Business news 9 February 2022
James Salmon, Operations Director.
BoE’s failure to control inflation leaves Britain vulnerable. Living standard squeeze will drag on economy. Shrinking executive pay makes Britain less attractive to top talent. And more business news.
BoE’s failure to control inflation leaves Britain vulnerable
The Bank of England continues to come under fire for its slow reaction to inflationary pressures. On Monday, former Conservative Treasury minister Jim O’Neill told MPs that the Bank had acted too late on inflation. Now, Paul Mortimer-Lee of the National Institute of Economic and Social Research says BoE officials are behind the curve and have increased the risk that faster, more dangerous hikes will be needed. Britain is now at serious risk of a downturn, Mortimer-Lee continues: “It would only take one more negative shock – still higher inflation, for example, or a significant global confidence shock – to take us into recession territory.” He goes on to say that the increase in NICs should be abandoned amid the surge in living costs, as higher taxes, combined with higher energy bills, pose another risk. Mr Mortimer-Lee, who spent more than a decade working at the Bank, expects the economy to expand by 4.8% in 2022 and 1.3% in 2023, down from growth of 7.3% last year.
Living standard squeeze will drag on economy
Forecasts from the EY Item Club indicate that inflation will rise to over 7% this year and combined with higher energy costs and a greater tax burden will prompt a pullback in consumer spending and form a drag on the UK economy. The group downgraded 2022 growth to 4.9% from 5.6%. Elsewhere, Pantheon Macroeconomics expects inflation to hit 7.5% this spring.
Shrinking executive pay makes Britain less attractive to top talent
Ian King talks in the Times to business leaders about how the gap between pay for CEOs in Britain and Europe is narrowing, causing concern that talent could be tempted to leave the UK. One FTSE chairman says he has written to the chairman of the Financial Reporting Council, Sir Jan du Plessis, arguing that the drag on executive pay from “box-tickers” is the biggest challenge facing UK companies at the moment. King says the in-tray facing Sir Jan “was already bulging with priorities such as the need to improve audit quality and the governance of the accounting regulator itself. But maintaining the attractiveness of plc boardrooms to top talent is, some would say, just as critical.”
Small UK businesses count the cost of lingering Trump-era steel tariffs
Dozens of specialist SME manufacturers have been hit by US tariffs on steel. Trade body UK Steel estimates that exports to the US have fallen from 351,000 tonnes in 2017 to just over 190,000 in 2020.
Banks missing out on the ‘black pound’
The financial services industry is overlooking black, Asian, and multi-ethnic consumers, according to a “black pound” report from Backlight. Multi-ethnic consumers are more likely to plan for their financial futures than white people, while Asians in particular are putting more away in their pensions. However, just 54% of multi-ethnic consumers have a private pension, compared to 75% of white consumers. The report also noted that if financial services firms wanted to attract these customers, they should know that many would seek products that match their religious or cultural needs. “For the first time, this report shows the untapped economic power of the multi-ethnic consumer and allows businesses to understand an audience that has rarely been researched in depth,” the report’s authors said.
BP brushes off calls for windfall tax
BP on Tuesday posted annual profits of $12.8bn, powered by its strongest quarterly earnings since 2014. The results prompted renewed calls for a windfall tax on North Sea fossil fuel operators. Labour has proposed a £1.2bn windfall tax as part of a wider £6.6bn energy plan, where North Sea operators would face a 10% hike in corporation taxes over a 12-month window. Responding to the demands, CEO Bernard Looney said during an investor call: “The UK needs more gas, not less gas, right now and that’s going to require more investment, not less investment. A windfall isn’t probably going to incentivise more investment.”
GlaxoSmithKline
Brentford based Pharma giant GlaxoSmithKline reported a fall in annual profit, and forecast a further fall in growth for the current fiscal year on expectations for increased sales of its lower margin Covid-19 antibody Xevudy. For the year ended 31 December, pre-tax fell 22% to £5.44 billion year-on-year as revenue was flat at £34.11 billion
Barratt Developments
House Builder, Barratt Developments reported an uptick in first-half profit as rising home prices offset the impact of a fall in completions. For the six months ended 31 December, pre-tax profit rose 0.6% to £34.5 million while revenue fell 9.9% to £2.25 billion.
Smurfit Kappa
Paper packaging manufacturer Smurfit Kappa said its annual profit rose 22% amid buoyant demand for cardboard boxes that helped offset higher raw material and energy costs. Pre-tax profit for the year through December increased to €913 million, up from €748 million year-on-year, as revenue climbed 18% to €10.11 billion.
PZ Cussons
Toiletries manufacturer PZ Cussons booked a fall in adjusted first-half profit after an easing in demand for hygiene products contributed to a more than 9% slump in its sales. Net profit for the six months through November almost doubled to £27.9 million, up from £14.2 million year-on-year when the company posted losses on its discontinued Nutricima business in Nigeria.
John Menzies
Logistics company, John Menzies said it had rejected a takeover bid from a subsidiary of Agility Public Warehousing. The subsidiary, known as National Aviation Services Holding for Company’s Business Management (NAS), made a preliminary and unsolicited proposal of 510p per John Menzies share. Shares have jumped from 335p to 448p.
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 charge our members a fixed annual subscription irrespective of how high the debt value is!
It takes less than 17 minutes to see how you would benefit, do you have the time now?
No face-to-face meeting required – 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
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
The Credit Protection Association – Prompting Punctual Payments – Ethical, Effective, Efficient, Economical collections.