Business news 9 March 2023
James Salmon, Operations Director.
FSB calls for late payment action. Economy to avoid recession but remain sluggish. Net Zero miss. Data Protection to be relaxed. Interest rate expectations. Labour market slows. And more business news.
FSB calls for late payment action
The Federation of Small Businesses is calling for legislation setting out a maximum allowable time for payments to be made to suppliers, if other measures do not result in an improvement.
Ministers had “lost the momentum and enthusiasm to make a difference” on the issue, the FSB said in a report, adding that more than half of small companies experienced late payment problems last year.
Tina McKenzie, the federation’s policy chairwoman, said: “We need to reinvigorate this agenda and push for growth and productivity. The best way to do this is to sort out the UK’s poor payment culture… Big businesses shouldn’t be using small firms as a bank. It’s time for them, too, to step up and take responsibility for poor payment practices.”
Economy to avoid recession but remain sluggish
The British Chambers of Commerce has said the UK will avoid a recession this year, but will continue to show sluggish growth and the economy won’t recover to pre-pandemic levels until the final quarter of 2024. The BCC upgraded its outlook after better than expected consumer spending and business investment figures.
Net Zero miss
The UK is set to miss its goal for a net zero emissions energy as it struggles to compete with the US and EU to attract investors. We are on track to “fall well short” of the government’s target for a clean power mix by 2035, said Chris Stark, CEO of the Committee on Climate Change. Outdated policy and cumbersome planning are delaying the infrastructure needed to electrify the country’s energy quickly.
Data Protection to be relaxed
The Government unveiled plans to relax some data protection requirements that came in under the European Union’s General Data Protection Regulation (GDPR). In an effort to cut costs and burdens on UK businesses will cut some of the red tape, create jobs and boost the economy said cabinet minister Michelle Donelan in a press release.
New legislation would make it easier for companies in the UK to mine user data for research and development. It would get rid of the need for companies to hire a dedicated data protection officer (DPO) and provide more clarity on when companies can process personal data without consent. The legislation also plans to reduce cookie pop-ups and create fines for nuisance marketing calls.
However any business still trading with the EU would need to continue to operate within GDPR.
Markets expect rates to hit 4.25% this month
Markets are pricing in a 0.25% rise in UK interest rates – taking the level from its 15-year-high of 4% to 4.25% – following remarks by US Fed chair Jerome Powell that the US central bank will need to tighten policy harder to bring inflation under control. Expectations of another Bank of England rate rise come after Monetary Policy Committee member Catherine Mann said rates could need to go higher, warning that the relative weakness of the pound could cause more inflationary problems. But Swati Dhingra, another MPC member, warned against over-tightening when there are growing signs external price pressures are easing. BoE governor Andrew Bailey will make an announcement on rates on the 23rd of March.
The bond market had been pricing in developed markets to start cutting rates across the glove within a year but now they are pricing in sharper rises and an increased risk of recession as central banks try to grapple with stubborn inflation.
Mortgage repayments for first-time buyers surge by two thirds
Soaring interest rates and a rise in house prices drove up the cost of a typical first-time buyer’s mortgage repayments by almost two thirds last year, according to the Office for National Statistics. In the 12 months to December 2022, the typical monthly bill rose by £481 to £1,262, an increase of 61%. The calculations were based on an average £286,000 semi-detached home and a 75% mortgage with a 25-year term. The findings will add to concerns that Britain’s property crisis is becoming worse as first-time buyers find it ever harder to get on the ladder.
UK labour market, and pay growth, slow in February
Figures from the Recruitment and Employment Confederation and KPMG show Britain’s labour market cooled in February and pay growth slowed. The REC/KPMG monthly permanent placements index fell to 46.3 last month, down from 46.8 in January with employers more likely to use temporary workers to fill roles. Clare Warnes, partner for skills and productivity at KPMG UK, said the economic outlook was impacting hiring activity. “Employers keep playing the short game by focusing on temporary hires,” Warnes said.
Retirees may find return to work tricky
Bank of England policymaker Catherine Mann has warned that those over-50s who left the workforce early and find themselves short of savings may run into difficulties when they try and return to work, due to Britain’s low-growth economy. Mann told Bloomberg TV the slow pace of growth in the UK was “striking” and pointed to Brexit as a factor on the supply side and on pricing power. To make matters worse, a further weakening of the pound would increase the cost of importing goods and energy, feeding into further inflation.
‘Golden hellos’ under scrutiny as employment market cools
Recruiters say competition for talent is easing in the face of economic constraints, however, high demand for expertise in certain areas, such as technology and sustainability consultancy remains.
Britain plans looser foreign worker rules to plug labour gap
Rishi Sunak’s government is planning to allow more overseas workers to come to the UK to tackle chronic shortages, starting with looser rules for the construction sector.
Chancellor set to unveil Budget tax breaks for business investment
Jeremy Hunt is looking to mitigate the step rise in corporation tax next month by giving UK companies tax relief on capital investment in his Spring Budget. The Chancellor has consulted on a range of reforms to replace the “super-deduction” scheme for capital investment, included “full expensing”, which would allow all qualifying capital expenditure to be written off by companies against their taxable profits. But with this estimated to cost £11bn a year, businesses are expecting more modest relief.
Criminals are using chatbots to craft more sophisticated frauds
The cybersecurity company Darktrace has warned that OpenAI’s ChatGPT will be abused by criminals to conduct fraud with gangs already using chatbot technology to make scam emails more complex giving them a better chance of gaining their target’s trust. Fears about more sophisticated fraud sent Darktrace sales up 36% to £219.3m over the second half of 2022, despite being accusing by a hedge fund of accounting fraud in February. Accountants from EY have been brought in separately from Darktrace’s regular auditors Grant Thornton to verify its financial statements. Cathy Graham, Darktrace’s chief financial officer, said: “We’re not afraid of transparency. So we are allowing EY to do their job, we are not restricting them as to what they can look at or test. And we will allow them to do that until they believe they can come to a conclusion.”
Chip wars
The Netherlands – home to market leader ASML in chip making machines – is set to restrict their export under pressure from the US to block China’s effort to move into the Chip making market.
VC investment into women-led tech firms rises
Female-led UK’s tech firms raised £3.6bn from venture capital firms last year, up from £2.9bn the previous year, according to data from Dealroom analysed for the Department for Science, Innovation and Technology. This comes despite VC firms reining in their investments last year with funding of UK businesses falling by almost a quarter last year, according to KPMG. Overall, fintech firms raised $12.5bn last year, down 8% on 2021 levels, figures from Innovate Finance show.
Finance chiefs to get their own AI chatbot
Brex, a six-year-old startup that makes software for finance professionals, is using OpenAI’s GPT language generation system – the same artificial intelligence tool behind the popular ChatGPT chatbot – for a service that can answer questions about corporate budgets, policy and spending. In addition to helping finance chiefs and other executives, the technology will enable employees get answers to questions like, “Am I going to go over budget? How can I buy this? And have we already bought something like this before?” said Brex CEO Henrique Dubugras. The chatbot will be able to tell workers if their spending violates any policies and whether an exception may be approved. “There’s like 200 different questions that finance teams have to answer to employees,” he said. “The bot will let those people spend less time answering questions and focus more on their job.”
Citi warns clients about risks of Russia ‘weaponising’ metals
Citigroup has warned of a threat to commodity markets from a potential weaponisation of metals exports by Russia, leading to global supply chains disruption and problems for manufacturers and automakers.
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!
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
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.