Business news 9 October 2024
Tax burden concerns hit business confidence. Fiscal rule change could unlock £57bn at Budget. Graduates shun full-time office jobs. Snooping bosses increase stress and hit productivity. Pensions, tax, markets, insolvencies & more business news that we thought would interest our members.
James Salmon, Operations Director.
Tax burden concerns hit business confidence
The latest business confidence monitor from the ICAEW shows that optimism has fallen amid concern over taxation, dropping to 14.4 in the third quarter from 16.7 previously. The survey, which included responses from 1,000 professional advisers, indicated that 29% of participants expressed concerns about the “tax burden.” Alan Vallance, the institute’s chief executive, said: “The findings show that businesses are troubled by the tax burden and increasingly reluctant to invest.” The survey also noted a slowdown in salary growth to 3.6%, the lowest in over two years, while domestic sales growth increased to 3.8%. Suren Thiru, the ICAEW’s economics director, commented: “While our survey indicates that the economy will expand in the third quarter, the pace of growth is likely to be slower compared to recent quarters.”
Fiscal rule change could unlock £57bn at Budget
With Chancellor Rachel Reeves reportedly considering a change to the UK’s fiscal rules at the Budget, experts say doing so could unlock an extra £57bn. Labour had pledged to follow two rules: that costs in the Budget are met by revenues such as tax and that debt must be falling as a share of the economy by the fifth year of the economic forecast. With it suggested that Ms Reeves may now be looking to alter Labour’s fiscal rules to help tackle a £22bn gap in public finances, the Institute for Public Policy Research has urged her to adopt a “public sector net worth” target at the Budget. This would be a measure of the total value of what the government owns, minus what it owes. The change would mean the Government aiming to increase public sector net worth in year five, rather than reduce debt.
Gilt yields rise ahead of Budget
The Government’s borrowing costs have been climbing steadily in recent weeks, with financial markets preparing for the Budget. The yield on the benchmark 10-year Gilt, which reflects the cost of borrowing, has increased from just over 3.75% in mid-September to around 4.2% now. Analysts suggest that the increase is largely a result of concerns that the Chancellor will ramp up borrowing to fund a major investment programme. Neil Wilson, chief markets analyst at Finalto, said the Government “may well want to change the debt rule to allow for more borrowing for investment,” adding: “The bond market may not let them.”
Graduates shun full-time office jobs
Nearly half of graduates and final-year university students are unwilling to apply for jobs requiring full-time office attendance, according to a new study by flexible offices provider IWG. The research indicates that 18% of younger workers are uncertain about working for companies that do not allow remote work, leaving only 33% of the graduate talent definitely willing to work for a firm which insists on in-office presence. While salary remains the top priority for 75% of graduates, 54% consider hybrid working equally important, equating it to a 13% salary increase due to savings on commuting and housing costs. Mark Dixon, IWG’s chief executive, said: “Businesses that do not offer hybrid working risk missing out on the best young talent.” “For many, flexibility is not a perk, but a necessity, and they will not consider jobs that require a long commute five days a week,” he added.
Snooping bosses increase stress and hit productivity
Susannah Copson, legal and policy officer at Big Brother Watch, says the Government appears to be retreating from its commitment to regulate workplace surveillance. She says that advances in technology, falling costs and the shift to home working have brought a “dramatic” increase in workplace surveillance amid a “frantic drive to maximise employee efficiency.” Warning that surveillance tools are invasive, unreliable and discriminatory, she voices concern over the “profound human cost,” saying use of the technology compromises employees’ well-being, job satisfaction and trust. Ms Copson warns: “The problem is systemic; without safeguards, companies will continue to introduce excessive surveillance, and workers will pay the price.”
Markets
Stocks were sharply lower yesterday after negative movements overnight in Asia fed through to the European trading session. China said on Tuesday it was ‘fully confident’ of hitting its growth target this year but held off announcing more stimulus measures, leaving markets disappointed, with the miners hit worst.
Yesterday, the FTSE 100 closed down 1.36% at 8190.61 and the Euro Stoxx 50 closed down 0.42% at 4949.00.
Overnight ihowever, sentiment switched again and the US the S&P 500 rose 0.97% to 5751.13 and the NASDAQ rose 1.45% to 18182.92.
Oil Prices fell $3 a barrel on Tuesday because of a pause in the conflict between Israel and Iran as well as growing confidence a massive hurricane would miss major oil production areas in the U.S.-regulated northern Gulf of Mexico.
European shares edged higher this morning, with real estate and automobile shares leading gains, while banks and travel stocks are the biggest drags.
This morning on currencies, the pound is currently worth $1.307 and €1.193. On Commodities, Oil (Brent) is at $77.8 & Gold is at $2615. On the stock markets, the FTSE 100 is currently up .36% at 8220 and the Eurostoxx 50 is down 0.11% at 4943.
Wholesale Gas Prices declined on Tuesday as milder weather saw stocks buoyed across Europe. UK natural gas fell over 2.2% throughout the day to just over 97 pence per therm, spelling good news for energy prices ahead as Britain prepares for the colder winter months.
Markets are in an era of ‘predictable volatility’
Financial Conduct Authority (FCA) chief executive Nikhil Rathi has warned investors to brace for volatility in the long term, highlighting a number of issues that pose a risk to the financial markets. Saying that excessive daily swings have become an increasing concern for the City watchdog, Mr Rathi warned that passive investment strategies and index funds had fuelled the ”interconnectedness” and “concentration” of the global financial system, while “herding behaviour” was creating sharper price swings. Noting how US economic data in early August sent shockwaves through stocks, Mr Rathi said the FCA is still “piecing together exactly what happened” to determine “if there are new systemic risks needing deeper examination.” Saying that the greater connectivity among global markets has created a landscape where “predictable volatility” is a constant, Mr Rathi noted that market shocks “that used to be one-in-ten-year events now happen every month.” Calling for a “new mindset towards risk,” he went on to warn against introducing “rules for the sake of it,” arguing that regulation should be proactive not reactive.
Fintechs brace for buyouts as IPOs stall
The fintech sector is bracing for more consolidation amid a dip in IPOs, with industry leaders saying firms will feel increasing pressure to consider buyout offers as venture capital investment is subdued and public listings are scarce. Data from KPMG shows that while UK fintech investment increased to $7.3bn in the first half of 2024 from $2.5bn in H1 2023, this falls well short of the record £23.4bn seen in the first half of 2021. Figures from Dealroom show that the number of UK fintech M&A deals surged from 14 in 2019 to 44 in 2023, peaking at 50 in 2021. There have been 31 deals so far this year. Tim Levene, CEO of Augmentum Fintech, Europe’s largest listed fintech fund, comments: “If you look at all the fintech exits over the last five or six years, only five per cent have exited to IPO – so that gives you a sense of the direction of travel.”
Economists call for exit tax
Experts have suggested that wealthy people looking to take their money out of the country should face an exit tax. The UK currently does not impose capital gains tax on wealthy individuals who leave the country for over five years, prompting many to relocate to avoid tax liabilities. A report by the Centre for the Analysis of Taxation (CenTax) shows that 75% of those leaving do so to sell their businesses without incurring tax. Arun Advani, director of CenTax, argues: “If politicians are worried about emigration, they could follow Australia and many other countries by taxing the gains of people who leave.” Critics argue that implementing an exit tax could deter investment in the UK, with Nigel Green of deVere Group calling such proposals “fundamentally flawed.” The UK is projected to see a decline in its millionaire population, with the Adam Smith Institute’s Millionaire Tracker indicating a drop to 593,000 by 2028, from 708,500 in 2007. Polling from Cornerstone Tax and Yonder shows that a third of Britons say changes in taxation are the main reason why they would leave the UK.
Reeves promises to ‘revolutionise’ capital markets and boost listings
Chancellor Rachel Reeves has pledged to revolutionise the UK’s capital markets and boost London IPOs. She told the Financial Conduct Authority’s (FCA) International Capital Markets Conference: “Our vibrant, dynamic capital markets are some of the strongest and the deepest that we have globally – delivering capital to support businesses across Europe and around the world,” adding: “But we know there is even more that we can do to build on those strong foundations.” Ms Reeves described the FCA’s overhaul of its listings regime as a “once-in-a-generation reform in our rulebook that will revolutionise our markets,” going on to add that changes to UK prospectus regulation will create “a more agile and effective regime which will boost IPOs and optimise the capital raising process.” Saying that reforms will “ensure that the UK’s markets remain world-leading,” the Chancellor argued that they will deliver “the right balance between risk and regulation, to provide a stable platform for growth.”
Chancellor urged to target pension death tax
The Society of Pension Professionals (SPP) has urged Chancellor Rachel Reeves to avoid altering pension tax reliefs but argues that changes to inherited pension pots could be beneficial. The SPP’s report highlights the complexity of potential reforms, saying that “no easy solutions” exist. Current rules allow contributions to receive income tax relief based on the individual’s marginal tax rate, with HMRC estimating the cost of relief at £48.7bn for 2022/23. However, the SPP argues that the actual cost is likely “considerably smaller” than reported. The report warns that modifying tax relief would be “incredibly complex, time consuming and costly” and may not yield the necessary funds. Additionally, the SPP cautions against limiting the tax-free lump sum, which could undermine public trust in pension savings. Reforming the treatment of pension pots at death is suggested as a potential area for generating revenue, with the Institute for Fiscal Studies estimating it could raise hundreds of millions of pounds.
Pension savers panic over tax raid
As concerns mount over potential changes to pension tax relief, savers are hastily withdrawing cash from their retirement funds, risking significant losses. Alice Haine from Bestinvest says: “Rumours that pensions tax relief was in the Chancellor’s sights… had a dramatic effect on saving behaviour.” The number of withdrawal requests has doubled compared to last year, with some clients losing as much as £270,000 from their retirement funds due to premature withdrawals. Financial advisers warn that these “knee-jerk” decisions could lead to long-term financial detriment.
Pension pot shake-up on the cards
Chancellor Rachel Reeves is considering a significant reduction in the tax-free lump sum that savers can withdraw from their pensions, potentially lowering the limit from 25% of their pension pot to just £100,000. Currently, savers can take up to £268,275 tax-free upon reaching 55. The Institute for Fiscal Studies estimates that this change could affect one in five retirees. Steven Cameron from pension company Aegon says: “Many individuals will have planned their retirement finances on the assumption they could take 25% of their full fund as a tax-free lump sum.”
Nobel Prize
Sir Geoffrey Hinton has won the Nobel prize in Physics for his research into AI.
Google
The US Justice Department told a federal judge that is weighing up calling for the historic breakup of Google as one potential remedy in its monopoly case.
TikTok
Adding to its US wows, 13 American states sued TikTok for harming children’s mental health. They want the app to change features that they say are intentionally addictive.
Rio Tinto
Rio Tinto is buying Arcadium Lithium for £6.7 billion to create one of the biggest lithium producers, a a key ingredient in electric cars.
Mondi
Paper and packaging company Mondi is buying 634 million euros worth of western European assets from Schumacher packaging.
Informa
Informa sealed the acquisition of London-listed Ascential, as the company now looks ahead to a tie-up with TechTarget. The £1.2 billion buy of the Cannes Lions operator received court sanctioning on Tuesday. Informa said Wednesday its “growth, focus and reinvestment” in recent years in the space of Live & On-Demand B2B Events, B2B Digital Services and Academic Markets will see it enter 2025 with revenue of over £4 billion.
Marstons
Marston’s reported stronger sales than the wider pubs sector in the past quarter and also hailed its much-reduced debt pile. Now a pure pub company after selling off a final stake in its brewery business, via the £206 million sales of its final 40% stake in the CMBC joint venture to co-owner Carlsberg in July, the Wolverhampton-based group posted a year-end trading update showing 5.8% sales growth for the 53 weeks to 28 September.
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Why you should become a member of CPA!
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.
Unlike other credit management and debt collection companies, we offer a range of services to our members that are all included as part of a fixed annual subscription, tailored to your needs.
Under your annual subscription you will have access to our main services:
- Our Creditcare credit reports provide credit ratings and limits along with a host of detailed information on your potential customers to enable you to trade with confidence and set appropriate credit policies for new customers.
- Our monitoring service will alert you to any significant changes in the status of those customers.
- Our Overdue account recovery service can be used to chase up payment on any invoices to those customers that have not been paid on time. Unlike other debt collection companies, this service directs your customer to pay direct to you and allows you to maintain your goodwill with them, rather than inserting ourselves into your relationship with you customer and insisting they pay CPA instead. Our Overdue account recovery service resolves over 80% of accounts referred to us.
All of the above services and other complimentary services such address verification, are included in your subscription!
And for the small minority of debts not resolved through our Overdue account recovery service, you can refer the debt to our collections department to escalate the late payment collections process.
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. 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.
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 borrowing more money to improve your cashflow, CPA suggests that business owners tackle the problem at its source. If late payments are a strain on your cashflow, then talk to CPA about how we can help you reduce those late payments.
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’s collection department 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.