Business news 3 May 2024
Entrepreneurs still scarred by 2008 crisis. A wet April dampens high street sales and footfall. OECD projects slow growth ahead for UK. Gen Z realise work doesn’t pay anymore. Union warning, markets, insolvencies, Apple & more business news that we thought would interest our members.
James Salmon, Operations Director.
Entrepreneurs still scarred by 2008 crisis
Small businesses are still hesitant to borrow money from banks for expansion due to the lasting impact of the 2008 financial crisis. Tessa Clarke, a member of Rishi Sunak’s SME Council and co-founder of Olio, a food-sharing app, highlighted the “scar tissue” left by banks calling in loans during the crisis. Clarke stressed that not seeking bank lending is a missed opportunity for some businesses, as venture capital may not be suitable for all. The Federation of Small Businesses has reported a decline in banks accepting loan applications from small businesses, and concerns over the use of personal guarantees. Net bank lending has also decreased, according to the British Business Bank.
A wet April dampens high street sales and footfall
UK retailers experienced a decline in sales and footfall in April due to heavy showers. The British Retail Consortium (BRC) reported a 7.2% decrease in footfall, with the high street, retail parks, and shopping centres all affected. Even after accounting for the early Easter effect, total footfall was down by 4.2%. Separate figures from BDO show that shop sales slumped by 1.7%. Fashion retailers were hit the hardest, with clothing sales falling by 8.3%. The wet and cold weather made it difficult for retailers to attract shoppers.
OECD projects slow growth ahead for UK
The Organisation for Economic Co-operation and Development (OECD) has forecasted that the UK economy will experience slow growth in the next two years. The current projection for 2024 is a 0.4% expansion, which is the second worst among G7 countries. This forecast aligns with projections from the International Monetary Fund and the Bank of England. The OECD said the UK’s constrained public finances will be a significant obstacle to the economy after 2024. The Government’s commitment to reducing the debt burden will result in fiscal consolidation, leading to a 1.3% hit on the economy between 2023 and 2025. The OECD called for measures to boost investment levels and increase the size of the workforce. Barret Kupelian, chief economist at PwC UK, supported the OECD’s projections and suggested addressing economic shortcomings through industrial and services planning.
Gen Z realise work doesn’t pay anymore
Writing in City AM, Dr Eliza Filby, a generations expert and author of Inheritocracy, argues that Generation Z are not lazy, as many commentators assert, but realise that corporate wages do not bring anything like the rewards they did for older colleagues. “We are in an asset-driven economy where wealth is supported but work is penalised,” Filby suggests. “This reinforces the wealth of the older generations and is creating disillusioned young people across the income scale.” The Telegraph also carries a piece on Gen Z asking if young people are shunning the wild nights out of the past because they’re simply not interested or because they can no longer afford it. According to a 2023 survey by Deloitte, the cost of living ranks as the foremost concern among Gen Zers worldwide. Michael Kill, of the Night Time Industries Association, believes attributing the decline in young people going out is less about a rumoured return to puritanism and more likely the pressure of inflation on young people.
Unions warn Labour against watering down rights
Unions have warned Labour not to dilute its package of workers’ rights, with Unite’s general secretary stating that crossing a red line would occur if the party does not fully commit to delivering the ‘New Deal for Working People’. The plan, proposed by Angela Rayner in 2021, includes radical changes such as banning zero-hour contracts, ensuring regular hours for 12 weeks or more, and making flexible working a day one right. Shadow ministers are discussing how to address concerns and are expected to seek union approval for the revised plan. However, Unite’s Sharon Graham criticised the timing of any watering down of the plan, stating that it is ironic to do so on May Day. Tory party chairman Richard Holden accused Labour of being in chaos over whether to stick with Angela Rayner’s union laws.
Markets
The FTSE 100 closed up 0.63% yesterday at 8172.15. Leading London higher was Asia focused bank Standard charted which soared by over 8% following their Q1 trading update. Also higher was packaging firm Smurfit Kappa which rose by over 6% after beating forecasts for Q1. Shares in Smurfit rose by just over 6%.
Overnight in the US the S&P 500 rose 0.91% to 5064.2, the Nasdaq rose 1.51% to 15840.96. The pound is strengthened a bit and is currently worth $1.2566 and €1.1692. Brent is at $83.8 as oil edged up on the prospect of OPEC+ continuing output cuts, Gold is at $2303 with traders cautious ahead of the US non-farm payrolls due out later. The FTSE 100 is currently up 0.4% at 8205 and the Eurostoxx 50 is up 0.47% at 4914.
Apple
Apple beat expectations with its latest results. Revenue fell 4% Year on Year but analysts had feared worse. CEO Tim Cook, said revenue could grow again this quarter because of the introduction of artificial-intelligence features in Apple devices. The tech titan also announced a staggering $110 billion share buyback program.
Morgan Sindall
Morgan Sindall said its financial year has started as expected, and it is “confident of delivering a full year performance which is in line with its expectations”. It said its Construction and Infrastructure arms have both performed as forecast. Trading at its Fit Out offering has been “strong”, while in Property Services, the “underlying operational performance has been as expected”. It cautioned, however, that the Property Services unit will be hurt by exit costs related to an underperforming contract.
Trainline
Trainline reported expectation-beating revenue, and said net ticket sales came in at the top end of its guidance range. It also announced a new share buyback. Revenue in the year ended February 29 rose 21% to £396.7 million, from £327.1 million. Revenue was topped the “previous guidance range”. Pretax profit jumped to £48.1 million from £22.1 million. Net ticket sales were up 22% on-year to £5.30 billion, at the top end of its previous guidance range.
HMRC targeting exempt loan charge victims
HMRC has launched fresh action against 2,700 victims of the loan charge scandal, despite a government review ruling that they should be freed from the tax bills. Contractors who were considered exempt from the charges now say they have been left terrified, with just 60 days to pay up before interest payments begin. The tax bills come despite the loan charge being linked to 10 suicides. The victims must pay the tax back along with penalties and interest for paying late. The Loan Charge Action Group has written to Lord Morse calling HMRC’s use of the notices a “clear abuse of power” that undermines the recommendations of his review. They argue that this use of section 684 notices is unfair and should not be allowed in this context.
Chancellor’s ‘stealth’ tax hits Tory seats the hardest
HMRC has, for the first time, released data breaking down its estimates for the number of basic and higher-rate tax payers in each constituency. Analysis of the data by the Liberal Democrats suggests that voters in “blue wall” Conservative seats will be the most affected by Jeremy Hunt’s tax rises and 1.5m voters in Tory-held constituencies may be dragged into the higher rate of income tax by 2028. In some Tory constituencies in England, more than 10,000 voters will either have been brought into a tax for the first time or moved into the higher rate compared to what they were paying when the rate band freezes were announced in 2022. Of the 25 worst affected seats, 17 are held by Conservatives , five by Labour and three by the Lib Dems.
Experts debate the fairness of HMRC’s penalty system
In the Times today, experts debate whether HMRC’s penalty system, which disproportionately affects those on lower income, needs to be reformed. According to Dan Neidle, founder of Tax Policy Associates, 40% of all HMRC late-filing penalties are charged to people who don’t earn enough to pay tax. The poorest 10% are three times more likely to be charged a late-filing penalty than the richest 10%. On the other hand, Rachael Griffin, a tax expert at Quilter, argues that the fines act as a deterrent and ensure that people submit their tax returns on time. She believes that the fines encourage compliance with the law and help maintain the integrity of the tax system. However, she suggests that HMRC should focus on removing low-income individuals who do not owe tax from the self-assessment system to reduce the administrative burden.
Address financial literacy and UK can be like Sweden
Handelsbanken UK CFO Martin Bjornberg says a higher level of financial literacy amongst Britons would result in greater prudential financial investment at all levels of society, as it has in Sweden.
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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 one will be particularly deadly for suppliers for some time to come.
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.