Business news 6 January 2022
James Salmon, Operations Director.
Small firms need urgent support . 85% of firms saw supply shortages in 2021. Inflation set to hit record high. Businesses warn of ‘unprecedented’ cost pressures. And more business news.
FSB chair: Small firms need urgent support
Mike Cherry, national chairman at the Federation of Small Businesses, says it is “becoming increasingly difficult to remember a time when we small business owners could plan with any kind of certainty”, with recent years delivering the financial crisis, “fractious” general elections, two referendums, and a pandemic.
Writing in the Times, he looks at “the sheer volume of upcoming flashpoints” that SMEs face, including new post-Brexit rules on EU trade. Mr Cherry also warns that “hikes” in National Insurance contributions, the living wage and dividend taxation are on the way and arrive just as business rates discounts for the hardest hit firms come to an end.
Noting that small business confidence dropped in every quarter of 2021, he says firms saw their “grit and resilience tested to the extreme” but were “exceptionally quick to adapt and innovate over lockdowns”. Mr Cherry argues that small firms “urgently need more support from policymakers.”
Only on Tuesday did we highlight that 1 in 10 small businesses were threatened by late payments
City chief says pandemic may be masking Brexit impact
Catherine McGuinness, the City of London’s policy chief, has warned that Covid may mean some of the impact of leaving the EU has yet to be realised. With the UK’s financial services sector losing most of its access to the EU, post-Brexit, Ms McGuinness said the full implications were still working their way through, adding that the pandemic “may be masking what’s really going on”.
It is noted that while far fewer finance jobs than initially predicted have moved from London to new EU banking hubs, pressure to relocate was eased by lockdowns. Ms McGuinness went on: “We are certainly not at a new normal….We need to put Brexit behind us.” She added that relations with the EU need to be put on a “new footing”.
85% of firms saw supply shortages in 2021
A Chartered Institute of Procurement & Supply poll of 228 firms found that 85% experienced supply chain disruption last year. A quarter said suppliers shutting down due to pandemic-driven restrictions caused them the most acute supply shortages. It was found that 71% of businesses experiencing disruption and shortages expected it to last for six months or more, while more than a third said shortages would persist into 2023.
Inflation set to hit record high
Inflation will reach its highest level on record this year, new research by City analysts suggests. Soaring energy bills will see the rate hit 6.8% in April, according to Goldman Sachs, with analysts at the bank warning that inflation could climb further if the Omicron coronavirus variant adds to pressure on global supply chains. The Bank of England (BoE) thinks the rise in the cost of living will peak at 6%, exceeding a high of 5.2% for the consumer price index. The Goldman analysts say a jump in inflation could prompt the BoE to increase interest rates to 1.0%, a level not seen since February 2009 in the immediate aftermath of the financial crisis.
Shoppers return to supermarkets
Figures show that in-store visits to supermarkets hit their highest level since March 2020 in December. However, online sales fell by 3.7% compared to 2020, accounting for 12.2% of sales. Overall, spending on groceries totalled £11.7bn over the four weeks to December 26. This marks a 0.2% decrease from the record high seen in 2020. Total grocery sales hit £31.7bn in the 12 weeks to year end. Although this was down 3% on Q4 2020, the figure is 8% up on that seen across the same period in 2019. The report also reveals that grocery price inflation reached 3.5% in December, adding nearly £15 to the average
Businesses warn of ‘unprecedented’ cost pressures
The British Chambers of Commerce (BCC) has voiced concern over the impact of an “unprecedented” surge in inflation. It said that there was already strong evidence of an economic slowdown in Q4 before the Bank of England raised interest rates in December as it looked to tackle rising inflation expectations. The BCC survey found that one in four of the 5,500 firms questioned are worried about rising interest rates, while a record proportion – three in five – expect their prices to increase in the next three months. BCC head of economics Suren Thiru said the survey suggests that the economic recovery slowed in Q4 “as mounting headwinds increasingly limited the key indicators of activity.” He added: “The notable uptick in concerns over higher interest rates underscores the need for the Bank of England to proceed with caution on further rate rises to avoid undermining confidence and an already fragile recovery.”
Rees-Mogg leading a tax revolt?
It has been claimed that Jacob Rees-Mogg is leading a tax revolt, with the Commons Leader reportedly telling the Prime Minister that the 1.25% National Insurance increase coming into force in April cannot be justified amid a cost of living crisis driven by soaring energy costs. A Government source says Mr Rees-Mogg believes “finding savings would be more frugal and responsible” than raising taxes. However, Chancellor Rishi Sunak is said to have resisted the call for the health and social care levy to be scrapped or postponed. Analysis by the Resolution Foundation think-tank suggests the levy will cost middle-earning households around £300 a year – and far more for wealthier households.
Busiest ever Christmas for home movers
Rightmove says a surge in buyer demand has meant the busiest ever Christmas for those wanting to snap up a property, with buyer demand up 23% on last year. The property platform saw its highest ever number of new sellers on Boxing Day, with the period between Boxing Day and New Year breaking records for home-mover activity. The number of new sellers marketing a home on Boxing Day was up 21% compared to 2020, while December 30 marked the busiest day for requests for home valuations since May 2021. Rightmove’s director of property data Tim Bannister said: “Boxing Day traditionally signals the start of activity ramping up as people turn their attention from turkey and trimmings to their plans for 2022.”
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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
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.
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Claim late payment compensation (LPC) from former business customers who paid you late in the last six years!
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