Business news 8 August 2024
The UK jobs market, AI projects, pension reform, house prices, markets, insolvencies & more business news that we thought would interest our members.
James Salmon, Operations Director.
UK’s largest employers warn of cooling jobs market
The UK’s largest employers have warned of a cooling jobs market, with a slowdown in wage growth and a fall in vacancies. The Recruitment and Employment Confederation (REC) and KPMG reported a decrease in permanent staff placements in July, as well as a decline in wage growth. The number of vacancies also fell, indicating subdued demand for hiring. Kate Shoesmith, the REC’s deputy CEO, stated that employers are keeping pay in line with inflation and that the interest rate cut is welcome. The report suggests that more of the same will be needed to maintain confidence. “Businesses may be cautious to hit go on their full recruitment and investment strategies until they have heard more from the Chancellor in her Autumn Budget,” suggested Jon Holt, chief executive of KPMG.
Yet hiring is increasing
Recruiter Robert Walters Plc, says Britain’s employers have stepped up hiring for white-collar roles and permanent staff, pointing to upward pressure on wages that the Bank of England is worried may feed inflation. Vacancies for professional jobs in the private sector jumped to almost 37,000 in July, the most since March 2023, according to data from company websites and job boards. That’s up by a third from last month, when companies paused recruitment ahead of the 4th July election. It represents a 14% annual rise, the highest since the post-Covid rebound in 2022.
Economy fared better in 2022 than previously thought
Revised official figures show that the UK economy grew by 4.8% in 2022, surpassing expectations and performing better than the 4.3% previously thought. The growth was driven by the transport, professional, and business support services industries, although there were downgrades in the manufacturing and healthcare sectors. Despite facing double-digit inflation and political instability, the UK economy fared well during the year. The Office for National Statistics (ONS) stated that the revised data fully reflects the changes in the economy following the COVID-19 pandemic. Healthcare played a bigger role in the economy, while hospitality and accommodation businesses were heavily impacted.
Britain backs AI projects, after scrapping £1.3bn in funding
The UK Government has announced plans to support 98 artificial intelligence (AI) projects across the country with an injection of £32m. The funding will benefit over 200 businesses and research outfits, with projects ranging from improving safety on construction sites to reducing emissions across supply chains. Among the projects are Anteam, working with the NHS to improve prescription deliveries, V-Lab refining AI-driven construction training simulations, and Monumo advancing its 3D generative-AI tool for electric vehicle motors. Sue Daley, director of tech and innovation at techUK, said the fund will offer considerable return on investment for the UK economy. However, the announcement comes after the controversial shelving of £1.3bn in tech and AI funding, which has been criticised as “idiotic” and potentially leading to a tech brain drain to the US. superpower.
Markets
Yesterday, the FTSE 100 closed up 1.75% at 8166.88 and the Euro Stoxx 50 closed up 2.03% at 4668.08. Overnight in the US the S&P 500 fell 0.77% to 5199.50 and the NASDAQ fell 1.05% to 16195.80 after after a 5% drop in Nvidia and 4.5% drop in Tesla. and US bank J P Morgan raised the chances of a US recession this year to 35%.
This morning on currencies, the pound is currently worth $1.27 and €1.161. On Commodities, Oil (Brent) is at $78.1 & Gold is at $2394. With stock markets, the FTSE 100 is down 1.15% at 8072 and the Eurostoxx 50 is down 1.16% at 4614 as markets unwound yesterdays gains.
Chancellor mulls pension reform to drive UK investment
Rachel Reeves is considering plans to consolidate local government pension schemes and use their £360bn of resources to invest in the economy. The Chancellor is interested in following Canada’s example, where pension funds are used to invest heavily in infrastructure projects to drive growth. Following a meeting with a group of Canadian retirement funds in Toronto during a three-day trip to North America, Reeves said: “I want British schemes to learn lessons from the Canadian model and fire up the UK economy, deliver better returns for savers and unlock billions of pounds of investment.” Currently, local government pensions in England and Wales are fragmented into 86 individual funds. The Chancellor is expected to provide further details of her pension plans in her first Mansion House address.
Reeves warned against abandoning fiscal rectitude
The Chancellor is set to present her first budget on October 30. However, campaigners have warned that the UK’s national debt is “spinning out of control” and Rachel Reeves must not avoid making difficult decisions by increasing borrowing. The national debt currently stands at over £2.5trn and is rising by £382m per day. The TaxPayers’ Alliance (TPA) has criticised Reeves for potentially abandoning her commitment to fiscal rectitude and planning a £17bn borrowing bonanza. Interest payments on the national debt cost taxpayers £102.2bn in 2023-24 and the TPA has now released a live clock showcasing the increasing national debt. Reeves is rumoured to be considering changing the way the government counts debt in order to borrow an additional £17bn without breaking her self-imposed rules. However, economists have warned that additional borrowing could increase the debt interest bill and crowd out private sector investment.
UK house prices rise by 0.8% in July
The average UK house price increased by over £2,200 in July compared to June, following three months of little change, according to Halifax’s index. Property experts are optimistic about the housing market, citing the recent interest rate cut by the Bank of England as a potential boost. Amanda Bryden, head of mortgages at Halifax, stated that the average house price in the UK is now £291,268, with an annual growth rate of 2.3%. Affordability constraints and a lack of available properties continue to pose challenges for prospective homeowners. However, with lower mortgage rates and potential further rate reductions, house prices are expected to continue a modest upward trend. Separately, the Royal Institution of Chartered Surveyors said its monthly survey of estate agents pointed to “a meaningful pick-up in sales volumes going forward” in July.
Riots
High street businesses are sighing in relief this morning. The much anticipated far-right demonstrations failed to materialize last night. Instead, anti-racism protesters turned out in their thousands in a counter protest, often outnumbering the diminished groups of anti immigration protestors. Police had mobilised some 6,000 officers, after anti-immigrant protesters planned scores of rallies in towns and cities targeting hotels housing asylum-seekers and immigration lawyers’ offices.
Almost a quarter of Gen Z struggling with mental health
Almost a quarter of Gen Z, aged 18 to 24, are struggling with long-term mental health conditions, according to a survey by PwC. This accounts for 22% of the Gen Z age group, compared to an average of 8% across the entire population. The survey highlights the challenge facing the Government in getting young people back into work. The current number of economically inactive individuals is 9.4m, up from 8.4m before Covid. Long-term sickness, including mental health issues, is a major driver of this increase. PwC’s chief economist warns that the Government’s growth targets cannot be met unless the mental health crisis among Gen Z is addressed. The research also found that almost 50% of inactive youngsters would be more likely to return to work if employers offered more mental health support.
Trump
A second Donald Trump presidency poses a “serious issue” for Europe, said Eurogroup chief Paschal Donohoe. Europe needs to prepare itself to deal with potential changes to tariffs and trade by making its economy less dependent on the US.
“Donald Trump has outlined a very different agenda with regard to tariff levels and with regard to trade,” Donohoe said. “We need to continue to deepen our own economic autonomy, to deepen the performance of our economy and the strength of our economy here in Europe, so that we’re in a stronger position to deal with the kind of changes that may come out of America.”
HMRC targets senior professionals in latest crackdown
HMRC is targeting senior lawyers, accountants, architects, and their employers in its latest crackdown on the self-employed. The tax authority has adjusted its interpretation of Salaried Member Rules to determine whether senior partners at limited liability partnerships (LLPs) should be classified as employed or self-employed for tax purposes. This change could result in significant tax bills for affected individuals and their firms, said Guy Sterling of Moore Kingston Smith. The new guidance from HMRC may lead to an increase in formal enquiries and compliance activity in the coming months. Matthew Spencer at Lubbock Fine added: “These rules have been in existence for 10 years and firms have often used the capital requirement as a failsafe and adapted levels of capital as required. To now say that such adaptations falls under the anti-avoidance provisions seems like a bit of an over-reach from HMRC.”
Deliveroo
Deliveroo reported a maiden interim pre-tax profit of £1.3m compared to a loss of £82.9m with gross transaction value of £3.7bn up 6%. CEO Will Shu said he was encouraged ‘by the inflection we are seeing in consumer behaviour in many markets’.
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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 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.
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.
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 turning to more debt, CPA suggests that business owners tackle the problem at its source. If late payments are a strain on your cash flow, then talk to CPA about how we can help you reduce those late payments.
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. CPA’s overdue account recovery service is a polite, efficient service designed to encourage prompter payments while maintaining goodwill. We direct your customers to pay directly to you, not to us and want to support and reinstate your direct relationship with your customer, not take it over, destroying goodwill.
Unlike other credit management companies, our overdue account recovery service is available to our members on a fixed annual subscription so you can pass any overdue accounts to this service and it is included in your subscription!
Our Overdue account recovery service resolves over 80% of accounts referred to us although our collections department is there to escalate the collections process on the remaining few if you require it.
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
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!
The Credit Protection Association – Prompting Punctual Payments – Ethical, Effective, Efficient, Economical collections.