Business news 2 December 2024
Corporate confidence in the economy falls. UK should train its own workforce. Bank of England in trade warning. Consumer credit growth slows. Typhoo rescued, markets, insolvencies & more business news that we thought would interest our members.
James Salmon, Operations Director.
Corporate confidence in the economy falls
Business leaders’ confidence in the prospects for the UK economy fell to levels not seen since the pandemic during November, according to analysis by the Institute of Directors (IoD). The institute’s Economic Confidence index fell to -65 in November, down from -52 during October. This marks the fourth consecutive monthly fall and is the second lowest reading the index has seen since its launch in 2016, with only the -69 seen in April 2020 coming in lower. Business leaders’ confidence in their own organisations fell from +2 in October to -7 in November, while investment and headcount expectations were also down. Revenue expectations slipped to +4 from +15, wage expectations dropped to +21 from +47, and export intentions declined from +6 in October to +2. Much of the downturn in confidence was attributed to the decision to increase firms’ National Insurance bills, with Anna Leach, the IoD’s chief economist, saying: “Far from fixing the foundations, the Budget has undermined them, damaging the private sector’s ability to invest in their businesses and their workforces.”
UK should train its own workforce
Cabinet Minister Pat McFadden says the UK will not set out a “numerical target” for net migration, telling the BBC’s Sunday with Laura Kuenssberg that targets for net migration “haven’t worked very well.” He added that the exact number of migrants needed “will always ebb and flow depending on the needs of the economy.” His comments came as figures showed net migration hit a record 906,000 in 2023. Mr McFadden, Chancellor of the Duchy of Lancaster, also said the UK should focus on training workers, saying: “We are going to make sure that we do more to train our own workforce and do more to get long term sick people off benefits and into work.”
Bank of England in trade warning
The Bank of England has warned that global trade barriers could hit economic growth, saying: “Global fragmentation, namely a reduction in the degree of international trade and policy co-operation, could have several consequences.” The Bank went on to warn that for the macroeconomy, this “could weigh on growth and increase the uncertainty of economic outcomes including around inflation, which could in turn feed into volatility in financial markets.”
Typhoo rescued out of administration
Typhoo Tea has been rescued out of administration in a £10.2m deal, with the firm’s trade and selected assets acquired by Supreme, a vape and battery maker. Supreme, which said the deal includes Typhoo Tea’s stock and trade debtors with a book value of £7.5m, expects the integration of the business to “proceed without disruption to existing operations or customer service levels.“ The firm added that it expects the Typhoo brand to “operate on a capital light, outsourced manufacturing model … with a much-reduced overhead base.“
Consumer credit growth slows
Consumer credit growth slowed slightly in October, according to the Bank of England, falling to 7.3% from 7.5% in September. Over the same period, the annual growth rate for credit card borrowing remained stable at 9.5%. The Bank’s Money and Credit report shows that net consumer credit borrowing by households totalled £1.1bn in October, with this slightly down from £1.2bn recorded in the previous month. The Bank’s figures also showed that households’ deposits with banks and building societies rose by £20.2bn in October, marking the biggest increase since the £21.7bn logged in December 2020. The report also shows that UK non-financial businesses withdrew £6.3bn from banks and building societies in all currencies in October, following net deposits of £1.5bn in September. RSM economist Thomas Pugh said weakness in consumer borrowing coupled with higher levels of saving “raises the risk that consumer spending remains subdued in the fourth quarter and economic growth underwhelms again.”
Markets
On Friday, the FTSE 100 closed up 0.07% at 8287.30 and the Euro Stoxx 50 closed up 0.96% at 4804.40. Over in the US the S&P 500 rose 0.56% to 6032.38 and the NASDAQ rose 0.83% to 19818.17.
This morning on currencies, the pound is currently worth $1.271 and €1.207. On Commodities, Oil (Brent) is at $72.54 & Gold is at $2642. On the stock markets, the FTSE 100 is currently up 0.03% at 8289 and the Eurostoxx 50 is flat at 4804.
LSE takeover bids exceed £50bn
The value of takeover bids for firms listed on the London Stock Exchange has hit £52bn this year. Analysis from investment bank Peel Hunt shows that 45 London-listed firms have been approached, agreed to, or completed acquisitions since January. Charles Hall, head of research at Peel Hunt, has described the level of takeover activity among FTSE 350 businesses as “unprecedented,” with 21 bids this year. Analysts say a surge in takeover attempts involving overseas bidders stems from the relatively cheap valuations of London-listed companies compared to their international counterparts. Dan Coatsworth, investment analyst at AJ Bell, said M&A activity is “red hot,” adding: “So many UK-listed companies are being taken over because the market didn’t spot the value on offer.”
Millions face higher mortgage costs
Half of UK mortgage holders could see their payments increase over the next three years, the Bank of England has warned, estimating that around 4.4m home loans will see payments rise by 2027. Among those seeing rates rise, the Bank calculates that around 420,000 households will see mortgage costs climb by around £500-per-month. However, about 23% will see no change and 27% of borrowers are set to see payments fall. The Bank predicts that about 2.7m homeowners will refinance onto a mortgage rate of over 3% for the first time before the end of 2027.
Mortgage approvals hit two-year high
Data from the Bank of England shows that UK lenders approved the most mortgages in more than two years in October, with 68,300 home loans given the green light. This was the highest monthly total since August 2022 and compares to 66,115 approvals in September. While brokers had been anticipating a rebound in activity after the Bank started lowering interest rates in August, concerns that the Budget would delivers tax hikes dented confidence. Karim Haji, global head of financial services at KPMG, said: “While this latest data paints a buoyant picture of the housing market, the ripple effects of the Budget and the corresponding hikes on fixed rate mortgage prices could dampen the outlook.”
Home sales climb 10% in October
HMRC data shows that 100,410 home sales took place in October, with this the highest total since November 2022. October’s transaction numbers mark a 10% increase on September’s total of 91,690 – and are 21% higher than October last year.
Homebuyers rush to beat stamp duty hike
Homebuyers and sellers in England and Northern Ireland are rushing to complete property transactions before new stamp duty regulations take effect in April. The changes will lower the threshold for stamp duty from £250,000 to £125,000, resulting in increased costs for buyers. For instance, purchasing a property at the average UK price of £266,000 will incur an additional £2,500 in tax. First-time buyers will also face higher costs, with the threshold dropping from £425,000 to £300,000.
Housebuilders fear £3bn tax rise
The housebuilding sector is bracing for a potential £3bn Building Safety Levy to fund remediation of Grenfell-style cladding on buildings between 11 and 18 metres tall. Industry leaders are frustrated as only £2.3bn of the £5.1bn raised through a 4% corporation tax surcharge in 2020 has been spent, and the Government lacks precise data on the number of buildings needing remediation. The levy would be based on a percentage of new development sales, potentially squeezing margins and deterring new housing projects.
Crowdfunding reforms threaten the economy
The UK Crowdfunding Association has warned that the Financial Conduct Authority’s (FCA) stringent reforms could cost the economy up to £16bn in “lost investment” and hinder small businesses’ access to finance. In a letter to City Minister Tulip Siddiq, Bruce Davis, chairman of the association, warned that the UK is now perceived as having one of the most heavily regulated crowdfunding markets globally. There are concerns that the FCA’s reforms – which include risk warnings; the banning of “inducements” to invest; the introduction of “frictions” to ensure investors do not rush into making decisions; and tougher “appropriateness” tests – have deterred potential investors and increased marketing costs for platforms. The letter says there is evidence of companies which previously raised money through crowdfunding platforms considering using EU jurisdictions “to avoid what were perceived as excessive costs, uncertainties and barriers to capital raising” in the UK. The Treasury said: “We are committed to ensuring retail investors have access to financial markets, while also making sure that appropriate consumer protection measures are in place.”
Eurozone Inflation
Eurozone Inflation accelerated in November and its most closely watched components remained high, data showed on Friday, adding to the case for a more cautious European Central Bank interest rate cut next month.Consumer price inflation in the 20 countries sharing the euro stood at 2.3% in November, according to the data from Eurostat. That was higher than 2.0% a month earlier and the ECB’s 2% target but in line with expectations.
Motor finance scandal will cost lenders £25bn
The Bank of England has warned that the motor finance scandal could cost lenders at least £25bn. This comes after the Court of Appeal ruled that it was unlawful for dealers to receive a commission from banks without receiving the informed consent of the customer. The Financial Conduct Authority says this means that customers who took out loans through a dealer may be owed compensation. Sam Woods, the Bank’s deputy governor, said that while officials do not consider the issue to be a risk to financial stability, “misconduct has often been quite a significant headwind.” It is noted that Lloyds Banking Group has set aside £450m to cover the cost, while Santander UK has set aside £295m.
NI hike will drive up childcare fees
Parents could see childcare fees climb by as much as 20% to cover rising costs at nurseries, with providers hit by changes set out in the Budget. Blick Rothenberg says higher minimum wages, increased National Insurance payouts and reduced business rates relief could dramatically increase childcare costs. Ele Theochari, a partner at the firm, said: “With over 75% of all nursery costs relating to staff and strict legal mandates in place that dictate the staff-to-child ratio, there is little nurseries will be able to do to mitigate additional staffing related costs.” The Early Year’s Alliance has warned that parents will “face up to a 20% increase in fees to cover nurseries rising costs.”
Job-hopping could boost pension pots and pay
Research by investment platform Wealthify shows that those who have frequently moved jobs have saved £12,304 more into their pensions than those who have moved just once. Frequent job-hoppers have an average pension pot worth £105,538, while those who remained in one job typically have £93,234. The Resolution Foundation says the amount required for a basic standard of living in retirement is currently £107,800, with this equivalent to an annual income of £19,300. Pension and Lifetime Savings Association figures show that a pensioner needs £31,300 a year for a ‘moderate’ lifestyle and £43,100 for a ‘comfortable’ lifestyle, with these totals requiring a pension pot worth between £300,000 and £790,000. The Wealthify analysis also shows that those who frequently switch jobs have an average salary of £39,276 compared to £35,403 for those who have moved once.
Non-dom raid to fall short?
The Chancellor’s tax overhaul targeting non-doms could yield less revenue than anticipated, with many wealthy individuals considering leaving the UK. Rachel Reeves confirmed the scrapping of the non-dom regime, which has allowed around 68,000 individuals to avoid taxes on overseas earnings, in the Budget. The Office for Budget Responsibility (OBR) had forecasted that the changes would generate over £33bn, including £10.6bn from non-doms under a temporary repatriation facility with a reduced tax rate of 12%. However, experts have questioned whether the move will be as effective as ministers hope. Edward Hayes, director at law firm Burges Salmon, noted that “the only people who will use the facility are by definition people who have already been non-doms in the UK.” James Quarmby from Stephenson Harwood added that the OBR’s estimates rely on retaining non-doms, which may not happen. The Treasury maintains that the new system will create a fairer tax environment.
Stellantis
Carlos Taveres quit as the boss of Stellantis, the world’s fourth-largest auto maker. The sudden resignation comes amid reports of tensions over how to improve the firm’s profitability.
Plastics
The UN conference in South Korea of delegates of over 100 countries to tackle pollution, collapsed without a deal after oil rich nations blocked efforts to cap production
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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.