is ‘indefensible’
National Farmers’ Union (NFU) president Tom Bradshaw has called on the Government to pause its “disastrous” reforms to agricultural inheritance tax, which he claims have caused “anger, despair and sense of betrayal” among farmers. The proposed changes, which end the 100% exemption on qualifying business and agricultural assets over £1m, have been described as an “indefensible family farm tax” by the union boss. The Government, however, maintains that the majority of farmers will not be affected by the changes.
Public sector sick days soar
Analysis shows that public sector workers are taking mental health sick days at a rate three times higher than their private sector counterparts. The number of mental health sick days taken nationwide increased by 6.6% from 2020 to 2022, reaching 14.6m. In 2022, the sickness absence rate for state employees was 3.6%, with over 12% of these days attributed to mental health issues. Just under 0.5% of all public sector working hours were lost to mental health issues in 2022, more than three times the 0.15% lost in the private sector. Data shows that NHS England staff took 46.5% more mental health sick leave in 2024 than they did before the pandemic, while data compiled by the TaxPayers’ Alliance shows that the number of days taken as mental health sick leave by council workers rose from 2.1m to 2.25m between 2021 and 2024. Figures also show that workers in the prison and probation service took 282,457 days of mental health sick leave between March 2023 and March 2024. Separate analysis by the Chartered Institute of Personnel and Development in 2023 found that the average employee takes 7.8 days of sick leave a year, up from 5.8 days before the pandemic in 2019. The Office for Budget Responsibility forecasts that spending on sickness and disability benefits could exceed £100bn annually by 2030.
Investment bosses back UK stocks
The chief investment officers at several large asset management firms expect UK stocks to outperform global equities in 2025, according to analysis by Asset Risk Consultants. Almost a quarter of the 98 UK CIOs polled cited the threat of trade wars as the single biggest risk facing markets this year, with rising inflation the next biggest threat. While 20% said increasing prices and the response from central banks could be an issue, other concerns cited included government debt levels (15%), stock market concentration (14%), and a recession in the US (8%). While 57% of the finance chiefs said they were optimistic about the outlook for equities, just 1% were negative. On the outlook for the pound in 2025, 21% were positive and 24% were negative, while just 5% expect the euro to perform well in the year ahead. The CIOs quizzed came from firms including Barclays Wealth, Brewin Dolphin, Investec, Rathbones and UBS.
LSE takeover losses exceed new floats
Figures from Dealogic show that the London Stock Exchange has lost more companies to takeovers than it gained through new flotations since 2015. While 585 companies worth a combined total of £779bn have left the London market after being bought by competitors or private equity in the last decade, 567 joined either the LSE’s main market or junior division AIM, with these having a combined value of £66bn. Samuel Kerr, at Dealogic’s owner ION Analytics, said: “Much of the slowdown can be attributed to the need to establish a new identity for the LSE since the UK left the European single market, with London no longer an English-speaking common law bridge to European markets as it once was.” He added that listing reforms by the Financial Conduct Authority “have come some way to reducing any regulatory burdens of a London-listing,” but the “proof in the pudding will be whether the LSE can attract sizeable IPO candidates in 2025 and beyond.”
European IPOs soar while UK stalls
The IPO market in continental Europe has experienced a significant resurgence, with proceeds doubling to €14.6bn over 57 floats, according to PwC. In contrast, the UK market raised only £700m from eight IPOs, a decline from the previous year. Despite the challenges, Vhernie Manickavasagar, capital markets partner at PwC UK, sees grounds for optimism for the UK. She says there were glimmers of a “return to normality” which were “signalled by the return of net inflows into UK equities in November for the first time in 42 months and the announcement of larger listings in London towards the end of the year.” Looking ahead, she added: “Preparations for a number of significant IPOs are already under way, providing momentum for what is hoped to be a big year for the UK markets in 2025.”
London’s share of IPO market falls
Data from the London Stock Exchange shows that proceeds from global IPOs fell 3% to $108.4bn in 2024, with this the lowest total since 2008. The figures also show that the number of listings fell to 1,145 from 1,271 in 2023. London’s stock exchange fell to 35th among all stock exchanges globally on IPOs, with just $576.7m raised. This gave the UK just 0.53% of the global market. However, the UK ranked fifth when follow-on fundraising was included, having raised $28bn with 73 issuances.
Why you should become a member of CPA!
The Credit Protection Association (CPA) has been assisting thousands of UK businesses to get paid, since 1914. We have supported our members through all sorts of difficult trading environments. With high interest rates and a struggling economy and elevated insolvencies, our services can help your business navigate these difficult waters.
Unlike other credit management and debt collection companies, we offer a range of services to our members that are all included as part of a fixed annual subscription, tailored to your needs.
Under your annual subscription you will have access to our main services:
- Our Creditcare credit reports provide credit ratings and limits along with a host of detailed information on your potential customers to enable you to trade with confidence and set appropriate credit policies for new customers.
- Our monitoring service will alert you to any significant changes in the status of those customers.
- Our Overdue account recovery service can be used to chase up payment on any invoices to those customers that have not been paid on time. Unlike other debt collection companies, this service directs your customer to pay direct to you and allows you to maintain your goodwill with them, rather than inserting ourselves into your relationship with you customer and insisting they pay CPA instead. Our Overdue account recovery service resolves over 80% of accounts referred to us.
All of the above services and other complimentary services such address verification, are included in your subscription!
And for the small minority of debts not resolved through our Overdue account recovery service, you can refer the debt to our collections department to escalate the late payment collections process.
CPA eases cash from tardy debtors – Efficiently, Effectively, Economically and Ethically. And we provide credit information so you can monitor and assess your key customers and be warned of any potential risks. CPA has been improving business cash flow for over 100 years, by tackling late payers and campaigning against the late payment culture in the UK.
Unlike other credit management companies, we offer our members a fixed annual subscription regardless of how high the value of their debts maybe!
Rather than to borrowing more money to improve your cashflow, CPA suggests that business owners tackle the problem at its source. If late payments are a strain on your cashflow, then talk to CPA about how we can help you reduce those late payments.
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.
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!
If you have a particular business customer who is late paying and causing you sleepless nights, why not offer it to CPA’s collection department for purchase on recourse?
CPA’s collection department will then pursue the debt. We will be liable for any costs incurred and then when we have recovered the debt, we will pay you the net principle debt recovered less our percentage.
Once you have enjoyed that success then you can consider the more cost effective membership which includes our Overdue Account Recovery service and Status/Credit reports as well as a range of other complimentary services.
Just call 020 8846 0000 and ask for Godfrey Nelson or Cris Shirley (business hours) or email debtpurchase@cpa.co.uk today.
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
Check our compensation calculator to see how much your business could be owed!
Discover NOW the potential value of late payment compensation hidden in your sales ledger!
The Credit Protection Association – Prompting Punctual Payments – Ethical, Effective, Efficient, Economical collections.