Business news 8 July 2022
James Salmon, Operations Director.
PM resigns. UK businesses urge swift action to restore confidence. Debt among over-55s set to rise to over £400bn in a decade. Retail sales slow further. UK public finances on ‘unsustainable path’. And more business news.
PM resigns
Boris Johnson said it is “painful not to be able to see through so many projects and ideas” as he announced his resignation as Tory leader. The PM was met with cheers from staff as he made his resignation speech outside No 10. He said he had tried to persuade colleagues it would be “eccentric” to change leader and blamed the “herd instinct” in Westminster for his exit. He added he intended to stay in office until his successor is chosen. While Johnson plans to hold on to the role until the October party conference, the Tory party are said to be preparing an accelerated leadership contest. Meanwhile, the defeated lame-duck PM told his senior ministers that any “major fiscal decisions” should be left to his successor.
UK businesses urge swift action to restore confidence
Business leaders have called for a successor to Boris Johnson to be appointed with minimal delay arguing that a political vacuum would bring instability. Richard Burge, chief executive of the London Chamber of Commerce and Industry said Boris Johnson continuing as interim PM would be damaging “to our international trading reputation, and to London as the world’s greatest city.” Tony Danker, director general of the CBI business lobby group, said the number one focus for all politicians had to be getting the economy growing again, while Kitty Ussher, chief economist at the Institute of Directors, said that Government’s priority “must be to give businesses the confidence to invest”. Craig Beaumont, external affairs chief at the Federation of Small Businesses, told the FT: “We have had no solutions to the problems facing businesses and now the worry is there will be a further delay.” Finally, Lord Rose, the chair of Asda and former boss of Marks & Spencer, said: “This has been too long in happening and it is unsustainable to continue with a hamstrung, lame duck prime minister into the autumn.”
Debt among over-55s set to rise to over £400bn in a decade
Joint research carried out by More2Life and the Centre for Economics and Business Research reveals that over-55s in the UK are expected to borrow £22bn more in 2022 than last year. The research, based on data from the Bank of England NMG’s survey and the Wealth and Assets survey, predicted that the total amount of debt owed by the over-55s would rise to £294bn this year, up from £272bn in 2021 and £209bn in 2017. This would amount to a 41% increase in five years and is expected to rise to £402bn by 2032, a surge of 92% in just 15 years.
Retail sales slow further
Retail sales have grown at their lowest rate since February last year, according to BDO’s high street sales tracker. Total like-for-like sales increased by 8.4% last month compared with a year ago, with an 8.8% drop in homeware sales suggesting that consumers were postponing big purchases. Sophie Michael, head of retail and wholesale at BDO, said: “These results confirm that the outlook for retailers is of concern. With consumer confidence at historically low levels, real wages falling to a 20-year low and interest rates set to rise further, there are few signs of encouragement for retailers.”
UK public finances on ‘unsustainable path’, says OBR
The Government’s independent forecaster has warned that the UK’s public finances are “on an unsustainable path” unless spending is tightened and taxes are raised. The Office for Budget Responsibility (OBR) said soaring energy prices and pressures from an ageing population risked tipping the UK into a recession. In its projections, the watchdog showed public debt rising persistently above 100% of GDP by the middle of the century and climbing further after that to reach twice the level of GDP by the mid-2060s. The OBR said bringing debt back to pre-pandemic levels, around 75% of GDP, would require finding an extra £37bn every decade for the next 50 years, raised either through tax increases or spending cuts.
Firms struggle to find suitable staff
A survey of 400 recruitment consultancies by the Recruitment and Employment Confederation and KPMG found the availability of workers to fill vacancies has deteriorated as shortages of suitable staff continue. Neil Carberry, chief executive of the confederation, said: “The labour market is still strong, with demand for new staff high.” He added, though, that the survey showed “we are likely to be past the peak of the post-pandemic hiring spree”. Claire Warnes, of KPMG, said: “The apparent buoyancy of the jobs market overall continues to mask some increasingly concerning trends. The fluctuations in demand for permanent and temporary workers in some sectors may be showing a sustained downward trend as…economic pressures are impacting employers’ confidence to grow.”
The ‘slow work’ movement advocates working less
In a piece on so-called “slow working”, Izzie Jani-Friend in the Metro points to new research conducted by PwC which reveals almost a fifth of UK workers are looking to leave their current job within the next 12 months, partly due to their desire to achieve greater job satisfaction. Separate research found that employee discussions of burnout have increased by 48% on the recruitment site Glassdoor. The slow working mindset involves taking lots of breaks, refusing to “hustle” to the point of exhaustion and saying no to colleagues asking you to do additional work. Jani-Friend explains that “slow living involves being in the present moment. It encourages us to take a moment, slow down our pace of life, and lean into a more peaceful lifestyle.”
UK company pay expectations rise in June
A Bank of England survey published on Thursday showed two-thirds of employers were finding it “much harder” than normal to hire new staff, with average wage growth expected to remain above 5% over the next 12 months. Expectations for pay growth in the coming 12 months increased to 5.1% from 4.8% in May while expectations for employment over the next year fell to their lowest level since February 2021.
Legal & General
Legal & General said it is performing in line with expectations with ‘minimal’ exposure to inflationary pressures. Citing a ‘good start’ to 2022, ‘our year-to-date operating performance is in line with expectations, with cash and capital generation running slightly ahead of our five-year ambition and return on equity at about 20%,’ said CEO Nigel Wilson.
HMRC victory in Alan Parry tax case raises uncertainty for freelance workers
Contracts between freelance workers and their employers will come under renewed scrutiny by HM Revenue & Customs after Sky Sports commentator Alan Parry lost an appeal against a £356,000 tax bill. Parry was contesting that the contracts his limited company, Alan Parry Productions Limited, held with BSkyB between tax years 2013/14 to 2018/19 reflected an employment relationship, rather than self-employment. Seb Maley, the chief executive of insurer Qdos, said the decision highlights the importance of IR35 compliance. “The sums alone in this case highlight the staggering cost of getting IR35 wrong . . . Alan Parry is the latest in a long line of high-profile presenters caught up in IR35 cases with huge tax liabilities.” He added: “Whichever way you look at it, the £356,000 tax bill handed to Parry is a firm reminder of the importance of IR35 compliance – something that contractors and businesses must prioritise.”
House prices defy slump fears with 13% rise
House prices in Britain rose for the twelfth month in a row in June, defying expectations of a slowdown, according to figures from the Halifax. The pace of house price growth accelerated from 10.7% in May to 13% in June, meaning the average price of a property is now £294,845, Prices have risen by 6.8%, or £18,849, so far this year. “Property prices so far appear to have been largely insulated from the cost of living squeeze,” Russell Galley, managing director at Halifax, said. “This is partly because, right now, the rise in the cost of living is being felt most by people on lower incomes, who are typically less active in buying and selling houses.” In England, the South West recorded the largest increase in prices at 14.2%, where a typical home now costs £308,128. Prices of detached homes have risen almost twice as fast as the price of flats in a shift in demand towards bigger properties, jumping 13.9% and 7.6%, respectively, according to Halifax.
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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.
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The Credit Protection Association – Prompting Punctual Payments – Ethical, Effective, Efficient, Economical collections.