Business news 4 February 2025
UK’s culture stifles entrepreneurs. Construction, Manufacturing, interest rates, tariffs, private equity buyouts, SME audits, markets, insolvencies & more business news that we thought would interest our members.
James Salmon, Operations Director.
UK’s culture stifles entrepreneurs
The House of Lords Communications and Digital Committee has warned that Britain’s culture “struggles to celebrate successful wealth creators,” which hampers the growth of UK tech companies. The report highlights that the UK risks becoming an “incubator economy,” where start-ups develop innovative products only to sell out or relocate abroad. Baroness Stowell, the committee’s chair, stressed the need for a cultural shift towards risk and innovation, stating: “Too often it’s a case of UK begins, other countries cash-in.” The report also criticises the complexity of taxpayer-funded schemes aimed at supporting start-ups, suggesting they may hinder rather than help innovation.
Construction slump challenges Rayner’s ambitions
Construction activity in Britain’s major cities has significantly declined, presenting a formidable challenge for Angela Rayner, the Deputy Prime Minister and Housing Secretary, as she aims to stimulate a building boom. According to Deloitte’s regional crane survey, new project starts fell by 27% in 2023, with the number of homes under construction dropping to 23,673. Despite a 57% increase in completed homes, the sector is hindered by political uncertainty, high interest rates, and stringent regulations. Zoe Davidson from Deloitte noted that the Government’s building safety regulations have “added complexity and lengthened timelines” for residential projects.
Bank of England to cut interest rates as growth stalls
City experts anticipate that the Bank of England will implement a third interest rate cut this Thursday, reducing the benchmark Bank Rate to 4.50%. Sanjay Raja, chief UK economist at Deutsche Bank, said: “Gradualism, we think, will remain front and centre for the MPC given two-sided risks to the inflation outlook.” The Bank’s upcoming forecasts are expected to reveal weaker growth and higher unemployment, with growth estimates for 2025 likely revised down to around 1%. Despite anticipated weaker growth, inflation is projected to rise, potentially reaching 3.3% by spring, influenced by increased energy prices and a weaker pound.
UK: EU vs US trade
Sir Keir Starmer told European Union leaders in Brussels, that Britain need not “choose” between closer trade ties with the US or the EU. The prime minister called for a “reset” in relations with the EU following Brexit. Mr Trump seems eager to impose tariffs on the EU, but has been unclear about whether he will do so to Britain.
Markets
Global markets kicked off February with a negative trading session, with the headlines dominated by trade tariffs, after US President Donald Trump slapped curbs on Canada, Mexico and China. However, Wall Street did recover some ground from the session lows after news emerged that Trump had decided to pause a 25% tariff on goods entering the US from Mexico after the two nations reached an agreement on border control. Mexican President Claudia Sheinbaum agreed to immediately send 10,000 soldiers to her country’s northern border to prevent drug trafficking.
And Beijing has responded by adding tariffs to US products and also began a probe into Google moments after US President Donald Trump imposed a 10% levy on goods from China.
In economic data, UK manufacturing eased more than expected in January. Meanwhile, Brent Crude was treading water in afternoon trading, quoted at $75.6 per barrel. Spot gold tested new highs at $2,820 an ounce.
Yesterday, the FTSE 100 closed down 1.04% at 8583.56 and the Euro Stoxx 50 closed down 1.3% at 5217.91. Overnight in the US the S&P 500 fell 0.76% to 5994.57 and the NASDAQ fell 1.2% to 19391.96.
This morning on currencies, the pound is currently worth $1.2415 and €1.2025. On Commodities, Oil (Brent) is at $75.05 & Gold is at $2816. On the stock markets, the FTSE 100 is currently down 0.13% at 8572 and the Eurostoxx 50 is up 0.24% at 5231.
Mexico tariffs are on hold, EU bristles while Canada holds firm
US tariffs on Mexico have been paused for a month after US President Donald Trump accepted an offer from his Mexican counterpart Claudia Sheinbaum to send 10,000 troops to the border to combat drug trafficking. Regarding Canada, talks on Monday morning failed to resolve US concerns but later discussions resulted in Canada promising new border security to combat organised crime, fentanyl trafficking and money laundering. Tariffs will be paused for 30 days as a result. Canadian Prime Minister Justin Trudeau had earlier in the day pledged retaliatory tariffs on $150bn worth of US goods while Ontario ripped up its $100m deal with Elon Musk’s Starlink. The European Union can expect 10% tariffs, Trump said on Monday, while the UK is “out of line” but the situation “can be worked out”. A spokesman for the European Commission had said the EU will “respond firmly” to any unfair or arbitrary tariffs on its exports. Meanwhile, Panama has capitulated to US demands to let its participation in China’s Belt and Road initiative expire and review its contracts with Hong Kong-based CK Hutchison Holdings for the operation of ports at both entrances of the Panama Canal. The US considers China’s presence at the canal a threat and a violation of the US-Panama treaty which saw the waterway handed over to Panama in 1999.
Private equity firms splash £160bn on UK firms
Private equity firms invested nearly £160bn in UK businesses last year, indicating a potential recovery in the mergers and acquisitions market after a challenging period. According to data from PitchBook and KPMG, there were 1,699 transactions valued at £158.9bn, marking a 12% increase from the previous year. Most activity occurred towards the end of the year, coinciding with falling interest rates and the conclusion of the general election. Alex Hartley, head of corporate finance at KPMG UK, commented: “There are encouraging signs from the 2024 data that deal activity may have bottomed out in the UK in 2023.”
US could pressure UK to scrap DST
The Daily Telegraph reports on how the Labour Government is expected to put the UK’s digital services tax under review as experts expect US President Donald Trump to demand change. The tax raises about £700m a year from US tech giants. John Denton, secretary general at the International Chamber of Commerce, said: “I think there will be a lot of pressure put on the UK on this particular issue.” In addition to the digital services tax, it is understood that the Online Safety Act, which regulates online speech, is also a particular concern for the new US administration. The FT reports that ministers are prepared to retaliate in the event of Trump targeting UK exports, but the emphasis from Downing Street is for the continuation of a constructive relationship.
Some 1.1m people face fines after missing self-assessment deadline
HMRC has revealed that over 1m people missed the deadline for filing their annual tax returns and now face a penalty of at least £100. More than 11.5m people did complete the self-assessment process, including more than 31,000 who finished it during the final hour before the deadline. The freezing of personal tax thresholds and recent high returns on savings have pushed many people into needing to file a return for the first time. Charlene Young, a pensions and savings expert at the investment company AJ Bell, said: “The numbers show that the perfect storm of rising interest rates, reduced allowances and frozen tax thresholds in 2023-24 continued to whisk people into the tax return trap.”
Manufacturing
UK Manufacturing eased more than expected in January, though confidence among purchasing managers remained weak as companies grapple with weak demand and rising costs. The final reading of the S&P Global UK manufacturing purchasing managers’ index (PMI) came in at 48.3 last month, up from the preliminary reading of 48.2 released two weeks ago.
FRC launches market study into SME audit
The UK’s Financial Reporting Council (FRC) has initiated a market study to assess the effectiveness of the audit market for small and medium-sized enterprises (SMEs). The study aims to explore ways to alleviate the reporting burden on these businesses. Miranda Craig, Director of Strategy and Change at the FRC, said: “SMEs are at the heart of job creation and innovation in our economy. The FRC is committed to supporting their aspirations to grow and scale by examining how the audit market is working for these businesses, given their ability to access capital is often dependent on having audited accounts. This market study will help the FRC identify challenges which SMEs are currently experiencing, including any reporting and audit burdens, and help inform our guidance to both audit practitioners and SMEs.” Interested parties are invited to submit comments and evidence by April 25, with the study expected to conclude before the end of 2025.
FCA threatened with legal action if it approves Shein’s float plans
A human rights group has threatened the Financial Conduct Authority (FCA) with legal action if it approves Shein’s plans to float on the London Stock Exchange. The Chinese-founded retailer has faced criticism for alleged forced labour in its supply chain, particularly in the Xinjiang region. In a letter to FCA executives, lawyers from Stop Uyghur Genocide stated that Shein’s listing would be “irreconcilable with the FCA’s statutory duty of integrity.” The group has submitted a dossier of evidence to a Select Committee, claiming “clear, identifiable links between cotton production in the Uyghur region and forced labour.” Leigh Day lawyer Ricardo Gama pointed to the FCA’s responsibility to prevent the London Stock Exchange from being used for companies at high risk of financial crime. Good Law Project has also joined in the legal fight, offering the campaign group help to meet legal costs. The FCA has yet to comment on the situation.
Accountant jailed for Covid loan fraud
Zeeshan Ashraf, a 44-year-old accountant from Birmingham, has been sentenced to three years and eight months in prison for fraudulently claiming over £268,000 through various Covid support schemes. Prosecutors revealed that Ashraf treated the funds as a “personal piggy bank,” using them to fund his lifestyle rather than supporting his business. He falsely inflated his company’s turnover to secure maximum loans from Barclays, Starling, and NatWest, and made multiple fraudulent applications under the Covid job retention scheme, receiving £91,174. Additionally, he exploited the Eat Out to Help Out scheme, claiming £26,928 for non-existent hospitality businesses. The Crown Prosecution Service aims to recover the misappropriated funds for the public purse.
Clarkson exposes tax loophole for farmers
Jeremy Clarkson, the former Top Gear presenter, has become a vocal advocate for farmers, criticising Rachel Reeves’ new inheritance tax policy. Clarkson has shared a “complicated” loophole in his column, suggesting a strategy where a son could inherit a farm without incurring the tax by divorcing his wife, who then marries his father. After his father passes he remarries his now mother-in law. “Bob’s your uncle!” Clarkson exclaims while advising farmers to consider unconventional family arrangements to avoid the tax. If, for instance, the farmer only has a daughter, he could marry his son-in-law. “We live in modern times. That’s allowed now.” Clarkson concluded: “And it’d be worth it, just to see the cross look on Ms Reeves’ face.”
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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.