Business news 7 May 2025
Small firms reveal tariffs impact. UK and India agree trade deal. Services sector shrinks. Interest rates, trade, employment tribunals, car sales, markets, insolvencies & more business news that we thought would interest our members.
James Salmon, Operations Director.
Please note: on the 19/3/25 CPA moved after 45 years on King Street, to new offices a couple of miles down the road at Profile West, 950 Great West Road, Brentford, TW8 9ES.
Small firms reveal tariffs impact
Research from the Federation of Small Businesses (FSB) suggests that small businesses have already taken steps to reduce trading with the US amid uncertainty over tariffs. The analysis found that 38% of small exporters have seen demand among US clients drop, while more than one in ten have had to cut sales. It was also found that one in three small businesses would reduce trade activity if UK ministers responded with retaliatory tariffs. FSB policy chair Tina McKenzie said tariffs “raise costs, squeeze margins, and make our goods less competitive,” adding: “For small businesses already navigating tough climates, it’s one blow too many.”
UK and India agree trade deal
The UK and India have agreed a trade deal that will make it easier for UK firms to export products to India and cut taxes on India’s exports. While trade between the UK and India totalled £42.6bn in 2024, the Government says the deal will boost that trade by an additional £25.5bn a year by 2040. It is also expected to increase UK GDP by £4.8bn and wages by £2bn a year in the long term. The deal includes provisions on the services sector and procurement, allowing British firms to compete for more contracts. Prime Minister Sir Keir Starmer said the deal would boost the economy and “deliver for British people and business,” while Business Secretary Jonathan Reynolds said the benefits for UK businesses and consumers would be “massive.”
The UK has lowered taxes on goods imported from India such as clothing and footwear, food products including frozen prawns, jewellery and gems, and some cars. India has cut taxes on goods imported from the UK such as cosmetics, scotch whisky, gin and soft drinks, higher-value cars, food including lamb, salmon, chocolate and biscuits, medical devices, aerospace and electrical machinery. The deal will also allow British firms to compete for more services contracts in India.
Trade deal criticised over ‘two-tier’ tax system
The Government has agreed a trade deal with India that exempts temporary Indian workers from paying National Insurance in the UK for three years, making them cheaper to hire. Critics argue this creates a ‘two-tier tax’ system, especially after National Insurance contributions for British firms were raised last year. Conservative leader Kemi Badenoch said the agreement delivers “two-tier taxes,” arguing that it offers tax refunds for Indian workers that are not available to UK staff. Reform UK leader Nigel Farage also criticised the deal, saying that Labour has “betrayed working Britain.” Business Secretary Jonathan Reynolds defended the agreement, citing similar arrangements with other countries.
Services sector shrinks in April
The UK’s services sector shrank in April, marking the first contraction since October 2023. S&P Global’s UK services PMI came in at 49 in April, down from 52.5 in March on an index where a reading above 50 points to growth. Firms say confidence has been hit by new US tariffs which have made businesses more reluctant to invest. Tim Moore, economics director at S&P Global Market Intelligence, said “heightened business uncertainty weighed on order books during April,” adding that export conditions were “particularly weak, with new business from abroad falling to the greatest extent since February 2021.” He noted that business expectations for the year ahead “fell sharply,” with firms “braced for an extended period of global economic turbulence and heightened recession risks.” The research saw 22% of firms predict a decline in business activity over the next 12 months.
Bank of England expected to deliver rate cut
Experts expect the Bank of England to reduce interest rates this week, with Thomas Pugh from RSM UK saying it is a “sure bet” that the Bank’s Monetary Policy Committee (MPC) will cut rates to 4.25% and Sanjay Raja, chief UK economist at Deutsche Bank Research saying this “seems like a certainty.” Analysts also expect the MPC to cut rates further later in the year, predicting that the base rate could be at 3.75% by the start of 2026.
Employment Tribunal backlog hits 49,800 cases
A backlog at the Employment Tribunal has increased by almost 28% over the last year. HM Courts & Tribunals Service data obtained by law firm Littler shows that there were 49,800 cases waiting to be heard by a Tribunal at the end of Q4 2024, up from 39,000 a year earlier. Joe Beeston, partner at Forster’s, said: “Matters are taking an age to get in front of a judge,” and noted that there has been an increase in hearings being rescheduled at the last minute. He added that the situation “is only likely to be compounded” by the introduction of the Employment Rights Bill, which is expected to increase the volume of claims. With law firms seeking to expand their practices, data from Vacancysoft and recruitment consultant EJ Legal shows that employment law vacancies were up by nearly 34% in 2024.
Scrapping transaction taxes could ‘reboot’ economic activity
While the Institute for Fiscal Studies has suggested that the Chancellor could increase income tax to boost Treasury finances, the Telegraph’s Brian Monteith says this “would only make delivering economic growth even harder to achieve.” He says ministers should instead “consider radical action to cut taxes so that economic activity is rebooted.” Mr Monteith says higher taxes on employers’ National Insurance contributions “are leading to businesses closing or cutting back,” while higher stamp duty on property, capital gains tax and stamp duty on shares mean people “hold on to their assets and choose not to move house.” He suggests that abolishing – or significantly cutting – transaction taxes will see a “sudden release of economic activity” that will deliver an increase in VAT, income tax and National Insurance receipts.
Markets
Yesterday, the FTSE 100 closed up 0.01% at 8597.42 and the Euro Stoxx 50 closed down 0.37% at 5263.38. Overnight in the US the S&P 500 fell 0.77% to 5606.91 and the NASDAQ fell 0.87% to 17689.66.
This morning on currencies, the pound is currently worth $1.3325 and €1.174. On Commodities, Oil (Brent) is at $62.7 & Gold is at $3380. On the stock markets, the FTSE 100 is currently down 0.3% at 8571 and the Eurostoxx 50 is down 0.3% at 5248.
The US has said trade talks will start with China this weekend in Geneva. Scott Bessent will meet with the vice premier He Lifeng.
The UK and US are said to be in intensive trade talks and may even announce something later this week with quotas for steel and cars. However, yesterday, Trump set out a non negotiating stance to negotiations saying “We’re going to put very fair numbers down, and we’re going to say, here’s — what this country, what we want. And congratulations, we have a deal. And they’ll either say ‘great,’ and they’ll start shopping, or they’ll say, ‘not good,’ “It’s going to be a very fair number, it’ll be a low number. We’re not looking to hurt countries,” he added.
Meanwhile in a move likely to frustrate Trump, Jerome Powell and the US Fed are expected to leave interest rates unchanged later today.
The impact of obesity drugs like Wegovy hit WeightWatchers who filed for bankruptcy.
Private capital investment surges
The volume of private equity and venture capital investment flowing into UK businesses was up 44% in 2024, according to analysis by the British Private Equity and Venture Capital Association (BVCA). Private capital firms invested £29.4bn into UK businesses last year, compared to £20.4bn in 2023. The data shows that more than nine in ten of the businesses which received private capital investment in 2024 were SMEs. The report also shows that 2.5m jobs are supported by private capital, up from 2.2m in 2023. BVCA chief executive Michael Moore said it is “important that the Government ensures that the UK remains an internationally attractive destination for private capital investment at a time of increasing geopolitical uncertainty.”
New car sales down 10.4%
New car sales fell by 10.4% in April, with figures from the Society of Motor Manufacturers and Traders showing that 120,331 new cars were registered. This means 13,943 fewer cars were registered in April 2025 compared with the year before. Demand for new cars was hit by the introduction of higher Vehicle Excise Duty rates, which came into effect on April 1.
Tesla
Demonstrating the backlash against Musk’s foray into politics, Tesla’s sales in Germany and Britain fell by 46% and 62% respectively in April, compared with a year ago, to their lowest levels in over two years. Volkswagen and BYD however have seen strong sales gains in Britain.
Wind blows cold
Orsted A/S canceled its planned huge offshore wind farm in the UK, in a significant blow to the nation’s net zero plans. It is yet another setback for the offshore wind sector that’s struggled to cope with spiraling costs The Hornsea 4 project, with a capacity of 2,400 megawatts, would have been one of the world’s biggest offshore wind farms and a critical part of the Britain’s plans for a clean power grid.
Defense
The UK is reportedly pressing the EU to more clearly back British participation in a €150 billion defense fund after the first draft of a proposed security pact was largely silent on the demand. Prime Minister Keir Starmer’s government is said to wants firmer language on defense industrial cooperation and joint efforts to counter illegal migration.
Construction
The UK construction PMI’s rose from 46.4 to 46.6.
Power firms underspending on boosting networks
Data from Ofgem shows that electricity network companies are spending less than planned on refurbishing and replacing their networks. Regional power distribution companies underspent their budget for “non-load related” capital expenditure — investment to maintain existing assets — by £290m in 2023/24, while national power transmission companies underspent their non-load budgets for grid replacement and refurbishment by £508m over the 2021 to 2024 period. Ofgem says distribution network operators had been delayed in their investment plans by “external market conditions, supply chain disruptions, and labour market constraints.”
Latest Insolvencies
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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!
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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!