Business news 2 July 2024
Consumer credit borrowing, Manufacturing, Hospitality investment, planning law, mortgages, markets, house prices, tax, insolvencies & more business news that we thought would interest our members.
James Salmon, Operations Director.
Breaking news – late Add – Food Inflation falls!
UK Food Inflation is now lower than at any time since 2021, according to new figures. Food prices were 2.5% higher than a year ago in June, down from 3.2% in May – well below the three-month average rate of 3% and the fourteenth consecutive slowing of inflation, according to the British Retail Consortium-NielsenIQ shop price index.
Consumer credit borrowing hits £1.5bn
Consumer credit borrowing bounced back to £1.5bn in May, up from £800m in April, according to Bank of England data. The increase includes borrowing through credit cards, personal loans, and car finance. Mortgage approvals for house purchases dipped to 60,000 in May from 60,800 in April, indicating caution among borrowers. Property buyers borrowed £1.2bn in May, half the amount borrowed in April. The amount of money deposited by households with banks and building societies grew by £5.3bn in May, driven by an additional £4.2bn flowing into ISAs.
Manufacturing sector grows again
The UK’s manufacturing sector grew for the second consecutive month in June. The S&P Global/CIPS UK manufacturing PMI hit 50.9 in June, dipping from a 22-month high of 51.2 in May on an index where a figure above 50 represents growth. The survey found that production volumes grew, with this driven by strong levels of new work in the domestic market. Rob Dobson, director at S&P Global Market Intelligence, said: “The performance of the domestic market remains a real positive, providing a ripe source of new contract wins.” He added, however, that “the ongoing weak export performance is concerning.” New work from overseas was down for the 29th month in a row. Peter Arnold, EY UK’s chief economist, said: “There was another strong month of output growth, with the balance only slightly down on May’s high, while new orders are now growing on a sustained basis.”
Investment in UK hotels up 50%
Investors committed £3bn of investment into UK hotels in the first half of 2024, according to figures from Knight Frank, with this taking total investment to 50% above 2023 levels. The increase was driven by a number of major deals, with the largest individual deal of the year seeing private equity firm Blackstone acquire hotel operator Village Hotels from KSL Capital Partners in a deal worth around £850m. Not far behind, Starwood Capital bought ten Radisson Blu hotels from Edwardian Hotels for £800m. Of the £3bn total, overseas investors accounted for nearly half. The report also shows that 70% of investment in UK hotels this year has been focused on London.
Planning laws deter investment, says pharma boss
Dave Ricks, chief executive of pharmaceutical firm Eli Lilly, has warned that the UK’s planning system puts companies off investing in the country. He said the current planning process is an “impediment” to building factories at speed, while countries like the US and Ireland “promise to cut through the red tape and layers of government.” Mr Ricks said that as the UK is “not the largest market,” it has to “overcome that with other attractiveness, whether that be workforce, asset delivery or economic incentives.” He added: “You have to be candid, say ‘are we as competitive as we can be?’ And to date it’s been a little bit less, but I think it’s not unachievable.”
House prices climb 0.2% in June
Data from Nationwide shows that house prices rose by 0.2% between May and June, taking the average property price to £266,064. Year-on-year, prices were up 1.5% on June 2023, marking a slight increase on the 1.3% annual growth recorded in May. The analysis shows that the number of transactions were down 15% on pre-pandemic levels recorded in 2019, while transactions involving a mortgage have fallen by 25%. Robert Gardner, Nationwide’s chief economist, noted that mortgage rates are “still well above the record lows prevailing in 2021 in the wake of the pandemic,” adding: “As a result, housing affordability is still stretched.”
Mortgage approvals slip below 60k in May
Figures from the Bank of England showed that just under 60,000 mortgages were approved in May, down from 60,800 in April and just over 61,000 in March. Approvals for remortgaging also decreased slightly in May, falling to 29,600 from 29,900 in April. EY economist Peter Arnold said: “The strong recovery in mortgage demand seen in the early part of the year has petered out of late, in keeping with the rise in quoted mortgage rates over the past few months.” Karim Haji of KPMG noted that default rates for mortgages have “ticked upwards” recently and unsecured loan default rates “remain elevated.”
Markets
Yesterday, the FTSE 100 closed flat yesterday at 8166.76 and the Euro Stoxx 50 closed up 0.74% at 4929.99 as French stocks bounced on the election news. Overnight in the US the S&P 500 rose 0.27% to 5475.09 and the NASDAQ rose 0.83% to 17879.30.
This morning on currencies, the pound is currently worth $1.2626 and €1.1782. On Commodities, Oil (Brent) is at $86.86 & Gold is at $23329. With stock markets, the FTSE 100 is down 0.42% at 8132 and the Eurostoxx 50 is down 0.63% at 4899 as markets declined ahead of inflation data.
Oil
Oil is trading near a two-month high on Middle East worries and concerns over the early start to the Atlantic hurricane season. Brent crude is trading near $87 a barrel, while West Texas Intermediate is above $83. The rises come as Hurricane Beryl strengthens to category 5, the highest level on the Saffir-Simpson scale, marking the strongest storm to ever form in the Atlantic at this time of the year.
Activist investors launch record campaigns in H1
Activist investors have launched a record number of campaigns at companies globally in the first half of 2024, according to data from Barclays. However, they have been less successful in breaking into boardrooms as companies have fought back effectively. In the first half of the year, Barclays tracked 147 activist campaigns, surpassing the previous record set in 2018, with 86 of these campaigns launched in Q2. Dissidents won 74 board seats during this period. However, in US proxy fights, activists only won 11% of the seats they sought. The average activist had returns of 18% last year, but returns for the first five months of 2024 have been flat. Jim Rossman, global head of shareholder advisory at Barclays, said: “We are seeing more activity but fewer transactions and that means activist investors may have to dig in and stay around for longer.”
UK dealmaking springs to life
Corporate buyers have sought to take advantage of sluggish valuations on the City’s public markets, according to analysis from investment bank Peel Hunt. The study shows that 30 listed companies came under offer in the opening six months of the year, with an average price of just over £1bn. Of the 30 companies to come under offer, 11 were in the FTSE 250. In the first of 2023, just two of London’s 250 biggest companies were subject to takeover bids. Michael Nicholson, head of mergers and acquisitions at Peel Hunt, said the UK takeover market had been like a “coiled spring” at the beginning of the year, adding: “The jack is out of the box.”
Business leaders prefer Labour cabinet
Business leaders prefer Labour figures over their Tory counterparts, a poll from Savanta shows. The research, which surveyed 1,000 business decision makers, found that 42% say Sir Keir Starmer is their preferred choice of Prime Minister, while 27% opted for current PM Rishi Sunak. While 34% said they would like to see Labour’s Angela Rayner as deputy PM, only 17% selected Tory Oliver Dowden. While the gap between Chancellor Jeremy Hunt and Labour counterpart Rachel Reeves was far narrower, the shadow Chancellor still scored higher. The only Tory shown to be more popular than their Labour counterpart was Home Secretary David Cameron, who was selected by 34% of those polled while a quarter chose Labour’s David Lammy. Overall, half of the business leaders polled said they prefer Labour and 28% opted for the Conservatives.
Energy boss warns over UK tax plans
An energy boss has expressed concerns about the potential economic impact of Labour’s tax plans, saying that investing in the UK could become “uneconomic.” David Bucknall, CEO of Ineos Energy, has warned that his firm will prioritise expansion in the US and Denmark due to the uncertainty caused by UK politics. The warning follows similar sentiments expressed by the head of Serica Energy, who described the UK as being “second only to a war zone” for future investment. Labour’s proposed windfall tax increase and the cessation of new licenses for exploration and drilling in the North Sea have raised concerns among a number of businesses and unions in the sector.
Labour may tighten tax on super-rich to raise revenue
Charlotte Gifford in the Telegraph says a global crackdown on the super-rich “could soon become a reality in Britain,” with Labour said to be considering options for an extra wealth tax as a means to raise revenue. While the party has ruled out increasing income tax, corporation tax, and National Insurance, experts believe that other taxes may be raised. Paul Johnson of the Institute for Fiscal Studies said it would be a “considerable surprise” if Labour did not raise other taxes over the next five years, owing to the fiscal pressures facing the next government. Capital gains tax and inheritance tax are among the measures reportedly being considered, with the potential to raise £10bn. Ms Gifford suggests that there is growing support for a new 2% tax on the super-rich, noting that French economist Gabriel Zucman has proposed a global tax on billionaires, which could raise between $200bn and $250bn per year. According to Mr Zucman’s report, the average wealth of the top 0.0001% has increased by about 7% annually net of inflation since 1987. This is more than double the 3% growth rate for average wealth.
Revolut
Revolut, a UK based fintech, reported its highest-ever annual profit, of $545m, in 2023. Revenues nearly doubled to $2.2bn from 2022, due to a rise in customer numbers.
Sainsbury’s
Sainsbury’s said it made the biggest market share strides in the grocery industry in recent weeks, helping the company record a rise in first-quarter sales. The supermarket chain said total sales in the 16 weeks June 22 rose 4.2% on-year. Grocery sales alone rose 4.8%. Sainsbury’s said total retail sales, excluding fuel, rose 2.6%, while like-for-like sales climbed 3.0%. The like-for-like measure also excludes fuel.
Ryanair
Ryanair said its June traffic hit a record high, topping the 19 million passenger mark for the first time. Passenger numbers rose 11% year-on-year last month to 19.3 million, the budget airline said. Its load factor was unmoved at 95%. Ryanair said it is the “first ever month to exceed 19 million guests”. The closest it had previously come to that threshold was in August 2023 when traffic spiked to 18.9 million.
Harland & Wolff shares suspended following results delay
Harland and Wolff, which owns the shipyard that built the Titanic, has suspended trading in its shares on the London Stock Exchange after accounting issues delayed the publication of its annual report until July 8. The firm said it had been in “ongoing discussions” with its auditors over the method of accounting for revenues in some of its contracts.
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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 last one was particularly deadly for suppliers fand we are still seeing elevated insolvencies as businesses struggle.
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.
Unlike other credit management companies, we offer our members a fixed annual subscription regardless of how high the debt value maybe!
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 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.