Business news 5 November 2021

James Salmon, Operations Director.

SME leaders deprioritising their mental health. Wages rise as firms struggle to recruit.  Unemployment climbs by 150k as furlough ends. Bank of England holds interest rates at 0.1%. Over £5.5bn of pandemic support lost to fraud or error.  And more business news.

SME leaders deprioritising their mental health
Research commissioned by the British Association for counselling and Psychotherapy shows that almost two thirds of SME business owners admit to deprioritising their mental health as they look to make a success of their business, with 63% overlooking their well-being.

The report shows that some SME leaders have sacrificed friendships in order to set up their company, while others have missed doctor’s appointments and put in extra hours while in bed at night. While some bosses have been forced to dip into their savings, 16% have taken out personal loans.

While almost every respondent said they keep the stress of running a business to themselves, 68% said they feel like they have nobody to talk to about their problems. Of these, 43% said it is because nobody understands the pressures of running a business, while 35% don’t want to burden others with their problems.

The poll of 500 SME owners saw 19% say they often feel like giving up running their business.

Wages rise as firms struggle to recruit
Businesses are seeing their recruitment plans a hit by a shortage of candidates, according to research by the Recruitment and Employment Confederation (REC) and KPMG which shows starting salaries for full-time and temporary staff have hit record levels. Strong demand for staff coupled with a shortage of workers has driven the sharpest increases in starting pay since the survey began in 1997. KPMG’s Claire Warnes said: “While it’s encouraging to see hiring activity increase in October, the recovery was at the softest rate recorded in six months due to the ongoing deterioration of candidate availability.” Kate Shoesmith, deputy chief executive of REC, added that while recruiters say candidates in some sectors and regions have been able to secure a substantial pay rise, “many employers can’t afford to offer this.”

Unemployment climbs by 150k as furlough ends
Official figures show UK unemployment rose by 150,000 after the furlough scheme came to an end. HMRC data shows that 1.14m people were still using the wage support scheme when it closed at the end of September. It also reveals that 500,500 of those on furlough at September 30 were already working part-time, while 65% of those furloughed returned to work on the same hours. Some 6% increased their hours, 16% reduced their hours and 3% were made redundant. Tony Wilson, director of the Institute for Employment Studies, said that with vacancies running at a record-high of 1.3m, many of those coming off furlough are likely to have found jobs relatively quickly.

Staff shortages mean pay pressure for factories
More than half of small British manufacturers feel under pressure to pay employees more because of staff shortages brought about by the pandemic and Brexit. The report from consultancies South West Manufacturing Advisory Services and the Manufacturing Growth Programme show most SME manufacturers lost skilled staff during the pandemic. With many struggling to fill the gaps, 60% say they have – or will have to – increase pay to attract staff. The poll saw 40% of respondents point to a shortage of EU staff post-Brexit as an issue.

Bank of England holds interest rates at 0.1%

The Bank of England yesterday decided to scupper a flurry of bets on interest rate hikes and leave them unchanged at a record low. Despite mounting speculation from financial markets, economists and experts, the Old Lady left interest rates at 0.1 per cent and will see through the final leg of its QE programme. The inaction caught some in the market unaware, with pound sterling now down more than 1.1 per cent against the US dollar.

The Bank of England has opted to hold interest rates at their record low level of 0.1%, with the Bank’s Monetary Policy Committee (MPC), which voted 7-2 in favour of keeping the rate at its current level, saying there was “value” in waiting to see how the jobs market coped with the end of the furlough scheme.

Governor Andrew Bailey said the decision to hold rates was a “very close call” and advised that they are likely to rise over the coming months. In an interview with the BBC, Mr Bailey said: “We think there will be some need to increase interest rates to bring inflation sustainably back to target. And we will be ready to do that.” The MPC said it expected inflation as measured by the Consumer Prices Index to climb over the next several months, peaking at 5% in April before falling back “materially” from the second half of 2022.

The Bank’s quarterly monetary policy report said supply chain issues and weaker consumer spending mean it has halved its growth forecast, with the economy expected to expand 1.5% in Q3 and 1% in Q4. Reflecting on how the MPC may alter the rate in the future, Martin Beck, chief economic adviser to the EY Item Club, said a base rate of 0.5% in a year was the most the markets can reasonably expect.


Oil rose more than $2 on Thursday, lifted by expectations that OPEC and its allies will stick to slow output increases despite calls from the United States and large importers for additional supply to cool the market.


In company news, telecoms giant BT Group share price jumped more than 10% yesterday after confirming its financial outlook for the full year, despite a slight slip in earnings in the first half. BT reported a 2.7% dip in revenue for the six months to September 30 to £10.31 billion, driven by a revenue decline in Enterprise & Global. Pre-tax profit slipped 5.0% to £1.01 billion, primarily due to higher finance expenses.

JD Sports Fashion

JD Sports Fashion hit out at the UK’s competition watchdog after the retailer was forced to sell Footasylum. It was the latest twist in a protracted and frustrating process for JD Sports, which purchased the footwear seller back in March 2019 for £90.1 million. That July, however, the UK Competition & Markets Authority opened a probe on the tie-up.

International Consolidated Airlines

International Consolidated Airlines narrowed losses in the third quarter as capacity continued to improve supported by growth from its Iberia and Vueling airlines. For the three months ended 30 September, operating losses narrowed to €452 million from a loss €1,923 million. Passenger capacity in Q3 was 43.4% of 2019, up from 21.9% in quarter 2.

Over £5.5bn of pandemic support lost to fraud or error
HMRC data shows that more than £5.5bn of taxpayer money from the Government’s coronavirus support schemes was acquired fraudulently or given out incorrectly, including £5.2bn under the Coronavirus Job Retention Scheme. HMRC’s annual report reveals that about 8.7% of the £60bn it paid out under the furlough scheme in the 2020/21 tax year was awarded erroneously or ended up in the hands of organised crime gangs and fraudsters. A further £490m was lost to fraudulent or incorrect claims under the Self-Employment Income Support Scheme, while the “eat out to help out” scheme accounted for £70m. An HMRC spokesperson said the Taxpayer Protection Taskforce is expected to recover £1bn from fraudulent or incorrect payments over the next two years, adding that work is already under way, with 23,000 ongoing investigations. HMRC says it has so far stopped or recovered £840m of over-claimed grants in 2020/21.

HMRC tax receipts slide 4.4%
HMRC has seen a decline in tax revenues over the latest financial year as a result of the pandemic, figures from the National Audit Office (NAO) reveal. HMRC reported total tax revenues of £608.8bn in the 2020/21 financial year, representing a £27.9bn decline from the previous year. Analysis shows income tax, national insurance contributions and VAT were the main source of tax office revenues. Gareth Davies head of the NAO, said the pandemic “has significantly reduced tax revenues and made it more difficult for HMRC to take enforcement action.” “Now that the initial impact of the pandemic has eased, normal tax compliance levels should be restored”, he added.

1 in 3 mortgage applicants rejected
Research by bridging finance lender KSEYE shows that 32% of UK borrowers have been rejected by a lender on at least one mortgage application in the past five years. The analysis shows that 44% of those who had been rejected said having irregular income was an issue, while 30% of those rejected were self-employed. It was also found that 46% of those who were turned down received an agreement in principle but the lender later reversed their decision, while 36% were never told why their application had been unsuccessful. Of the 752 mortgage customers polled by KSEYE, 59% said lenders should do more to take an individual’s full financial circumstances into account.

House Prices

UK House Prices have hit a record high as the average property tops £270,000. Annual house price inflation has reached 8.1 per cent, from 7.4 per cent, according to Halifax’s house price index. London has remained the weakest performing area of the UK by quite a stretch. Annual inflation was 0.8 per cent, compared to an increase of 1 per cent in September. This marks the lowest year-on-year rise in prices since February 2020.

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The Credit Protection Association – Prompting Punctual Payments – Ethical, Effective, Efficient, Economical collections.