business news 6 October 2021

James Salmon, Operations Director.

Rising costs hamper business growth. Visa Tax suggested. PM: Bosses have used high immigration to avoid investment. Global deal on 15% corporation tax rate edges nearer and lots more business news.

Rising costs hamper business growth
The IHS Markit/CIPS composite purchasing managers’ index (PMI) rose slightly from 54.8 to 54.9 in September, the first expansion since May. Around 34% of firms reported an increase in output during the month, while only 13% signaled a reduction.

However, mounting costs forced businesses in both the service and manufacturing sectors to raise prices at the fastest pace since records began in 1999.

Tim Moore, economics director at IHS Markit, said: “Another spike in operating expenses was reported in September, even though this data is yet to fully reflect the inflationary impact of the UK fuel crisis and surging energy prices at the end of the month. Higher wages were also a key reason for increased cost burdens in September.”

Senior economic advisor to the EY ITEM Club Martin Beck said the “short-term acceleration” of inflation is “squeezing living standards” but “supply constraints should gradually ease.” He added: “The recovery is unlikely to be brought to a halt by supply-side pressures.”

Visa Tax

Next chief executive Lord Wolfson has said labour shortages should be solved by allowing companies to hire overseas workers and paying a “visa tax”. He told the BBC that staff were not available in the places needed and seasonal workers were difficult to recruit. Particularly he warned warned that warehouse and logistics staffing was under pressure.

Lord Wolfson suggested businesses could get visas for skills they “desperately need” and recommended that they should have to pay UK workers the same amount as overseas workers. To make this competitive, he argued businesses should have to pay a “visa tax on top – lets say 7% of wages”.

He added that this solution would “ensure people are not being brought into the UK to undercut UK workers because they will always be more expensive and it provides the skills Britain desperately needs to keep its industry moving”.

PM: Bosses have used high immigration to avoid investment
Boris Johnson will today use his Conservative party conference speech to accuse big business of using high immigration as “an excuse” not to invest in their company or staff. The claim is likely to further inflame tensions with business leaders who were left fuming yesterday after the Prime Minister denied the UK was in crisis and pushed the responsibility for solving supply chain problems back on the private sector.

Mr Johnson will say: “We are not going back to the same old broken model with low wages, low growth, low skills and low productivity, all of it enabled and assisted by uncontrolled immigration. The answer is to control immigration, to allow people of talent to come to this country but not to use immigration as an excuse for failure to invest in people, in skills and in the equipment or machinery they need to do their jobs.”

Global deal on 15% corporation tax rate edges nearer
As negotiations over new global tax rules continue, Ireland has signalled movement on a key issue regarding a minimum corporate tax rate of 15%. It is reported that text in the OECD agreement stating the rate should be “at least 15%” could be altered to show a 15% rate was the figure settled upon. Sources said the move paves the way for Ireland to abandon the 12.5% rate introduced almost 20 years ago and join 140 other OECD member states in backing a new global minimum. A second “pillar” of the reforms would enable nations to levy a slice of the profits generated by some of the world’s biggest firms based on the sales they make within each country’s borders.

Greens and Tory co-chair in Pandora news
As more information about the Pandora Papers drips out, Sir Philip and Lady Tina Green takes their turn in the spotlight with Tina reported to have bought nearly £40m worth of property in Mayfair and Belgravia at the time of the collapse of BHS. Lady Green’s identity as the buyer was hidden because they were purchased using offshore companies set up in the British Virgin Islands. The Guardian again leads with the leaks, this time splashing with news that Ben Elliot, the Conservative party’s co-chair, jointly owned a secret offshore film financing company with Ben Goldsmith, the brother of the Tory peer and minister Zac – that indirectly benefited from more than £120,000 of UK tax credits. The paper suggests that, while the arrangement does not appear to have breached any tax regulations or laws, it does raise questions about whether government film schemes should be helping to fund projects that are controlled in a tax haven.

UK target for firms fleeing German socialism
Experts predict that with a more left-leaning government likely to slide into power in Germany some businesses may decide to relocate to avoid the inevitable tax rises, with the UK a possible beneficiary. Dr Alim Baluch said if businesses were not focussed on the EU, but rather Asia or the US, then companies could well move to the UK with lower taxes, great infrastructure and an advanced 5G rollout all seen as attractions.

London IPOs reach new high
Funds raised on London’s main market and AIM reached record highs in the third quarter, new research by EY reveals. There were 14 IPOs raising £2.9bn on the main market and 19 IPOs raising £1.1bn on AIM. Funds raised by companies floating on the London stock exchange in the first nine months of the year totalled £13.4bn, exceeding the total IPO proceeds of £9.3bn generated in 2020. Scott McCubbin, EY UK IPO leader, said the London IPO market had “never been so strong” and was experiencing a “post-Brexit-Covid kick”. “The time is now,” McCubbin said. “We have a level of certainty and predictability when mapping the future growth of a company that I haven’t seen since before 2008.”

Business rates makes some stores unviable, Greggs warns
Bakery chain Greggs has warned that ending the business rates relief introduced at the start of the pandemic would make some of its stores unviable. CEO Roger Whiteside said: “The business rates system simply isn’t responsive enough to market conditions – it’s out of date. Once the business rates system is restored fully, then that will affect the viability of individual units. It will make some units not profitable when they really should be.” Mr Whiteside added: “Business rates are too high, that’s the bottom line. And hopefully this latest crisis will accelerate the Government’s appetite to do something about it.” The Treasury is expected to publish a much-delayed review of the system later this month.

Investors lose faith in Tory economic competence
Although sterling has recovered slightly from a protracted slump analysts expect further falls as goods and worker shortages continue to undermine investor faith in the Government’s ability to sufficiently manage the economy.

With concerns also swirling that the Bank of England may fail to contain inflationary pressures, traders warn that overseas investors could turn their back on the pound. Berenberg economist Kallum Pickering adds that a growing lack of public confidence in the Government’s ability to manage the economy and fix problems is illustrated by the ongoing panic buying.

Derek Halpenny, head of global markets research at MUFG, believes sterling could sink to lows last hit in November 2020. “For many investors, it’s the first time probably in their careers that they’re actually looking at a scenario like we’re in or entering: a real credible prospect of a period of stagflation,” he says.


Amazon is expanding its presence on the High Street by opening its first non-food store in the UK. The shop, in the Bluewater shopping mall near Dartford, will sell around 2,000 of its most popular and best-rated products. It’s called Amazon 4-star, because every item has been given more than four stars by customers.


Tesco reported a more than doubling of first-half profit and upgraded its annual guidance on the back of higher sales, lower covid costs and an improved performance at its banking unit. The company also announced that it would kick off an ‘ongoing’ share buyback programme, with a first tranche worth £500 million to be repurchased by no later than next October.

Topps Tiles

Topps Tiles upgraded its annual profit forecast on the back of higher sales pinned on a ‘buoyant home improvement market’ in the UK. Topps Tiles said it now expected its adjusted pre-tax profit for the 53 weeks to 2 October year through September to be ‘slightly above’ consensus forecasts.


Oil Prices rose for a fifth day on Wednesday to their highest since 2014 amid global concerns about energy supply on signs of tightness in crude, natural gas and coal markets.


Gold Prices fell on Wednesday, pressured by a firmer dollar and rising US Treasury yields, while investors focused on US non-farm payrolls data that would be crucial to the Federal Reserve’s schedule for tapering support.

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