Business news 6 January 2025
Business needs support, the Economy, employment law, productivity, tax returns, tax increases, house building, traffic, ICC, mortgages, farmers, retail footfall, politics, markets & more business news that we thought would interest our members.
James Salmon, Operations Director.
Nearly a third of businesses will need financial support
According to BDO, British businesses are facing significant challenges due to supply chain disruptions and rising costs, with 32% of mid-sized firms indicating they require additional financial support, including bank loans and government grants. Richard Austin, a partner at BDO, said: “[Mid-sized businesses] are the engine room of the economy, employing more than eight million people across the UK. They need a more favourable operating environment, underpinned by policy and taxation, that enables better access to capital and encourages ongoing investment in new technologies.” However, the survey also found that 49% of businesses felt they were in a stronger position than before the pandemic with £4.6m investment earmarked by mid-sized companies over the next two to five years.
Labour’s new employment laws threaten jobs
Labour’s proposed Employment Rights Bill, led by Deputy Prime Minister Angela Rayner, aims to enhance workers’ rights but has raised significant concerns among small business owners. A poll by the Federation of Small Businesses (FSB) revealed that 92% of small employers fear the legislation will lead to job losses, with 67% planning to hire fewer staff. Tina McKenzie, FSB’s Policy Chair, said: “Small firms have made it crystal clear that the Bill will not motivate them to hire more whatsoever.” Critics argue that the Bill’s provisions, including changes to unfair dismissal laws, could deter hiring and exacerbate the benefits bill, ultimately impacting living standards across the UK. The Government maintains that the Bill is essential for economic growth and worker welfare.
UK economy woes leave businesses despondent
Stuart Rose, former chairman of Asda and Marks and Spencer, expressed his “despondent” feelings regarding the UK economy, citing “no growth”, “poor productivity”, and a “very, very large tax burden” as key issues. He highlighted the impact of Chancellor Rachel Reeves’s recent Budget, which has dampened business activity and lowered GDP forecasts. Rose stressed the need for improved productivity, stating: “If we do not improve productivity in the country, then nothing is going to happen.”
Tax fears kill business confidence – BCC
Confidence among UK businesses has significantly declined, with the British Chambers of Commerce (BCC) reporting that 63% of firms are concerned about taxes, the highest level since 2017. The survey, which included over 4,800 businesses, revealed that nearly two-thirds are worried about the impact of rising national insurance contributions (NICs) following the recent Budget. The BCC’s director general, Shevaun Haviland, said: “Businesses’ confidence has slumped in a pressure cooker of rising costs and taxes,” as many firms anticipate raising prices in the coming months. The economic outlook remains bleak, with growth figures disappointing and businesses cutting back on investment. However, a separate report from KPMG suggests that UK economic growth could more than double this year, driven by interest rate cuts and increased government spending
Britain doesn’t need a productivity boost, but a revolution
Britain is facing a significant productivity crisis, writes Kate Andrews, economics editor at the Spectator, lagging behind the US and other nations. While US productivity rose by 2% in the third quarter of 2024, the UK saw a decline of 1.8% during the same period. This ongoing issue stems from a reluctance to embrace innovation and automation, which has resulted in a stagnant economy and limited growth. According to The Productivity Institute, the average productivity gains in Britain since the financial crash have been a mere 0.5% per annum. Andrews states: “Britain doesn’t need a productivity boost, but a revolution.” The current Government’s focus on efficiency gains rather than substantial reform may hinder any potential improvements, leaving the UK in a precarious position as it struggles to close the productivity gap with its global counterparts.
Tax return deadline looms large
As the January 31 deadline for filing self-assessment tax returns approaches, over 12m individuals are expected to complete their returns for the 2023-24 tax year, according to HM Revenue & Customs. Many have already filed during the festive period, with 40,072 submissions made between Christmas Eve and Boxing Day. Chris Etherington from RSM advises: “You’re probably best off setting aside at least half a day to make sure you are reporting everything correctly.” Those required to file include the self-employed, individuals earning over £150,000, and those with additional income. Missing the deadline incurs immediate fines, escalating with time, and can lead to further penalties for late payments.
Labour’s tax raids loom ahead
Economists predict that Labour will need to implement further tax increases before the next general election due to weak economic growth during its tenure. A survey of 96 experts indicated that while the UK may outperform France and Germany in 2025, national insurance hikes are expected to undermine job security and the economy. Maxime Darmet, senior economist at Allianz Trade, said: “Growth will undershoot the Government and the OBR’s forecasts.” The majority of respondents believe Chancellor Rachel Reeves will have to raise taxes again, despite her assurances against a significant tax-raising Budget. Concerns over rising costs and inflation are fuelling anxiety among workers, with Andrew Goodwin from Oxford Economics noting that the OBR’s growth forecasts are overly optimistic. The overall sentiment suggests that the UK will continue to struggle with weak investment and productivity.
Chancellor faces £6.4bn fiscal crisis
Andrew Goodwin from Oxford Economics has warned that the Chancellor’s fiscal headroom may diminish significantly, dropping from £9.9bn to £3.5bn by 2030 if borrowing costs remain elevated. The situation will limit her capacity to enhance public service funding and may necessitate future tax increases, despite a previous £40bn tax hike. Goodwin says that “fiscal sustainability concerns are not going to go away” for Reeves, who has committed to borrowing solely for investment and reducing national debt. The current government debt stands at £2.8trn, making finances susceptible to rising interest rates.
Labour must reform tax and trade to attract investors
Labour’s upcoming “modern industrial strategy” aims to attract investment and stimulate economic growth, but it faces significant challenges, writes Seema Shah, chief global strategist at Principal Asset Management, in the Sunday Times. She highlights that the strategy must address key barriers, including the UK’s relationship with the EU and business taxation. “Launching an industrial strategy to lower barriers to investment, while ignoring the tax burden… is like hanging an ‘open for business’ sign above a boarded-up shop,” Shah states. The strategy’s success hinges on meaningful engagement with the EU and reforming the tax landscape, particularly in light of the chancellor’s national insurance hike and the UK’s comparatively high capital gains tax. Without these changes, the UK’s appeal to investors may remain limited.
Labour needs pro-development policies to boost housebuilding
The Chancellor’s decision to raise National Insurance rates for employers has significantly increased costs for smaller developers, with the Home Builders Federation now warning that the tax hikes will undermine Labour’s bid to build 1.5m homes by the end of the decade. Neil Jefferson, chief executive of the lobby group, said the increased costs could drive smaller developers into administration, reducing the capacity of the industry even further. Mr Jefferson added that “developer confidence remains low and businesses can’t plan to increase output because demand just isn’t there and the economic and policy climate does not yet feel particularly pro-development.”
Bilimoria takes charge at ICC
Karan Bilimoria, founder of Cobra Beer, has taken on the role of UK chair of the International Chambers of Commerce (ICC). Commenting on the Labour Government’s tax policies, Bilimoria said: “Business feels… let down. We are disappointed.” He highlighted the negative impact of tax increases on enterprise and warned of a potential recession. He also critiqued the previous Conservative government’s tax hikes, particularly the rise in corporation tax from 19% to 25%, calling it a “huge mistake.” Bilimoria, who has a rich history in business and was the first ethnic minority president of the Confederation of British Industry, aims to advocate for reforms in business rates and increased investment in research and development. He also believes that fostering a closer relationship with the European Union would benefit UK businesses.
Is Starmer’s time already running out?
An exclusive Deltapoll survey reveals that nearly a third of Britons believe Sir Keir Starmer will be ousted as Prime Minister within a year, with 68% saying he has performed ‘badly’. The poll highlights growing dissatisfaction with his handling of the economy, NHS, immigration, and the cost-of-living crisis. One Labour MP remarked: “If this poll doesn’t ring alarm bells in No10, then we really are doomed.” Despite Labour leading in voting intention with 30%, Starmer faces pressure from within his party, especially if local elections yield poor results.
eBay now required to report info to HMRC
New regulations now require eBay and other such platforms to report sellers’ information to HMRC, raising concerns that many may face additional tax liabilities. However, eBay reassures users that there is no new “side hustle tax” and that most casual sellers of second-hand items will not incur extra charges. According to HMRC, sellers who sell at least 30 items or earn around £1,700 in 2024 will be notified that their details will be shared with the tax authority. Chris Etherington from RSM said: “This is about putting the onus on digital platforms to share information with HMRC – there aren’t any changes for sellers.” The initiative aims to enhance compliance and ensure fairness among taxpayers, with HMRC investing £37m into the project. Victoria Todd from the Low Incomes Tax Reform Group added that the new rules simply mean more information will be shared, and those following existing regulations need not worry.
Thousands more farmers face IHT pain
Analysis by the Central Association of Agricultural Valuers (CAAV) indicates that, by 2036, an extra 14,000 farmers will be dragged into the inheritance tax net after Rachel Reeves’s Budget comes into force. That’s if tax thresholds are not raised in line with inflation. Jeremy Moody of the CAAV has estimated that 75,000 farming taxpayers will be hit by Ms Reeves’s Budget changes to inheritance tax over the next 30 years – 2,500 farmers each year, which is five times the Treasury’s own estimate of 500 estates.
IHT is the tip of the iceberg for farmers
Alexander Brown in the Scotsman considers how farmers have been let down by successive governments, with Labour’s inheritance tax raid just the latest in a long line of poor decisions. He points out that farmers protested in London last year over cheap imports, inaccurate food labelling and the environmental focus of the Tory Government’s farm payment scheme. Alistair Carmichael, who chairs Westminster’s influential Environment, Food and Rural Affairs (DEFRA) Committee, said on Sunday: “I think for the last couple of decades at least, we have had a tacit consensus amongst policy makers that we could meet our food security needs by importing food, and the countryside could effectively be turned into some glorified theme park, and that farmers were just awkward people who got in the way of the grand schemes for nature, restoration, and climate change mitigation and the rest of it.”
Retail footfall plummets in December
Visitor numbers at UK retail sites fell by 2.2% in December compared to 2023, raising concerns about disappointing Christmas sales. According to the British Retail Consortium (BRC) and Sensormatic, shopping centres experienced a 3.3% decline. Helen Dickinson, BRC’s chief executive, remarked: “A drab December… capped a disappointing year for UK retail footfall.” The decline in footfall is attributed to inclement weather, which kept shoppers at home, particularly in south-west England and Northern Ireland. Despite the challenges, Kien Tan from PwC expressed optimism, saying: “Overall, and despite the rollercoaster footfall ride, we still expect a modestly positive Christmas for retail as a whole.”
Retailers row back on hiring workers via gig economy apps
The Trades Union Congress (TUC) has expressed concern over retailers using gig economy apps like YoungOnes and Temper to hire freelance workers, arguing that this practice could deny workers essential rights, including minimum wage and sick pay. Kate Bell, the TUC’s assistant general secretary, said: “We urge you to end this practice immediately and ensure that all your workers receive the rights and protections that they deserve.” Retailers such as Lush, Uniqlo, and Gymshark have ceased using these apps following criticism from unions. Uniqlo confirmed it had stopped using the Temper app after a brief trial, stating: “We are committed to treating our employees fairly.” Lush also indicated it would not use such methods in the future.
Satellite broadband
Amazon has unveiled plans to offer satellite broadband in the UK in competition with Elon Musk’s Starlink. A regulatory filing over the weekend said the company founded by Jeff Bezos would look to access local radio frequencies over the next one to two years in order to begin rolling out the service in the UK.
UK’s North Sea policy a ‘very big mistake’ – Trump
The UK’s plan to shift away from North Sea oil and gas production has been labelled a “very big mistake” by US President-elect Trump, who called for Sir Keir Starmer’s government to open up the North Sea and get rid of windmills. His comments appear to have been prompted by news that US oil producer Apache would be winding down its North Sea operations due to high taxes and onerous regulations. The attack on UK energy policy is the latest in a series of criticisms of Labour from Trump’s team and puts Ed Miliband’s drive for net zero and clean energy in the spotlight. The Energy Secretary, has pledged not to issue any new North Sea drilling licences and has vowed to make Britain’s power system “clean” by 2030.
Call for domestic abuse victims to get paid leave
Victims of domestic abuse may soon be entitled to up to 10 days of paid leave, as MPs discuss new regulations aimed at supporting those affected. Many victims struggle to maintain employment due to the physical and mental toll of their experiences, often resorting to sick leave for necessary appointments. Labour MP Alex McIntyre is advocating for the Domestic Abuse (Safe Leave) motion to address gaps in employment law. A 2019 study by Vodafone and KPMG revealed that women who experience abuse lose approximately £5,800 annually, with the social and economic costs of domestic abuse estimated at £78bn over three years.
Traffic congestion slows UK growth
Traffic on England’s main roads is officially slowing down, with the average speed forecast to drop to 55mph by 2025, down from 59mph a decade ago. This trend poses a challenge for Sir Keir Starmer’s Government, which is concerned that congestion is hindering economic growth. A report by PwC highlights that the increase in freight traffic, driven by online shopping, and the shift to electric vehicles are contributing factors. Jack Cousens, head of roads policy for the AA, said: “The reduction in speed would indicate there is that knock-on effect on the impact on UK plc’s bottom line.” While slower speeds may correlate with fewer fatalities, the Government is urged to improve infrastructure to ensure reliable traffic flow. Measures include extending fines for roadworks that overrun and encouraging lane rental schemes to reduce congestion.
Markets
This morning on currencies, the pound is currently worth $1.2474 and €1.2055. On Commodities, Oil (Brent) is at $76.45 & Gold is at $2632.
Goldman Sachs no longer sees gold reaching $3,000 an ounce by the end of 2025, pushing their forecast out to mid-2026 on expectations the Fed will make fewer interest-rate cuts. Even so, investors see plenty of reasons to remain bullish after a 27% rally last year.
On the stock markets, in the US the S&P 500 rose 1.26% to 5942.47 on Friday and the NASDAQ rose 1.77% to 19621.68. The FTSE 100 is currently down 0.21% at 8206.79 and the Eurostoxx 50 is up 0.69% at 4905.19.
US Tech stocks have rallied inpre market trading after Microsoft announced plans to spend $80 billion on data centers and iPhone assembler Foxconn reported faster-than-expected revenue growth. Nvidia and Advanced Micro Devices gained more than 2%.
Britons have ‘lowest appetite’ for stock market investing in the G7
A new study by Abrdn shows Britons have the lowest appetite among their G7 peers for investing in the stock market, with wealth in the UK mostly tied up in housing, pensions and cash.
Record £34m imposed in fines for late accounts filings
The number of businesses filing accounts over six months late has surged, resulting in record fines of £34.4m in 2023-24, a significant increase from £10.2m in 2019-20.
Problems with UK economy data could be widespread, warns lawmaker
The Labour chair of the Treasury committee, Dame Meg Hillier, has said gaps in the UK’s jobs data may indicate wider problems with the country’s statistics, leaving economic policymakers “flying blind”.
FTSE bosses earn average salary in three days
In the first three days of 2025, executives at Britain’s largest companies earned more than the average employee’s annual salary. According to The Mail on Sunday’s Fat Cat Files, the typical FTSE 100 chief executive made £4.7m in 2023, which is 125 times the average worker’s earnings of £37,430. The pay gap is particularly stark at Tesco, where chief executive Ken Murphy earned nearly £10m, 431 times the salary of a typical worker. Critics argue that the growing pay differentials contribute to workplace inequality, especially as real wages have stagnated since the 2008-9 financial crisis.
UK mortgage approvals fall in November
Mortgage approvals fell in November, data from the Bank of England showed on Friday, while consumer credit growth dropped to its weakest level in more than two years. “November’s money and lending data suggests that households’ caution with their borrowing and saving ahead of the Budget hasn’t gone away,” said Elias Hilmer, economist from consultancy Capital Economics. “This adds further downside risk to our forecast for GDP to stagnate in Q4.” The BoE said mortgage approvals fell to 65,720 in November from 68,129 in October, the lowest reading since August. The annual growth rate for all consumer credit decreased to a 29-month low of 6.6% in November, from 7.3% in October.
Private school tax raid could push down house prices
Labour’s proposed tax on private schools is expected to impact London’s housing market, with house prices in affluent areas predicted to decline as higher school fees prompt families to seek more affordable homes and schools outside the capital. According to Savills, the average price of a home in prime central London, currently £4.6m, is forecast to fall by 4% in 2025, equating to a £184,000 drop. In outer prime London, where the average property costs £1.8m, prices are expected to remain stable. Meanwhile, housing hotspots outside London are projected to see a 2% increase, driven by families relocating. Lucian Cook, head of residential research at Savills, said that escalating private school fees would likely suppress house prices in neighbourhoods like Islington, Hampstead, and Chiswick. He added that other regional markets would benefit from “displaced demand” as families move away from the capital.
Private schools face selling off sports fields
With private schools facing large business rates bills from April, many are preparing to sell off playing fields to bring in cash. However, education bosses say the sale of playing fields or other sports facilities would impact negatively on entire communities. The ending of business rates relief for private schools comes on top of Sir Keir Starmer’s controversial move to apply 20% VAT to private school fees, which came into force on Jan 1. Private schools’ playing fields are often used free of charge by community groups or state school pupils. Separately, Labour is being accused of misleading public over private school tax after the Treasury revealed it had no plans to ringfence the funds raised to improve state schools, despite Rachel Reeves promising it would just last weekend. The Chancellor said “every single penny” of the £1.5bn-a-year gained from applying 20% VAT to independent school fees would be hypothecated for state education. Neil O’Brien MP, shadow education minister, responded: “This is yet more dishonesty from Rachel Reeves. Any money they raise from this education tax raid will just disappear into the black hole she has created with her catastrophic Budget. They are trashing state education and playing politics with children’s futures.”
Some 17% of divorces ‘delayed due to financial concerns’
Recent research by Legal & General Retail reveals that financial concerns are causing delays in divorce proceedings, with 17% of recent divorces postponed due to money worries. The study highlights that many divorcees are less likely to consider pensions when dividing assets, with only 13% doing so compared to 50% who considered the family home. Additionally, 11% of individuals had forgotten to update their wills or remove their ex-partner as beneficiaries on pensions and life insurance, risking future disputes. Paula Llewellyn, chief customer and strategy officer at the firm, advises that careful financial planning is essential during this time, suggesting that individuals should review their assets and consult a qualified financial adviser to ensure a fair settlement.
Tribunal rules against HMRC worker
An employment tribunal has dismissed Rachel Gladstone’s discrimination claims against HMRC after she labelled her boss, Sandra Edwards, as “sexist” for expressing a desire to buy “pink dresses” for a potential granddaughter. Gladstone argued that the comments were “triggering” due to her efforts to counteract the “pink is for girls” culture while raising her daughter. Despite her claims of unfair constructive dismissal and disability discrimination, the tribunal concluded that she had been treated fairly. Gladstone resigned in April 2023 after receiving a written warning for other workplace issues.
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.