Business news 7 November 2023

James Salmon, Operations Director.

Steep falls in housebuilding drive contraction in UK construction. EV demand falters as manufacturers risk missing targets. Shoppers ease back on spending.  And more business news that we thought would interest our members.

Steep falls in housebuilding drive contraction in UK construction

UK construction activity contracted in October, although slightly less so than in September, according to the S&P Global/CIPS UK construction PMI. The ongoing downturn has been driven by a sharp contraction in housebuilding on the back of higher borrowing costs. CIPS chief economist John Glen said: “High interest rates and low consumer demand for new homes continue to drag down the UK construction sector, with a lack of new tender opportunities and a cutback of existing projects being reported across the housebuilding industry.”

EV demand falters as manufacturers risk missing targets

Car registrations across all fuel types grew 14.3% to a five-year high, but electric vehicle (EV) demand continues to wane. Only one in four new battery cars are purchased by private buyers, with large fleets driving the majority of sales. The Society of Motor Manufacturers and Traders (SMMT) has called on the Government to introduce incentives and facilitate infrastructure investment to boost EV uptake. The SMMT also warned that new rule of origin post-Brexit trade tariffs will push up the price of EVs. Richard Peberdy, head of automotive at KPMG, described the rule of origin tariffs as “another cloud closing in on the horizon,” adding: “Higher costs would threaten market competitiveness at a time when lower pricing is key to increasing EV adoption, whilst also being key to the UK meeting the 22% target set for 2024 by the ZEV mandate.”

Shoppers ease back on spending

Retail sales in the UK slowed down in October as consumers reduced their spending due to high interest rates and inflation. Figures compiled by the British Retail Consortium and KPMG show sales grew by 2.5% on an annual basis, the second slowest increase this year and below the rate of inflation. Paul Martin, UK head of retail at KPMG, said: “While consumers are operating in a lower inflationary environment compared with October last year, there is no doubt the past 12 months have taken a toll on their ability to spend. Coupled with a higher interest rate environment, dwindling Covid savings and the heating coming back on, consumers are thinking very carefully about how they spend their money.”

Businesses expect high taxes to stay

More businesses expect taxes to rise rather than fall after the next general election, according to research from BDO. The accountancy and business advisory firm surveyed more than 500 businesses and found that over three-quarters of them anticipate paying the same or higher taxes after the next general election. This is a shift from earlier this year when a similar BDO survey found that 61% of businesses believed the UK’s business tax environment would improve after a general election. Jonathan Hickman, tax partner at BDO, stated that there is a growing acceptance among businesses that high levels of business taxation may be here to stay and could even increase post-election. Survey respondents suggested that investment in HMRC service levels should be the Chancellor’s top priority, followed by calls for simplifying tax rules and cutting government spending. The most popular tax change businesses called for once economic conditions improve was new green tax breaks.

Number of licensed premises in Britain falls below 100,000

The number of pubs, bars, and other licensed premises in Britain has dropped below 100,000 for the first time on record, according to the Hospitality Market Monitor. Despite a cost of living crisis, closures are slowing down, with an average of three closures per day in the past three months, compared to 10 a day on average over the past year.

Unemployment, inflation and interest rates

The Bank of England has pushed back on rate cut hopes and suggested the UK unemployment rate might need to hit 6% from current levels of 4.3% in order to hit inflation targets. This is due to high levels of pay settlements that are having an inflation impact.

UK’s commercial property market on the edge

The Telegraph’s Ben Marlow considers the risks facing Britain’s commercial property sector as valuations drop. New green regulations, post-pandemic working patterns and rising interest rates have all contributed to a situation that could result in a steep correction in prices. Since the start of the year London office values have fallen 26% in the City and 14% in the West End and analysts believe prices have a lot further to fall. One lawyer says property companies and banks are hoping that if they don’t mark values down they will be able to ride out the correction, despite an ever widening gap between what investors believe assets are worth and what prospective buyers are willing to pay. MSCI calculates the disparity is somewhere between 20% and 35% in core office markets. Meanwhile, increasing numbers of property funds are limiting redemptions so they can gradually sell off assets and pensions specialists expect companies to bail on illiquid assets as they look to sell their pension schemes on to specialist buyout vehicles. “The selling pressure from pension buyouts is going to be a big problem,” one investment chief says. “There is just so much of this stuff sitting in pension funds that are about to become forced sellers. It could turn very ugly very quickly.”

Real estate investment businesses struggle

Insolvencies of real estate investment companies have increased 16% in the past 12 months, according to Mazars, with up to 738 businesses going under. The number of insolvencies among real estate landlords increased the most, rising by 35% from the previous year. Property developers saw a 4% increase in insolvencies, while estate agency businesses experienced an 11% increase. Rising interest rates have led to higher commercial mortgage repayments, making it difficult for some landlord companies to service their debts. The decline in office and retail property prices has also made it harder for landlords to sell property to repay their debts. Rebecca Dacre, partner at Mazars, said: “Landlords are in a difficult position, often carrying large amounts of secured debt which leave them with little room to negotiate, especially as the property market downturn impairs the value of the property. Insolvency can be inevitable and within the residential market, will sadly take more and more rental properties off the market and away from prospective tenants.”

Scores of British companies admit breaching sanctions on Russia

Some 127 companies voluntarily admitted breaching British sanctions against Russia as of mid-May, HM Treasury data provided to Pinsent Masons show, illustrating how the breadth of the sanctions has tested UK business. Companies hope to be treated with “leniency” over breaches if they disclose them voluntarily to the Office of Financial Sanctions Implementation or to HM Revenue & Customs, the law firm said. Stacy Keen, a partner at Pinsent Masons and a specialist in issues related to financial crime, explained: “The challenge of dealing with Russian sanctions dwarfs the complexity of Iranian or Syrian sanctions for UK businesses. Given how well-hidden the ultimate ownership of some Russian-linked businesses can be, it is surprisingly easy for a business to accidentally trade with a sanctioned individual if their due diligence is lacking.”

UK sets out proposals to bring stablecoins into real economy

The Bank of England and the Financial Conduct Authority have set out proposals to bring stablecoins into the real economy as a payment option for goods and services. Sarah Breeden, the Bank’s deputy governor for financial stability, said: “Stablecoins can enhance digital retail payments in the UK. With this comes the need to make sure there is robust and clear regulation in place. Our proposals aim to support safe innovation so that firms can understand the risks they need to manage and ensure that the public can be confident in all forms of digital money and payments.” Under the proposals, the FCA will oversee firms looking to issue new stablecoins while the Bank will regulate operators of “systemic payment systems” using stablecoins.

House Prices up!

UK House Prices increased in October, ending a six-month streak of declines, according to mortgage lender Halifax. The average house price increased 1.1% in October from September. Prices had fallen 0.3% in September from August. On an annual basis, prices were 3.2% lower, easing from September’s 4.5% decrease.

Net mortgage loans to see lowest two-year growth in a decade

EY is predicting that net mortgage loans will see the lowest two-year growth in a decade, with a 1.5% increase in 2023 and a 2% increase in 2024. The rising cost of borrowing is causing concern for lenders as the UK economy faces the possibility of a recession due to high interest rates set by the Bank of England. Data from the central bank shows a drop in both mortgage and consumer lending in September, attributed to the continued rise in interest rates. EY expects mortgage lending to improve in 2024 and 2025 if inflation falls, interest rates are cut, and housing becomes more affordable. However, the forecasted 2.8% growth for 2025 is still below the pre-pandemic average.


China reported a worse-than-expected drop in exports in October, while imports surprisingly rose for the month from a year ago. China’s customs agency said exports in US dollar terms fell by 6.4% in October from a year ago. That’s worse than the 3.3% drop predicted by a Reuters poll. Imports rose by 3% in US dollar terms in October from a year ago. That’s in contrast to the Reuters’ forecast for a 4.8% drop from a year ago.


Persimmon said it had seen a strong upturn in sales since October as it raised its expectations for the number of home sale completions it expects for the year. The housebuilder said in the past five weeks private sales rates have improved to 0.59, compared to 0.45 last year, showing a “strong pick up” since the start of October.


WeWork filed for bankruptcy in the states despite agreeing a  major debt restructuring earlier this year.

Latest Insolvencies

Appointment of Liquidators – NEONICKEL LIMITED
Petitions to wind up (Companies) – RAFLA MED LTD
Appointment of Liquidators – DBG C LIMITED
Appointment of Liquidators – POSITIVE DELTA CONSULTING LTD
Petitions to wind up (Companies) – WILLIAM HYNES LIMITED
Petitions to wind up (Companies) – IMITATE MODERN LIMITED
Appointment of Liquidators – HOLISTIC WELLBEING LIMITED
Appointment of Liquidators – MAVAL INVESTMENTS LIMITED
Appointment of Liquidators – BUE SHIPPING LIMITED
Appointment of Liquidators – GALLAGHERS’ PUB COMPANY LIMITED
Appointment of Liquidators – DEWHIRST LIMITED
Appointment of Liquidators – BEDFORD HOUSE LIMITED
Appointment of Liquidators – A14ACCESS LTD
Petitions to wind up (Companies) – QUANTIFYING NATURE LTD
Appointment of Liquidators – MSP CJ LIMITED
Appointment of Liquidators – DBG 2 LIMITED
Appointment of Liquidators – DNC TECHNOLOGIES LIMITED


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The Credit Protection Association – Prompting Punctual Payments – Ethical, Effective, Efficient, Economical collections.


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The Credit Protection Association – Prompting Punctual Payments – Ethical, Effective, Efficient, Economical collections.