Business news 5 February 2025
Labour fails to convince voters on growth. Chancellor’s fiscal headroom evaporates. European reset, markets, insolvencies & more business news that we thought would interest our members.
James Salmon, Operations Director.
Labour fails to convince voters on growth
Recent polling by Freshwater Strategy indicates that over 70% of voters lack confidence in the Chancellor’s economic plans, with around 67% doubting her ability to manage the economy. Despite Rachel Reeves’ recent push for growth sentiment remains low. The economy has stagnated since Labour took power, compounded by £40bn in tax rises. Furthermore, EY’s ITEM Club has downgraded GDP growth expectations for 2025 to 1%, reflecting ongoing economic challenges. Many voters anticipate further tax increases, with over 50% expecting Reeves and Starmer to break a manifesto pledge by raising income tax.
Chancellor’s fiscal headroom evaporates
Rachel Reeves has been warned that she must either cut spending or increase taxes due to the evaporation of any fiscal leeway. The Office for Budget Responsibility’s estimates reveal that the Government’s £9.9bn fiscal headroom has been eliminated by low growth and rising borrowing costs. JP Morgan’s Allan Monks said: “The Chancellor’s fiscal headroom looks set to evaporate.” While she is expected to resist an emergency budget, further tax rises may be necessary in the autumn, including extending the freeze on income tax bands, the Times reports
European reset
Sir Keir Starmer joined an informal meeting of the European Council on Monday evening for dinner at the Palais d’Egmont in Brussels to talk about the continent’s security. It was the first time a PM had joined a gathering of the EU’s 27 leaders since Boris Johnson in October 2019. There, the PM set out his pitch for an ambitious UK-EU defence and security partnership which will make “Brexit work better for the British people”. Speaking in Brussels yesterday morning Mr Thomas-Symonds – , the Cabinet Office minister responsible for negotiations with Europe – promised an approach of “ruthless pragmatism” in resetting the trading relationship.
Markets
Yesterday, stocks steadied after Mexico and Canada quickly achieved some reprieve against tariffs. The FTSE 100 closed down 0.15% at 8570.77 and the Euro Stoxx 50 closed up 0.89% at 5264.59.
Overnight in the US the S&P 500 rose 0.72% to 6037.88 and the NASDAQ rose 1.35% to 19654.02.
This morning on currencies, the pound is currently worth $1.254 and €1.204. On Commodities, Oil (Brent) is at $75.2 & Gold is at $2870. On the stock markets, the FTSE 100 is currently up 0.18% at 8586 and the Eurostoxx 50 is down 0.1% at 5259.
US market futures fell early Wednesday after Google-parent Alphabet posted disappointing revenue, following a positive session for the major averages.
In the latest tit for tat in the US-China trade war, China’s antitrust watchdog is preparing for a potential probe into Apple’s policies and the fees it charges app developers.
Google
Alphabet CEO Sundar Pichai said the company is planning another big year of spending as it continues to build out its artificial intelligence offering. “We are confident about the opportunities ahead, and to accelerate our progress, we expect to invest approximately $75 billion in capital expenditures in 2025,” Pichai said in Tuesday’s earnings release announcing the investment plan. The capex figure came in ahead of the $59.73 billion consensus estimate for Google
Future Fund faces £263m loss
The Future Fund, a taxpayer-backed initiative launched by Rishi Sunak during the pandemic, is currently facing a staggering loss of £263m, with its value dropping from £1.1bn to £799m. Designed to support struggling start-ups, the fund has seen hundreds of companies collapse, with 202 firms reported insolvent as of April 2024. The Department for Business and Trade (DBT) revealed that only £75m has been recouped through repayments or sales. The fund’s spokesperson stated: “As venture capital is a long-term investment, it is too early to give an indication of the overall Future Fund performance.” With the government holding stakes in 680 companies, the outlook for recouping investments appears bleak.
McDonald’s urged to back farmers
Supporters of British farmers are calling on McDonald’s to join major supermarkets in opposing Rachel Reeves’ proposed inheritance tax on family farms. The campaign group No Farmers, No Food has urged the fast-food giant to “join retailers in supporting farmers in their campaign against the Government’s inheritance tax on family farms.” Mo Metcalf-Fisher, head of external affairs at the Countryside Alliance, stated: “Farmers are battling for their future and they need retail businesses that support their hard work to speak out now.” Farmers are set to protest in Westminster on February 10, as a petition against the tax has already gathered over 100,000 signatures.
NAO: UK could learn from DOGE
Gareth Davies, chief of the National Audit Office (NAO), has expressed interest in learning from Elon Musk’s US Department of Government Efficiency, particularly regarding spending cuts. In his annual speech, he highlighted the unsustainable nature of NHS and special education needs funding, stating: “A succession of NAO reports have concluded that systems have become unsustainable.” He stressed the urgent need for reform due to rising demand and costs, advocating for the integration of AI to enhance productivity.
Scotland bucks UK tech trend
Scotland has distinguished itself from other UK regions by experiencing a 5% increase in new tech hires in 2024, while the UK overall saw a 5% decline. According to RSM UK, 1,663 IT companies were incorporated in Scotland, up from 1,553 in 2023. “Scotland’s growth in comparison to other UK regions is fantastic,” said Hannah Atchison, associate director of RSM in Edinburgh. However, challenges remain, including a lack of later-stage capital and difficulties in attracting talent.
Royal Stafford pottery firm collapses
Royal Stafford, a pottery firm with a manufacturing history exceeding 200 years, has entered liquidation, resulting in over 70 job losses. Established in 1845, the company operated from the Royal Overhouse Manufactory in Burslem, Stoke-on-Trent, which has been in use since 1787. Colin Griffiths from the GMB Union described the collapse as a “wake-up call” for the Government regarding its industrial strategy, warning that without intervention, the UK could lose its ceramics industry.
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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.