Business news 2 April 2024

A bumper news summary of stories over the bank holiday weekend. Recession, Post office, the tax gap, inflation, debt servicing costs,the living wage & more business news that we thought would interest our members.

James Salmon, Operations Director.

SMEs flag political turmoil as their biggest threat

A survey of business advisors by ReSolve has found that political uncertainty is now the biggest concern for SMEs, surpassing inflation and interest rates. The high costs of doing business is also cited as an issue that could have a negative impact. The survey also shows that 52% of UK SMEs may require debt restructuring in 2024, potentially leading to insolvencies, with access to capital and tighter lending policies posing additional challenges. Despite the obstacles, business advisors are optimistic about interest rate cuts, with 93% anticipating lower rates during 2024.

ONS data confirms recession

Office for National Statistics (ONS) figures show the economy fell into recession in the second half of 2023. GDP fell by 0.5% over H2, with a 0.1% dip in Q3 and a decline of 0.3% in the last three months of 2023. A technical recession is defined as two consecutive quarters of negative growth. Ashley Webb, an economist at Capital Economics, said: “The UK’s mild technical recession at the end of last year was as mild as previously thought and the economic recovery is probably already under way.” Lindsay James, an investment strategist at Quilter Investors, commented: “It would be premature to declare that the economy has completely turned a corner; however, the

Disposable income climbs despite recession

Real household disposable income increased by 0.7% in Q4 2023, having been flat in Q3. Office for National Statistics data also shows that while disposable income was up, household expenditure fell as people replenished their savings accounts and paid down debt. The household savings ratio increased to 10.2% in Q4, up from 10.1% in Q3. Ashley Webb, assistant economist at Capital Economics, says household disposable income will continue rising due to lower inflation and cuts to National Insurance announced in the Budget.

Inflation in UK shops falls

Inflation in shop prices in the UK has eased to the lowest level for more than two years as retailers cut prices on Easter treats, clothing, and electrical goods. Prices rose at an annual rate of 1.3% in March, down from 2.5% in February, according to the British Retail Consortium (BRC) and NielsenIQ. Non-food inflation dropped to 0.2% from 1.3%, while food inflation fell to 3.7% from 5%. The drop in shop prices raises hopes that overall inflation is moving closer to the Bank of England’s target of 2%.

Nearly 20% of Brits admit to not having any defined financial goals

A survey of 2,237 UK adults by NatWest found that only 80% of people earning under £100,000 had set precise financial goals. One in six Brits admit to not having any defined financial goals at all. The top general financial goal for UK adults is “saving for a rainy day” (35%). Those earning below £100k stated “saving for retirement” (29%) and “saving for home improvements/extensions” (17%) as specific financial goals. Some 80% of Brits surveyed have not discussed their financial goals with a bank or building society.

Tax gap hits £35.8bn

Labour analysis of official Treasury documents shows that the tax gap in the UK – the difference between the amount of tax owed and the amount paid – stands at £35.8bn. This figure is £5bn higher than a year earlier and is made up of tax avoidance, evasion, negligence, and error. Labour says the Conservatives have only managed to reduce the tax gap by 0.1 percentage point since 2019, failing to recoup £8.6bn annually. Previously it had fallen four times as fast every year. Labour’s analysis highlights that if the downward trend in the tax gap had continued, the Treasury would have an extra £8.6bn annually to fund public services. Shadow Financial Secretary to the Treasury, James Murray, has criticised the Tories for their failure to tackle tax avoidance. An HMRC spokesperson said: “The UK tax gap is on a long-term downward trend and we have brought it to a joint record low. It is one of the lowest worldwide.” It is noted that the Government’s promise to publish detailed figures for tax evasion by UK residents holding money in tax havens has not been fulfilled, potentially leading to even more unpaid tax going unaccounted for.

National living wage rise could delay rate cuts

Economists suggest that while the rise in the UK minimum wage could boost spending across the economy, it may also pose inflationary risks and delay interest rate reductions by the Bank of England. EY Item Club chief economic advisor Martin Beck said rate-setters may wish to assess the impact of the wage rise before major cuts to rates. “Following accusations that policymakers were behind the curve in tightening policy when inflation was heading up, the MPC may well decide it’s appropriate to exercise further caution in bringing rates down,” he said. “Assessing the effect of April’s large rise in the national living wage on broader pay growth offers another reason for inaction for the time being.” Elsewhere, economists at PwC suggested the wage rise, alongside cuts to national insurance and slower overall inflation, could help retailers after a challenging last 18 months.

IMF: Government debt servicing costs to remain high

The International Monetary Fund (IMF) has warned that governments face years of high debt interest costs, saying that the average debt ratio in rich economies was on course to hit 120% by 2028. This compares to a rate of around 75% at the start of the century. In a blog post, senior IMF officials said a prolonged period of “elevated real long-term interest rates could pose significant challenges” for debt sustainability, with tighter monetary policy raising debt servicing costs. Tobias Adrian, the IMF’s financial counsellor, Vítor Gaspar, its director for fiscal affairs, and Pierre-Olivier Gourinchas, its chief economist, said that despite low equilibrium rates, borrowers may face “a new normal with significantly higher funding costs than in the past decade.” The officials called on governments to carry out responsible fiscal policies to bring down debt levels and to rebuild fiscal buffers, adding that these policy recommendations were not a call for renewed “austerity” in public services.

Business leaders’ confidence improves

Business leaders’ optimism about the year ahead bounced back last month as signs of green shoots in the UK economy started to emerge. The Institute of Directors’ economic confidence index stood at -12 in March, an improvement from its previous reading of -25 in February. Director confidence in prospects for their own organisations also rose, and expectations of increasing investment levels increased. Roger Barker, director of policy at the Institute of Directors, said: “Although it would be premature to claim that the economy has definitively turned the corner as recently asserted by the prime minister, our latest poll figures do argue in favour of some emerging green shoots.”

UK firms move more head office roles out of the capital

UK companies are increasingly moving head office jobs outside of London due to rising living and housing costs in the capital. Job advertisements in executive management, human resources, and marketing in London dropped from nearly 50% to 41% of all open roles last year. The North of England and Midlands have gained a bigger share of the total, with Manchester positioning itself as an alternative to London. Inflation raising salaries and remote working trends have led to more businesses expanding outside of London. The slowdown in dealmaking has also pushed banks and professional services companies in the Square Mile to cut costs. London saw a 50% drop in job listings last year, the most of any region. The capital’s housing crisis has deterred young professionals from moving to London. “The trend to regionalisation is undeniable,” said Vacancysoft CEO James Chaplin.

Post Office knew its court defence was false

The Post Office spent over £90m fighting sub-postmasters in the High Court despite knowing that its defence was untrue, according to a draft report uncovered by the BBC. The documents show that losses in Post Office branches could be inserted remotely without postmasters’ knowledge. The assertion that remote access to sub-postmasters’ computers was impossible was central to the Post Office’s position that there had been no miscarriages of justice. The draft report, named Operation Bramble, was commissioned by the Post Office in March 2016 and carried out by Deloitte. It stated that staff at Fujitsu, the firm responsible for the Horizon software system, were able to edit or delete transactions recorded by branches. Throughout the draft report, Deloitte refers to having already discussed its findings with “Post Office management”. While Fujitsu whistleblower Richard Roll had said the company could remotely alter sub-postmaster’s cash accounts, the report is the first documentary evidence that the Post Office knew Fujitsu staff did this without a sub-postmaster’s knowledge.

Lack of support a concern for Britain’s semiconductor industry

Britain’s semiconductor industry has been told not to expect progress on a central plank of the Government’s £1bn semiconductor strategy until the next spending review, which will take place after the election. A report commissioned by the Government was published earlier this year and outlined a range of options to improve Britain’s manufacturing expertise, but industry figures will now have to wait two years to find out how much of the promised £1bn will be spent, and what on. Zachary Spiro, manager at policy consultancy Flint Global, said: “The UK industry and international investors would have hoped for a clearer horizon earlier than that.”

Public sector pensions bill hits record high

Official figures show that Britain’s public sector pensions bill has hit £2.6trn. The Treasury says the cost of future pension promises to public sector workers increased by £333bn to reach a record £2.64trn in the 2021/22 financial year. This was driven by a substantial downgrade to Britain’s growth prospects, which raises the predicted cost of funding schemes that offer a guaranteed income on retirement. While Office for National Statistics data shows there are just 700,000 members of active private sector defined benefit schemes across the UK, millions of public sector workers still benefit from guaranteed DB schemes. Former pensions minister Sir Steve Webb, now a partner at consultants LCP, described the £2.6trn figure as “eye-watering” and noted that it is larger than the size of Britain’s economy.

Workers urged not to opt out of pensions

Workers have been urged not to opt out of paying into their pensions as the increase in the National Living Wage will bring an unseen boost to pension contributions. Experts at Aegon have calculated that workers could see their pension pots boosted by £37,200 as a result. Kate Smith, head of Pensions at Aegon, said: “This 9.7% wage increase is good news for workers on the National Living Wage for the very obvious reason that it boosts pay packets, but the hidden benefit is that it will also have a positive impact on workplace pension contributions.” The group also called for a timeline for the Government’s plans to expand auto-enrolment to all employees aged 18 and over. Rachel Vahey, head of policy development at AJ Bell, said: “This could provide a boost of over £120,000 to someone’s pension pot over the course of a 50-year career, depending on investment growth.”

A rising minimum wage is failing to tackle poverty

The minimum wage in the UK is set to reach two thirds of median earnings, marking a significant milestone. However, despite the success of the minimum wage policy, poverty rates have paradoxically risen, reports Tom Calver in the Times. Hourly pay rates are only part of the picture, as low weekly pay and high housing costs contribute to the struggle of low earners. Some sectors, such as farming, are particularly affected by the living wage. While pay rates have increased, poverty levels have not fallen as expected. Taxes, benefits, and inflation also play a role in the financial situation of low earners. The UK’s minimum wage may be envied, but disposable household incomes among poor households remain low.

Diversity training forces workers to suppress beliefs

A survey by the Free Speech Union has found that nearly two-thirds of staff who undergo diversity training at work say they have had to conceal what they really thought for fear of losing their job. Almost a quarter say they have been compelled to say things they don’t believe after attending the courses. The survey of 800 employees found that members of minority communities were more likely to find the training conflicted with their views. Tom Harris, Director of Data and Impact at the group, said: “Authoritarian EDI training has become a fiscal drag on the bottom lines of British business. While millions of pounds continue to be spent on these courses, our research demonstrates that the most ambitious employees are leaving companies because of it and, ironically, the training conflicts most with the values held by the minority groups it purports to benefit.”

Hospitality feels pinch of wage rises

Pubs and restaurants are preparing for a £3.2bn increase in payroll costs as both the national living wage (NLW) and national minimum wage (NMW) rise. The NLW rose from £10.42 to £11.44 an hour on Monday, with the age at which it is paid being lowered from 23 to 21. The NMW for younger workers has also increased, with rates for 18 to 20-year-olds rising from £7.49 to £8.60 an hour. The changes will add £3.2bn to hospitality payrolls, impacting the industry’s operating costs. The trade body UK Hospitality warns that soaring costs are leading to a decline in new licensed premises and pessimism about future prospects. The industry is calling on the government to address business rates, national insurance contributions, and VAT to support growth. Kate Nicholls, CEO of UK Hospitality, highlights the risks to the industry’s contribution of £140bn in revenue and 3.5m jobs.

Car insurance rises may have peaked

The rapid rise in the cost of car insurance over the past two years appears to be over, with premiums slowly starting to fall. According to Compare the Market and Consumer Intelligence, the average fully comprehensive premium was £892 in February, up 46% from the same month last year but down from a peak of £951 in November. Price increases in car insurance premiums have flattened out, with premiums for new customers rising by 59.7% between February last year and December, but have since fallen slightly. Ian Hughes, chief executive of Consumer Intelligence, stated that the rise in the cost of car parts, repairs, and second-hand cars, which had driven up premiums, had eased. Two of Britain’s largest insurers, Admiral and Direct Line, also suggested that the pace of premium rises had peaked. However, home insurance prices continue to rise due to the higher cost of building materials and labour. Mohammad Khan from PwC UK expects home insurance premiums to rise by another 10-25% this year, while car insurance premiums are expected to fall properly from the middle of 2025.

Many managers lack formal training

A survey conducted by the Chartered Management Institute (CMI) suggests that 82% of UK workers in management positions lack full training or qualifications, earning them the label of “accidental managers.” The poll saw just 27% of workers say they would describe their manager as “highly effective.” The CMI found that 72% of people who rated their own manager as effective also felt valued and respected. This dropped to just 15% where there was a bad boss in place. When there is good leadership in place, 74% of those polled were more satisfied with their job, 77% were motivated, and 67% said their organisation had a good culture. The study also found that bad managers and a toxic workplace culture are causing one in three workers to quit their jobs.

Majority of second homes will see council tax double

More than three quarters of England’s second home owners are set to be charged double council tax next year, under new rules introduced by Michael Gove. At least 153 local authorities will impose the extra levy, affecting as many as 130,000 homes once the Levelling Up and Regeneration Bill passes its final stages. The Government has been accused of waging a war on second homes with Sir Iain Duncan Smith criticising the additional charge, stating that it could harm communities which rely on tourism. The most affected area is Cornwall, which plans to charge double council tax on its 12,679 second homes, raising an estimated £24m.

Thames Water owners to begin urgent restructuring talks

Thames Water has appointed advisers at Teneo amid growing concerns that the water company could be taken over by the Government in a special administration. Teneo’s appointment comes after the consortium of pension funds and foreign states that own Thames Water’s parent company, Kemble, said they would not give the company a promised £500m lifeline. This came after the water regulator Ofwat refused to sign off on proposals to charge customers more and reduce fines. Thames Water’s ultimate parent company, Kemble, is working with Alvarez & Marsal to oversee talks with creditors.

Latest Insolvencies

Appointment of Liquidators – DIGIMARK ONLINE LIMITED
Appointment of Liquidators – GALLAHER SOLUTIONS LIMITED
Appointment of Liquidators – SERELAY LIMITED
Appointment of Liquidators – DELLANDS LTD
Appointment of Administrator – SOLO RAIL SOLUTIONS LIMITED
Petitions to wind up (Companies) – B & H HAULAGE LTD
Appointment of Liquidators – DOMINO PROPERTIES LIMITED
Appointment of Liquidators – DOVETAIL SYSTEMS LIMITED
Appointment of Liquidators – ROOT64 SOLUTIONS LIMITED
Appointment of Liquidators – TB IT CONSULTANCY LIMITED
Appointment of Liquidators – CONNELLY GRISHAM LIMITED
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Appointment of Liquidators – IFS CONSULTING LTD
Appointment of Liquidators – ANGLIA CARDIOLOGY LIMITED
Appointment of Liquidators – RECOVERED PAPER MANAGEMENT LTD
Appointment of Liquidators – THORSEN TRANSLATIONS LTD.
Appointment of Liquidators – E PLANET LTD
Appointment of Liquidators – CHEVOLLEAUX CONSULTING LTD
Appointment of Liquidators – TAYLORS PASTURE LIMITED
Appointment of Liquidators – LAZER TECHNOLOGY LTD
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Appointment of Liquidators – FORTY ONE CONSULTING LTD
Appointment of Liquidators – WILLBRO NOMINEES LIMITED
Appointment of Liquidators – SILVERCREATIVE LIMITED
Appointment of Liquidators – NIDORAM LIMITED
Appointment of Liquidators – FOAM WORKS GROUP LIMITED
Appointment of Liquidators – NAVACENT LIMITED
Petitions to wind up (Companies) – TAYLOR AND RALTON LIMITED
Appointment of Liquidators – SIENA CONSULTING LIMITED
Appointment of Liquidators – JBE CONSULTING LTD
Appointment of Liquidators – REIS CONSULTING LIMITED
Appointment of Liquidators – M DEACON UK LTD
Appointment of Liquidators – CCS PROPERTY RENTALS LIMITED
Appointment of Liquidators – PLUS POINT SERVICES LTD
Appointment of Administrator – FUTURE FISHING LIMITED
Appointment of Liquidators – WHITFIELD & NOAKE HOLDINGS LIMITED
Appointment of Liquidators – L GRAY LIMITED
Appointment of Liquidators – TESSEL CREATIVE LTD.
Appointment of Liquidators – CALDERBANK CONSULTING LTD
Appointment of Liquidators – SUNBEAM IT SOLUTIONS LIMITED
Appointment of Liquidators – INTERHALL CONSULTANTS LTD
Appointment of Administrator – LOUCHE LIMITED
Appointment of Liquidators – RAJART LIMITED
Appointment of Liquidators – NOVA TERRA PROPERTIES LIMITED
Appointment of Liquidators – ANDY WATERS RAIL SAFETY LIMITED
Appointment of Liquidators – M (BRUTON STREET)
Appointment of Liquidators – A P KAVIA LTD
Appointment of Liquidators – CAPICHE LIMITED
Appointment of Liquidators – DIRECT WAX INJECTION LIMITED
Appointment of Liquidators – JO BLACKBURN LIMITED
Appointment of Administrator – TWT LOGISTICS LIMITED
Appointment of Liquidators – PIF II GLOW UK LIMITED
Appointment of Liquidators – REINA OLGA LIMITED
Appointment of Liquidators – FRANCIS EVANS LIMITED
Appointment of Administrator – ARSLAN LONDON SECURITY LTD
Appointment of Liquidators – ELLIS DAVIES & SONS LIMITED
Appointment of Administrator – UK PRINTING COMPANY LIMITED
Appointment of Liquidators – WHISTLER SQUARE LLP
Appointment of Liquidators – PSV MARINE LIMITED
Appointment of Liquidators – RETAIL & GENERAL FINANCE LIMITED
Appointment of Liquidators – SC TECH LIMITED
Appointment of Administrator – GREAT POINT MEDIA LIMITED
Appointment of Liquidators – ERGOWEALTH LTD
Appointment of Liquidators – PRIORITY SITES LIMITED
Appointment of Liquidators – STOPPARD’S BUTCHERS LTD
Appointment of Liquidators – ERGOWEALTH GROUP LTD

Appointment of Liquidators – PETER HILLMEN LTD
Appointment of Liquidators – JB AND DB ASSETS LIMITED
Appointment of Liquidators – CLOWES ENGINEERING LIMITED
Appointment of Liquidators – MAYBANK LIMITED
Appointment of Liquidators – MIKE WALKER LTD
Appointment of Liquidators – WAH HONG LTD
Appointment of Liquidators – SAMPHIRE COMMUNICATIONS LTD

Petitions to wind up (Companies) – ALCAZAR TECHNOLOGIES LTD
Petitions to wind up (Companies) – HALA LONDON LTD

Petitions to wind up (Companies) – PACIFIC VALVE COMPANY LTD.
Petitions to wind up (Companies) – ICARUS LEISURE SOHO LIMITED
Appointment of Liquidators – WKB CONSULTANCY LIMITED
Appointment of Liquidators – S.HUTCHINS & GREEN LIMITED
Petitions to wind up (Companies) – ZEN LOUNGE LIMITED
Appointment of Liquidators – FRASER BERG LTD
Petitions to wind up (Companies) – DCSNI LIMITED
Appointment of Liquidators – PREHEN DEVELOPMENTS LIMITED
Appointment of Liquidators – TOLLGATE HOUSE LIMITED
Petitions to wind up (Companies) – PATCHING & SONS LIMITED
Appointment of Liquidators – PEARCE AGGREGATES LIMITED
Petitions to wind up (Companies) – 2 SISTERS LEICESTER LIMITED
Appointment of Liquidators – VSQUARED TV LIMITED
Appointment of Administrator – SKURIO LIMITED
Appointment of Administrator – KROGAB UK LIMITED
Appointment of Liquidators – VINCENT GUNN FAULKNER LIMITED
Appointment of Liquidators – BLUE VIPER PROPCO II LIMITED
Appointment of Liquidators – GLENAVA LTD
Petitions to wind up (Companies) – THE ECO ROOF AND WALL COMPANY LIMITED
Appointment of Liquidators – LAMANTRA PROPERTY CO LIMITED
Winding up Order (Companies) – FLOOR SANDING EXPERTS LTD
Petitions to wind up (Companies) – ZULU TRAVEL SERVICES LTD
Appointment of Liquidators – THE SALESFORCE PM LIMITED
Petitions to wind up (Companies) – LANCASHIRE OAK LTD.
Appointment of Liquidators – ABSON OFFICE SEATING LIMITED
Petitions to wind up (Companies) – AJAA LTD
Petitions to wind up (Companies) – NORTHERN FIDES LTD
Winding up Order (Companies) – CUSSONS INTERNATIONAL LTD
Appointment of Liquidators – M CLAUGHTON TRANSPORT LTD
Appointment of Liquidators – RT GEOPHYSICS LIMITED
Petitions to wind up (Companies) – BYM HOUNSLOW LIMITED
Petitions to wind up (Companies) – FEATHERFOOT GLOBE LIMITED
Appointment of Liquidators – WEBSTER THOMPSON LIMITED
Appointment of Administrator – BIDSTACK GROUP PLC
Petitions to wind up (Companies) – DEMILEX LOGISTICS LIMITED
Appointment of Liquidators – YEW AVENUE LIMITED
Appointment of Liquidators – MILLER STURT KENYON LIMITED
Winding up Order (Companies) – BROTHER WOOD COMPANY LIMITED
Appointment of Administrator – DUCHY PLANT HIRE LTD
Appointment of Liquidators – BLUEPRINT42 LIMITED
Petitions to wind up (Companies) – CELLCOM LTD
Appointment of Liquidators – BLUE VIPER PROPCO I LIMITED
Appointment of Liquidators – CMR CLOUD LTD

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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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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.