Business news 8 September 2023
James Salmon, Operations Director.
Jobs market starts to cool. Firms expect price and wage growth to slow. One in 5 small firms reinvest profits to stay afloat. The Pound, Apple, house prices, energy, tourist tax, HMRC, London & more business news that we thought would interest our members.
Jobs market starts to cool
Britain’s jobs market is cooling, with hiring down and wage growth slowing, easing pressure on the Bank of England to push on with interest rate rises.
Research by KPMG and the Recruitment and Employment Confederation (REC) found that permanent placements have contracted at the quickest pace since June 2020, with the employment index down last month to 38.9 from 42.4. The number of temporary positions has fallen for the first time since July 2020.
Official data shows that unemployment is at a historic low of 4.2% and pay growth has reached a record high of 7.8%. The Bank thinks these factors will keep inflation elevated. KPMG and the REC say wages are still growing but the pace of expansion for permanent hires is down to its lowest level since March 2021.
Arm IPO
Arm told prospective investors that the UK chip designer expects revenue growth of 11% in its current fiscal year and an increase in the mid-20% range in fiscal 2025, boosted by chip demand for data centers and AI.
Firms expect price and wage growth to slow
A Bank of England survey of finance chiefs at over 2,000 SMEs shows that firms are expecting price and wage growth to ease over the coming months.
Over the next year, CFOs expect to raise prices by 4.4%, down from an expected 5.5% the month before. This is the lowest level of expected price increases since November 2021.
Wages are expected to grow 5% over the next year. CFOs, on average, believe inflation will fall to 4.8% in a year’s time, down from 5.4% in July.
One in 5 small firms reinvest profits to stay afloat
One in five small businesses have reinvested all their profits to stay afloat this year, as rising costs eat into margins. Plans to make businesses more sustainable have been put on hold, with going green becoming less of a priority.
However, almost half of small businesses believe that eco-conscious businesses are more successful. Looking ahead, 43% of small businesses feel in a better position to make their business more sustainable.
Some plan to finance eco-friendly changes by reducing spending in other areas or looking for new revenue streams. Others aim to reduce their carbon footprint, invest in smart technology, and adopt more environmentally friendly practices. Smart Energy GB, which commissioned the research, advises that reducing environmental impact can deliver cost savings.
The Pound
Sterling is under pronounced pressure in forex markets, trailing as yesterday’s worst performer. This wave of selloff initiated yesterday following BoE Governor Andrew Bailey’s comments to parliament, hinting that UK is “much nearer” to hitting the peak of interest rates. Further aggravating the downfall, a BoE survey rolled out today unveiled a stark decline in businesses’ on-year inflation expectations, thus spotlighting intensified speculation over the path of BoE’s tightening.
Gas Prices
Gas prices jumped more than 11% as markets worried that a strike by workers at Chevron in Australia could disrupt supply.
House prices fall £14k in a year
House prices fell 4.6% in the year to the end of August, according to data from Halifax. This marks the steepest fall in the annual rate in 14 years and has seen the average price fall by £14,000. The data shows that prices fell by 1.9% between July and August, taking the average to £279,560.
Kim Kinnaird, director of mortgages at Halifax, said of the decline: “We may now be seeing a greater impact from higher mortgage costs flowing through to house prices,” adding: “The market will continue to rebalance until it finds an equilibrium where buyers are comfortable with mortgage costs in a higher range than seen over the previous 15 years.”
UK risks missing out on £100bn investment in offshore energy projects
The UK risks missing out on as much as £100bn of investment in domestic offshore energy projects, unless the Government provides more certainty over the country’s tax regime and potential green subsidies. Trade association Offshore Energies UK (OEUK) has called for a stable and competitive tax environment and a faster process for planning and regulatory approval. In its latest economic report, OEUK forecast that up to £200bn could be spent in offshore energy this decade in a bid to bolster supply security and reach net zero. However, firms will struggle to reach final investment decisions for half of this projected funding as they become mired in red tape and navigate the country’s tax regime, the group said. Without changes, OEUK fears the UK will struggle to ramp up domestic energy generation.
MPs warn over impact of tourist tax
MPs have warned that Britain is missing out on a £1bn “Brexit boost” due to the removal of VAT-free shopping for international tourists. Speaking during a parliamentary debate on the so-called tourist tax, MP Geoffrey Clifton-Brown said the EU is currently enjoying a “Brexit bonus” at Britain’s expense as international visitors opt to visit France and Spain to enjoy tax-free shopping. He said Britain is “missing out on a £1bn Brexit boost.” Recent figures from tax refund company Global Blue show that 10% of UK spending by international visitors in 2019 has now been diverted to EU countries.
Ministers urged to improve HMRC service
A Telegraph editorial argues that deficiencies in the service provided by HMRC, as well as the excessive complexity of the tax system it oversees, are causing problems for confused taxpayers. Noting that the tax office is due to face further scrutiny from the House of Commons Public Accounts Committee, the piece says MPs should remind HMRC of its responsibilities. “A priority for the Government has to be improving the pitiful performance of public sector agencies such as HMRC,” it argues.
Offshore Wind
A government auction resulted in no new offshore wind projects being bought in a blow to the UK’s renewable power strategy. The auction resulted in no bids for new offshore wind farms, but there were deals for solar, tidal and onshore wind projects. Companies said the price set for electricity generated was too low to make offshore wind projects viable.
Apple
Apple shares continued their fall, dragging down other Tech companies as the news that China -apples biggest market outside the US – had banned the use of iPhones by employees at government-backed agencies and state companies. Shares in Apple fell more than 3% yesterday and its market cap has lost almost $200bnsince the news broke.
City of London unveils roadmap for post-Brexit boom
The City of London Corporation has published a roadmap to prosperity, co-authored by leading industry experts including Lloyd’s, JP Morgan, KPMG and Barclays, which could add £225bn to the UK economy.
The roadmap sets out five key objectives, including the creation of a new financial and professional services council, a change in culture across the pensions industry, and a new UK knowledge and support hub.
The proposals also call for a shift in strategy towards service-oriented trade deals and highlight the significance of UK financial and professional services to the economy.
Chris Hayward, policy chairman at City of London Corporation, emphasised the urgency of making these reforms to drive the country forward. He noted that the roadmap is not a wish list, but rather an industry-shaped vision for the future of the sector. He said: “In a time of mounting competition and economic headwinds, it’s time for a roadmap that future-proofs UK financial services and produces more investment, more jobs, new businesses and more funding for public services.”
Crypto firms given ‘breathing space’ on new rules
The Financial Conduct Authority has given crypto firms “breathing space” on new rules as it prepares for a clampdown on the marketing of digital assets. Firms will be subject to new rules relating to the promotion of crypto products as of October 8.
However, the City watchdog has confirmed that it will offer firms a grace period on some of the new regulations. Among rules that firms will have until the January 8 to implement will be a 24-hour cooling-off period in which customers will not be able to access crypto products. The FCA says it will consider giving crypto asset firms more time to implement certain changes, “in response to industry readiness.”
Susannah Streeter, head of money and markets at Hargreaves Lansdown, said the regulator “shot out of the traps, harnessed with new powers and raced ahead with new rules to give consumers extra protection in the crypto Wild West, but it’s now recognised some crypto firms will struggle with the deadline which is fast approaching.”
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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 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 offer our members a fixed annual subscription regardless of how high the debt value maybe!
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.