Business news 7 July 2022
James Salmon, Operations Director.
UK political news continues to dominate. Consumer confidence plunges. The new Chancellor has promised “nothing is off the table”. FCA urges Brits to seek help if facing financial difficulties. And more.
UK political news continues to dominate with not much else going on. After a string of resignations from ministers in the last 24 hours, despite desperately trying to cling on to power, Boris Johnson is reportedly set to announce his resignation this morning as the latest in a long string of scandals looks to have finally caught up with him. The pound is already rallying.
Consumer confidence plunges
Consumer confidence in the economy has plunged to its lowest point since the start of the pandemic, according to research by Which? The consumer group found only 8% of consumers felt the UK economy would improve over the next 12 months. This compared with 78% who thought it would worsen, resulting in a net confidence of -70 compared to -47 in May. Confidence in future household finances also dropped to the same level as in March 2020 with six in ten people saying their household had been forced to either cut back on essentials or dip into savings, to cover spiralling costs in the past month. The survey from Which? was echoed by fresh data from PwC, which placed consumer sentiment lower than the start of the first lockdown but higher than amid the 2008 financial crisis. There were notable financial worries from “groups who until recently showed resilience and optimism, such as the professional classes,” Lisa Hooker, industry leader for consumer markets at PwC UK, said. “This demonstrates just how far-reaching the impact of the cost of living crisis is proving to be,” she said.
Nadhim Zahawi will be looking for easy wins
The new Chancellor has promised “nothing is off the table” when it comes to tax cuts after taking up his new role. Nadhim Zahawi, who replaced Rishi Sunak after he resigned abruptly on Tuesday, has triggered a flurry of speculation over what he could do to ease the tax burden, which is at its highest in 70 years. Chris Sanger, EY’s head of tax policy, says Sunak’s exit “could be a turning point” given he “held the line against tax reductions in the face of increasing inflation”. Zahawi told Times Radio on Wednesday morning that he could roll back the corporation tax rise planned for next April. “When boards invest, companies invest, they invest for the long term and they do compare corporation tax rates,” he said. “So I will look at everything.” Chris Etherington, of RSM UK, said: “The new Chancellor could bring the income tax cut forward, although he will need to find billions to do so if he wants to balance the books.” Nimesh Shah, of Blick Rothenberg, adds: “Boris Johnson and Nadhim Zahawi will want a headline grabber and accelerating the changes to income tax would give them that, as would increasing the cut from 1% to 2%. That would affect the biggest demographic of taxpayers and also play to the Red Wall electorate.” Mr Shah also said abolishing the NICs increase for anyone earning below £50,000 would really help appease those on middle and lower incomes.
Huw Pill signals willingness to step up rate rises
The Bank of England’s chief economist Huw Pill said on Wednesday that he would be willing to step up the pace of policy tightening if the conditions merited it. The BoE expects inflation to rise from its current rate of 9.1% to about 11% in the autumn, and Pill said the resulting hardship for those most exposed to rising living costs showed it was “essential we bring inflation back down to target”. His comments come after the Bank’s deputy governor Jon Cunliffe said the BoE would do “whatever is necessary” to contain inflation.
FCA urges Brits to seek help if facing financial difficulties
The Financial Conduct Authority (FCA) on Wednesday advised Brits to seek help as soon as possible if they are having financial trouble. Over two-fifths of Britons suffering financial hardship during the cost of living crisis did not respond when their lender tried to contact them about their difficulties, the FCA said. Research by the regulator found half of those borrowers in financial difficulty who waited more than a month before seeking help regretted not reaching out sooner. The FCA said consumers should contact their lender if they were struggling to make payments.
UK food exports to EU fell 19% in 15 months after Brexit
Analysis of HMRC data by Hazlewoods reveals that the value of food exports to the EU dropped by £2.4bn in the first 15 months after Brexit. Tightening custom requirements and long port delays mean many UK food producers are no longer able to send perishable goods to the EU. The increase in red tape and costs means it can be very difficult to make a profit exporting fresh produce. “For an industry where the UK can justifiably call itself a world leader, that is a real shame,” said Rebecca Copping, associate partner at Hazlewoods. By contrast, overall exports recovered in the first three months of this year despite being hit by Brexit red tape and a fall in demand due to the pandemic.
Volatility puts companies off London floats
Political and economic volatility discouraged London IPOs in the first half of this year with the amount of money raised falling by more than 90%, according to EY. During the six months, 26 companies made their London debut, against 47 in the same period in 2021 while the money raised by those new joiners before their listings collapsed to £595m – down 94% from £9.4bm in a busy first half of last year, EY said. “There is a perfect storm of geopolitical pressure,” said Scott McCubbin, EY’s UK&I IPO leader, “compounded by inflationary pressures … leading to associated interest rates rises.” He and his team expect London floats to stay flat throughout the rest of this year.
House Prices
UK House Prices rose in June in the largest increase of monthly growth since 2004, hitting an average of £294,845 after months of declining growth. Climbing ever-closer to the £300,000 mark, house prices jumped 1.8% in June, after climbing 1% in May, when the average cost of a home was £289,099, according to the Halifax House Price Index.
In related news Persimmon, one of the UK’s largest housebuilders, has cautioned that planning system delays, disruption in material supply chains and challenges in securing labour have weighed on completions. The housebuilder completed 6,652 homes in the six months to 30 June, down from 7,406 in the same period last year, according to its latest trading update.
Why should you become a CPA member!
The Credit Protection Association (CPA) has been assisting thousands of UK businesses to get paid since 1914. We have seen many financial crises, this one will be particularly deadly for suppliers for some time to come.
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.
Unlike other credit management companies, we charge our members a fixed annual subscription irrespective of how high the debt value is!
It takes less than 17 minutes to see how you would benefit, do you have the time now?
No face-to-face meeting required – 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 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
The Credit Protection Association – Prompting Punctual Payments – Ethical, Effective, Efficient, Economical collections.