Business news 10 March 2023

James Salmon, Operations Director.

GDP exceeds expectations. UK jumps up rankings for highly skilled overseas workers. Making hybrid working work is in everyone’s interests. Hunt has £166bn of headroom for tax cuts.  And more business news.

GDP exceeds expectations

The UK Economy grew by 0.3% in January, official figures showed on Friday, exceeding expectations as it continues to fend off what economists see as an inevitable recession. GDP grew far more strongly than forecast in January, adding to evidence of resilience in the face of a cost-of-living squeeze and widespread industrial unrest. Economists polled by Reuters had projected a 0.1% monthly increase in GDP. GDP was flat over the three months to the end of January, the Office for National Statistics said. Growth was helped by a recovery in school attendance after more parents kept children home at the end of 2022.

Reacting to the latest figures, the Chancellor, Mr Hunt said “In the face of severe global challenges, the UK economy has proved more resilient than many expected, but there is a long way to go.”

Tina McKenzie, at the Federation of Small Businesses, said “While January’s figures are a glimmer of hope, the flat growth over the previous three months means we’re not out of the woods yet, with tough trading conditions persisting for many small firms.”

Darren Morgan from the Office for National Statistics (ONS), which collects and publishes the data, said the UK economy had “partially bounced back” after shrinking by 0.5% in December.

UK jumps up rankings for highly skilled overseas workers
According to the Organisation for Economic Co-operation and Development (OECD), the UK has shot up the rankings of countries most attractive to highly qualified workers, due to changes to the migration regime introduced after Brexit. The OECD said the rankings reflected the UK’s decision to abolish its quota for highly skilled workers as well as the success enjoyed by many overseas workers in the country. The UK enjoyed the largest improvement in “talent attractiveness” in 2023, moving up nine places to 7th since 2019 and climbing above the US and Canada for the first time.

Making hybrid working work is in everyone’s interests
Writing in City AM, Helen Brand, the chief executive of ACCA, talks about the importance of making hybrid working work. Brand explains that the “collaboration and engagement challenges associated with hybrid working help to explain why a fifth of UK accountants, and more than half of accountants globally, still work full time in the office.” This needs to be balanced against the fact that 87% of ACCA survey respondents would like to work remotely for at least one day a week.

The data also indicates that workers with hybrid arrangements are “less likely to suffer from mental health issues, meaning a lower chance they will take time off work.” Employers need to look at what barriers are preventing hybrid working practices and if necessary take a trial-and-error approach. “Hybrid working is ultimately a win-win for both employers and employees. It is good for employees’ mental health and helps previously excluded people to become more visible. At the same time, it brings greater choice to employers by enabling them to recruit from the broadest possible talent pool. It’s in everyone’s interests that we make hybrid working work.”

Manufacturing

Manufacturing production fell 5.2% in the UK year on year, falling 0.4% in latest month (January)

Markets

US markets tumbled Thursday as banks and other financial stocks sold off, and investors braced for a key payroll report that could shape the direction of interest rates. Overnight, the DOW dropped -1.66%, the S&P 500 dropped -1.85% and the  NASDAQ dropped -2.05%. Asian and European markets have followed suite with the FTSE 100 down 1.8% at the time of writing.  Traders are bracing for more bearish developments, which could be sparked by today’s non-farm payroll report.

Hunt has £166bn of headroom for tax cuts

The Chancellor is coming under renewed pressure not to go ahead with the planned hike in corporation tax after research by the National Institute for Economic and Social Research (NIESR) indicated that booming tax receipts and a sharp fall in energy prices would give the Treasury £166bn of headroom. Forecasts by the Office for Budget Responsibility (OBR) at the time of Jeremy Hunt’s Autumn Statement put the figure at £18.6bn, but the NIESR expects inflation to remain higher for longer than the OBR, resulting in higher nominal GDP, a higher tax take and a devaluation of the Government’s debt liabilities.

Stephen Millard, NIESR’s deputy director for macroeconomics, warned that Mr Hunt’s planned business tax rises “will have a big, big, big impact on trend output.” Meanwhile, allies of former PM Liz Truss say the figures vindicate doubts over the OBR’s accuracy and show Ms Truss may have been right over the high growth, tax cutting economic policy which saw her forced out after just 49 days.

Raising corporation tax “a big mistake”
The Centre for Policy Studies (CPS) has warned that Jeremy Hunt ‘s corporation tax hike will make Britain a “significantly worse place to do business” as the think tank urges the Chancellor to at least introduce some business investment relief to compensate for the loss of the expiring super-deduction. CPS director Robert Colvile said: “We still believe that increasing corporation tax is a big mistake. But introducing full expensing as a replacement for the super-deduction would at least compensate for its effects and persuade businesses to help deliver the growth we so desperately need.” Mr Hunt is expected to set out new incentives and is considering options including full expensing, but is said to have warned that they cannot be as expensive as the super-deduction.

Russian money laundering in the UK

The government says it suspects Russian nationals are exploiting lax checks by Companies House to launder  funds stolen from Ukraine. Law enforcement agencies have allegedly identified large numbers of sham companies registered in the UK by foreign nationals, in what looks like an attempt at money laundering or tax evasion. Despite heavy sanctions, half of all Russia’s foreign trade is conducted in western currencies.

WANdisco suspends shares after fraud uncovered
AIM-listed software group WANdisco has asked for its shares to be suspended after it discovered a major fraud. Investigations by its CEO and CFO found “significant, sophisticated and potentially fraudulent irregularities” which meant anticipated revenue for 2022 could be as low as £7.6m, compared with the £20m previously stated. The cloud computing specialist, which only days ago said it was considering a secondary listing in New York, said external advisers would now be drafted in to help with a more detailed probe. Sources denied that the problems were uncovered by the company’s auditor BDO. Russ Mould, investment director at broker AJ Bell, said WANdisco’s credibility has now been “shattered.”

Dame Sharon White: I find it “quite hard to recruit men”
Dame Sharon White, the chairwoman of John Lewis, said she has found it “quite hard to recruit men” at the group since her push to rebalance the organisation away from its masculine “command and control” culture. Speaking at an International Women’s Day event at King’s College London, Dame Sharon said she had also faced criticism for recruiting and promoting women. Dame Sharon said: “I do find it quite hard to recruit men. One of my issues around gender in the workplace is how do we make sure we can have a decent balance.”

Over 60% of leadership positions at John Lewis Partnership are filled by women, compared to 40% of director posts across FTSE 350 companies. The Telegraph points to a recent report from PwC which showed the UK now ranks behind Poland and Hungary for gender equality. The paper also refences an Ipsos poll which found two out of every five Britons believed that championing women’s equality meant that men were being discriminated against.

Silicon Valley Bank

Silicon Valley Bank’s share price fell over 60% after it announced several measures to raise cash. The bank, which focuses on tech start-ups, said that it had sold bonds worth $21bn from its portfolio, at a loss of $1.8bn, following a fall in deposits at the bank after a few venture capitalists withdrew deposits. The announcement triggered a sell-off in other American banking stocks by 4%.

US President plans 25% tax on billionaires
US President Joe Biden is proposing a 25% minimum tax on billionaires and a doubling of the capital gains tax rate for investment from 20% to 39.6%. Under the plans, the richest 0.01% of Americans would pay at least 25% in taxes. The top rate on earners making at least $400,000 would rise by 2.6 percentage points to 39.6% and corporation tax would also rise from 21% to 28%, reversing two of Donald Trump’s policies. The tax hikes form part of a budget plan the White House claims would reduce the federal deficit by nearly $3tn over the next decade.

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.