Business news 6 March 2025
Some of the business news that we thought would interest our members.
James Salmon, Operations Director.
Cost pressures weigh on UK growth
The British Chambers of Commerce (BCC) has revised its economic growth forecast down to 0.9% for this year, a decrease from the previous 1.3%. This adjustment reflects “the severe pressures piling up on businesses right now,” according to David Bharier, head of research at the BCC. The forecast indicates that inflation will remain above the Bank of England’s 2% target until late 2027, with unemployment expected to rise to 4.6% by the end of 2025. The report suggests increased national insurance contributions and rising business costs are likely to stall investment and force companies to reconsider workforce plans.
Over three quarters of business leaders pessimistic
The latest Business Confidence Survey by the Adam Smith Institute (ASI) reveals that over 77% of business leaders in the UK have “low” or “very low” confidence in the current economic climate. Concerns are primarily centred around the Chancellor Rachel Reeves’s decision to increase the employers’ National Insurance, alongside high energy costs and inflation. Larger businesses are also worried about legal action, which has been compounded by the rapid growth of class-action cases in recent years. Andrew Griffith, Shadow Secretary of State for Business and Trade, said: “The results from this Adam Smith Institute survey may be shocking, but they’ll come as no surprise to anyone who actually understands how business works.” Writing in City AM, Sam Bidwell, director of research and education at the ASI, urges the Government to reconsider its tax policies and address the pressing issues faced by businesses to foster growth and stability.
Job cuts surge in services sector
The UK services sector experienced its fastest job cuts since 2020 in February, driven by weak demand and rising costs. The S&P Global UK services PMI survey recorded a score of 51, indicating slight growth but below the expected 51.1. Tim Moore, economics director at S&P Global Market Intelligence, noted that there has been a “clear loss of growth momentum since last autumn.” He highlighted that concerns over the economic outlook and increasing payroll costs have led to a decline in business optimism, resulting in net job shedding for five consecutive months. This marks the longest period of employment decline since early 2011, excluding the pandemic.
Chancellor expected to make sweeping cuts to welfare
The UK Government is preparing to implement significant cuts to welfare in response to rising inflation and borrowing costs. Chancellor Rachel Reeves is expected to announce these measures in her spring statement on March 26. The Office for Budget Responsibility (OBR) is revising its economic growth forecasts, which may further constrain the Chancellor’s financial flexibility. With 2.8m people currently out of work due to ill health, Work and Pensions Secretary Liz Kendall plans to introduce reforms to support those who can work. The Government is also looking to reduce civil service numbers to cut costs.
£10bn stealth raid looms
Workers may face a £10bn stealth tax increase as Rachel Reeves risks breaching her borrowing rules, warns the Institute for Fiscal Studies (IFS). The Chancellor’s strategy to meet fiscal targets has left little room for manoeuvre, potentially forcing her to extend the freeze on income tax thresholds. Matthew Oulton from the IFS said: “Rachel Reeves has engineered a trap for herself, albeit in difficult circumstances.” The IFS suggests alternatives, such as reducing public sector budgets or reforming health-related benefits, to address the financial gap.
BoE: Uncertainty could keep rates high
Huw Pill, chief economist at the Bank of England, told MPs at the Treasury Select Committee on Wednesday that the central bank is unlikely to implement rapid interest rate cuts due to ongoing inflation concerns. Pill noted: “There is more work to do to squeeze those domestic underlying inflation out of the system.” Alan Taylor, a member of the Monetary Policy Committee, echoed this sentiment, highlighting the uncertainty stemming from external factors such as US tariffs and energy price hikes. Bank governor Andrew Bailey acknowledged the impact of National Insurance increases on inflation, stating: “We can see all of those… and when we ask firms, that’s exactly the answer we get.” While inflation is projected to peak at 3.7% in the third quarter, it remains significantly lower than the 11.1% seen in October 2022. The Bank of England is committed to maintaining a cautious monetary policy stance amid these challenges.
Labour consults on cutting red tape for investment growth
The UK Government is preparing to launch a consultation aimed at reducing regulatory burdens in the alternative investment sector. Speaking at a British Private Equity & Venture Capital Association dinner, City minister Emma Reynolds stressed the sector’s role in driving UK growth, stating: “Freeing fund managers from costly and burdensome rules will enhance the attractiveness of the UK as an asset management hub.” The consultation will focus on simplifying regulations for fund managers who invest in assets beyond stocks and bonds, such as property and infrastructure. This initiative is part of a broader government strategy to modernise the UK’s financial services infrastructure, which includes a shift to a ‘T+1′ standard for settling securities trades by 2027.
Trade bodies explore future of defence funding
Top trade bodies in the UK, including TheCityUK, UK Finance and defence industry peer ADS Group, are advocating for policy reforms to enhance debt finance and equity capital for the defence sector. This initiative follows Prime Minister Keir Starmer’s commitment to increase defence spending from 2.3% to 2.5% of GDP by 2027. The joint recommendations aim to address “friction points” in financing arms manufacturers, including improved information sharing and faster payments to small defence suppliers. The push comes amid rising European defence stocks and a broader rearmament trend in response to geopolitical tensions.
Employment law changes will prove a “growth killer”
John Hayes, managing partner at Constantine Law, warns that amendments to the Employment Rights Bill could severely harm the UK’s flexible labour market. He describes the changes as a “growth killer” rather than a growth maker, particularly highlighting the proposal to extend “guaranteed hours” to agency workers. This could lead to rigidity in a market known for its flexibility, raising questions about who will bear the costs of cancelled shifts and how pay will be managed across different periods. The Government claims these changes aim to enhance job security, but Hayes argues: “The promise to guarantee a fixed set of hours to agency workers is the most damaging and dangerous for the economy.”
Cyber security disclosures under scrutiny
The UK Government is enhancing cyber risk management across the economy, aiming to improve organisations’ cyber security. The Department for Science, Innovation and Technology (DSIT) commissioned Azets UK to investigate the quality of cyber disclosures in annual reports of large organisations. Stakeholders, particularly investors, demand greater transparency regarding digital security risk management, which is crucial for business continuity and competitiveness. “Better quality disclosures on how digital risk is governed would enable them to more accurately assess the opportunities and risks,” the report states. This research aligns with the government’s broader efforts to bolster the UK’s cyber defences and support the digital economy. The publication was timed to follow the non-financial reporting review led by the Department for Business and Trade (DBT) in collaboration with the Financial Reporting Council (FRC).
Germany lifts ‘debt brake’ to raise defence spending
European financial markets have experienced a significant rally following Germany’s announcement to relax its debt brake rule, allowing for increased defence spending. The yield on 30-year German government bonds surged by 16 basis points, reaching 3.07%, marking the largest increase since October 1998. The Dax 30 index rose nearly 4%, driven by industrial stocks, while defence companies like Rheinmetall saw shares jump by 5%. Holger Schmieding, chief economist at Berenberg Bank, described the plan as a “really big bazooka” with the potential to transform Germany’s economy.
The move came the day after EU chief Ursula von der Leyen presented a plan to mobilise €800m for Europe’s defence of Ukraine.
Emmanuel Macron said he was ready to discuss ways to extend France’s nuclear deterrence across Europe to counter Russia.
Meanwhile John Ratcliffe, the head of the CIA, said that America would stop intelligence-sharing with Ukraine
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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!