Business news 8 March 2023

James Salmon, Operations Director.

UK facing biggest risk of mortgage arrears in developed world . House prices hold up . Powell: Fed is prepared to return to bigger interest rate rises . “Dr Doom” predicts massive financial crisis.  And more business news.

Fitch: UK facing biggest risk of mortgage arrears in developed world
UK banks are more exposed to the housing market than in any major developed country, according to Fitch Ratings, who predict the share of homeowners missing more than three months of mortgage payments will double in 2023 to 1.5% as high rates hit borrowers. Based on the current number of residential mortgages in the UK, this means 135,000 households will be in arrears. Fitch has forecast that the Bank of England will raise the Bank Rate to a peak of 4.75% in May this year. Jessica Hinds, director of economics at Fitch, explains: “[The UK] have seen much bigger increases in mortgage rates, the Bank of England started tightening much earlier, and we have shorter mortgage terms than in other countries.”

House prices hold up
The latest report on UK house prices from the Halifax has calmed fears of a steep plunge in values, showing annual growth of 2.1% in February compared with the same month last year. Prices rose 1.1% between January and February, an improvement on the prediction of about 0.3% economists had made. “Recent reductions in mortgage rates, improving consumer confidence, and a continuing resilience in the labour market are arguably helping to stabilise prices following the falls seen in November and December,” Kim Kinnaird, director of Halifax Mortgages, said.

Powell: Fed is prepared to return to bigger interest rate rises
Jerome Powell, chairman of the US Federal Reserve, said on Tuesday that a stronger US economy meant it may be forced to raise interest rates higher than expected. The Fed chair’s remarks prompted a stock market sell-off, with the S&P 500 closing 1.5% lower in New York while the Nasdaq fell 1.25%. Traders revised their bets on future rate rises, pricing in a rate hike of 0.5 percentage points in March, up 0.25 percentage points earlier in the day. The two-year Treasury yield rose to its highest level since 2007, at 5%. Sterling dropped by as much as 1.5% against the dollar to below $1.19.

“Dr Doom” predicts massive financial crisis
Nobel Prize winning economist Professor Nouriel Roubini has warned that even if the US Federal Reserve lifted interest rates to 5.5% it would not be enough to get inflation under control. The Fed would have to go well above 6%, he said, causing a hard landing and significant distress in equity, bond and credit markets. “We’re facing the perfect storm: inflation, stagflation, recession, and a potential debt crisis,” Roubini told Australia’s ABC. However, Nouriel is known as “Dr Doom” for his grim view on where the world is heading.

Hiring falls again

UK hirings of permanent staff fell for the fifth consecutive month in February as economic worries impacted on recruitment, according to the report from consultancy KMPG and the Recruitment & Employment Confederation. New appointments fell at a slightly faster pace than in January, pointing to an easing of  tightness in the labour market.

RMT

The RMT have suspended industrial action after receiving an improved offer from Network rail.

Heathrow

With passenger numbers rising, Heathrow Airport has been told by the Civil Aviation Authority to cut the passenger fees it charges airlines next year, which should reduce ticket prices. The average charge per passenger at Heathrow for 2023 is £31.57 but they have been told this must fall to £25.43 in 2024 and “remain broadly flat” until the 2027.

Energy

National Grid Plc had to call on a reserve coal-fired station for the first time after the country’s power market failed to provide enough electricity during the worst supply crunch this season.

Greggs

Greggs reported a solid increase in revenue and a slight uptick in profit, as it boasted a record number of shop openings in the year and like-for-like sales ahead of pre-pandemic levels. The bakery chain posted a pretax profit of £148.3 million in 2022, up 1.9% from £145.6 million the previous year, while revenue rose 23% to £1.51 billion from £1.23 billion.

Foxtons

Foxtons said annual pretax profit doubled in 2022 to £11.9 million from £5.6 million a year ago, as revenue climbed 11% to £140.3 million from £126.5 million. The estate agency declared a final dividend of 0.7 pence per share for 2022, sharply up from 0.27p for 2021

Tory MPs give Hunt tax demands
The fifty-member strong Conservative Growth Group has delivered a dossier of tax demands to Chancellor Jeremy Hunt ahead of his Spring Budget. The Tory MPs, backers of former PM Liz Truss and her tax cutting policies, call for changes to pension allowances for doctors, for the threshold at which small businesses must pay VAT to be raised and for changes to the IR35 rules, which they believe are strangling entrepreneurship. Meanwhile, former House of Commons leader Jacob Rees-Mogg has claimed that there is a “good chance that corporation tax won’t rise in the Budget”. He told GB News: “I think that may be the rabbit out of the hat.”

City groups praise ‘world leading’ transition plans
UK Finance has welcomed proposals to make a standardised framework for assessing climate transition plans, arguing that they could propel the UK to becoming a world-leader in environmental regulation. The Transition Plan Taskforce (TPT) – launched by the Treasury last April – is working on a disclosure framework that would minimise international differences, which it is expected to publish in the summer or autumn of 2023. TheCityUK also said it endorses the aim to “maximise international alignment” when developing the TPT disclosure framework. Emma Reynolds, managing director at the body, said stakeholders will need to “work together to maximise the impact of its work.”

Closure of HMRC unit puts £5bn of taxpayers’ money at risk, warn MPs
HMRC’s decision to shut down its Taxpayer Protection Taskforce, which targeted fraudulent and faulty COVID-19 support schemes claims, could lead to £5.1bn of taxpayers’ money being written off, a report by MPs claims. MPs on the parliamentary Public Accounts Committee (PAC) said while the Treasury and HMRC moved quickly to put the schemes providing “essential” support for businesses and individuals in place, they were too slow to better target support to those in genuine need, and tackle error and fraud.

French firm wins HMRC post-Brexit border contract
Post-Brexit border checks will be carried out by a French company after Wincanton, the British logistics group, failed in its bid for the work. The news sent the company’s shares down by a quarter on Tuesday. The outsourcer Sodexo has been selected instead to run Inland Border Facilities by HM Revenue & Customs. The decision to turn to Sodexo is likely to anger proponents of domestic procurement, the Telegraph’s Oliver Gill suggests, reminding readers of the decision in 2018 to award the post-Brexit contract to make UK passports to the Franco-Dutch company Gemalto instead of London-listed De La Rue, which subsequently suffered a heavy blow to its share price from which it has never recovered.

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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.

Get compensated for previous late payments

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