Business news 5 January 2023
James Salmon, Operations Director.
Hunt to cut to ‘unsustainably expensive’ business energy support. PM outlines plans for remainder of parliament. Foreign investors dump UK gilts at record rate. And more business news.
Hunt to cut to ‘unsustainably expensive’ business energy support
The Chancellor has confirmed that he will announce plans to reduce energy support for businesses in the Commons next week. Jeremy Hunt met with business groups on Wednesday and told them energy support as it stood was prohibitively expensive and would be cut to a lower level from March. Shevaun Haviland, the director general of the British Chambers of Commerce, said although the move was unsurprising given the cost, reduced support would “have a significant impact on many businesses.” Tina McKenzie, policy chair of the Federation of Small Businesses, said small firms were less able to deal with the cost pressures of higher energy prices and called for an extension of the scheme, taking into account the size of the business.
PM outlines plans for remainder of parliament
Rishi Sunak has outlined his policy priorities for the year to come in his first major speech of 2023. Five key challenges during this parliament were to halve inflation; grow the economy; reduce debt; cut hospital waiting lists; and stop migrant crossings, Mr Sunak said.
He is hoping that achieving these objectives will help him win the next election, at which point Mr Sunak will concentrate on turning Britain into a nation of innovators
Foreign investors dump UK gilts at record rate
Figures from the Bank of England show that overseas investors sold a total of £38.4bn of government debt between September and November, with the three-month average rate of £12.8bn the highest since BOE records began in 1982. Derek Halpenny, head of research at Japan’s MUFG bank, said it was also the first time that foreign investors offloaded gilts for three months running since 2016. The Treasury needs to raise more than £300bn next year while the BOE plans to sell £40bn of the gilts it bought under its QE programme. The apparent loss of foreign institutional confidence doe not bode well, Halpenny continues, noting that market concerns could drive up yields and push sterling down, deepening the cost-of-living crisis.
UK taxpayers face losses from fraud and error in Covid support claims
Annual accounts from the BEIS show around £1bn was lost in “irregular” payments by local authorities to businesses forced to shut during COVID-19 lockdowns.
Households heading for £500 energy bill boost
Household energy bills are forecast to fall below the Government’s £3,000 price guarantee after a sharp drop in wholesale prices. Analysts at Investec forecast that the energy price cap will be as low as £2,600 per year from July. That is nearly £500 less than the wealth manager’s earlier forecast of about £3,100 per year. It would also be lower than the Government’s energy price guarantee, potentially meaning the Treasury will no longer have to shell out billions of pounds on subsidising household bills.
Retail
UK Shopper Footfall in December rose 5.8% on the month before and was up 9.9% on last year, while the all-important gap between pre-pandemic 2019 also narrowed to 10.9% from 11.4% in November. December footfall on high streets was 12.7% higher than in 2021, while shopping centres saw a 10.3% uplift and retail parks also enjoyed 3.6% more visitors. However, in the penultimate week before Christmas, marred by four days of rail strikes, footfall was 20.1% lower than 2019, more than doubling from 9.6% the week before.
BCC finds business optimism low
A quarterly survey by the British Chambers of Commerce reveals British businesses are nearly as pessimistic as they were in the midst of the pandemic, as they brace for a drop in profit during a recession in 2023. “The widespread economic damage caused by Covid shutdowns has been compounded by subsequent inflation, global trade crises, and new trade barriers with the EU,” David Bharier, head of research at the BCC, said in a statement Wednesday. “Business conditions deteriorated significantly in the second half of 2022.”
HMRC expected to get tougher on tax bills in 2023
BDO is warning taxpayers who are in arrears that HMRC is expected to get “much tougher” when it comes to recovering tax debts in 2023. The firm’s head of tax dispute resolution, Dawn Register, said: “While HMRC is offering time to pay arrangements to those who are genuinely going to find it difficult to pay their tax on time, they’re unlikely to give any waiver for late filing or late payments and are expected to get tougher on those with outstanding debts. Those paying late will also be hit with higher interest charges this year.” She continued: “The late payment interest rate is set to rise to 6% on unpaid taxes from January 6, 2023, the highest rate since November 2008. Taxpayers in arrears should take note.”
Mortgage approvals sink to lowest level in two years
Mortgage approvals fell to their lowest level in two years as interest rate rises put off buyers, new Bank of England figures suggest. They slumped to just over 46,000 in November, down from just under 58,000 in October. The fall in mortgage approvals was “another indicator of slowing demand for UK housing as the rising interest rate environment bites”, said Daniel Mahoney, economist at Handelsbanken. BoE data also showed consumer credit rose by £1.5bn in November, more than double the £700m borrowed in October. Credit card borrowing jumped to £1.2bn in November from £400m in October. Karim Haji, head of financial services at KPMG, said that despite households cutting discretionary spending, “inflation on essentials and the increased cost of energy means debt is still being accumulated for food, lighting and staying warm.” Thomas Pugh, economist at consulting firm RSM UK, added: “Very weak consumer confidence is still prompting households to spend less and save more in anticipation of tough economic times ahead.”
FTSE bosses ‘earn more by Thursday afternoon than average worker will make in year’
Data from the High Pay Centre indicate that by 2pm on Thursday the CEOs of FTSE 100 companies will have earned an average of £33,000 so far this year. This is the same as the median salary for a UK worker. Chief executives at Britain’s top companies saw their pay levels increase by 39% over the past year while the average worker has seen their pay rise by 6% over the same period. “In the worst economic circumstances that most people can remember, it is difficult to believe that a handful of top earners are still raking in such extraordinary amounts of money,” High Pay Centre director Luke Hildyard said. “The UK economy really cannot afford for such a big share of the wealth that is created by all workers to be captured by such a tiny number of people at the top.”
New car sales fall to a 30-year low
The UK recorded its worst year for car sales in 30 years in 2022, according to figures from the Society of Motor Manufacturers and Traders. Total sales were around 700,000 cars fewer than were sold in pre-Covid 2019, when registrations exceeded 2.3m units. Mike Hawes, chief executive at the SMMT, said car makers have really struggled to be able to make the vehicles in sufficient quantities, “primarily due to semiconductor shortages.” Mr Hawes continued: “The automotive market remains adrift of its pre-pandemic performance but could well buck wider economic trends by delivering significant growth in 2023.” Chris Knight, UK automotive partner at KPMG, said: “Despite the cost of living crisis, we enter the year with new car registrations on the up and one in five consumers with savings telling KPMG that they still plan on buying a vehicle in 2023.”
British firms exit Taiwan ahead of Chinese invasion
Western companies are growing increasingly concerned that China is on the brink of invading Taiwan, with UK company Brompton Bicycle one of many manufacturers drawing up plans to shift parts of its supply chain out of both countries. Brompton’s managing director Will Butler-Adams said many companies are sticking with the same suppliers, but have asked them to de-risk by relocating to other areas in Asia, such as Thailand or Vietnam.
Amazon
Amazon is latest tech company to announce massive layoffs and is set to axe 18,000 with most oming from HR and its retail operations such as Fresh and Go. It is up from the 10,000 it had previously planned and represents about 1% of the companies workforce.
US FED
Markets have digested Federal Reserve minutes from last month confirmed their will to bring down inflation and, in an extremely blunt warning to investors, cautioned against underestimating their resolve to keep interest rates high for some time. Markets were pricing in rate cuts in the second half of 2023. The tone of the minutes suggested frustration that this was undermining the central bank’s efforts to bring price pressures under control.
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!
No face-to-face meeting required – 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.