Business news 10 September 2024
Industrial strategy must boost small firms’ exports. Firms concerned over workers’ rights plan. Debt, tax hikes, SEIS investments, recruitment, employment, markets, insolvencies & more business news that we thought would interest our members.
James Salmon, Operations Director.
Industrial strategy must boost small firms’ exports
The Government’s industrial strategy must prioritise e-commerce in order to boost small business exports and promote economic growth, according to a report by the E-Commerce Trade Commission and cross-party Social Market Foundation (SMF). The report, which was launched by the Chartered Institute of Export & International Trade, makes a number of recommendations, including: integrating the planned industrial strategy with the expected trade strategy; providing grant funding for trade tech investment; ensuring industrial trade strategy plans for emerging markets; and aiming to increase the number of UK female-owned goods selling SMEs which are also exporting. SMF’s Richard Hyde, who wrote the report, commented: “The vast majority of British businesses are smaller businesses, but too few of them are exporting at present.”
Firms concerned over workers’ rights plan
A poll from the Institute of Directors (IoD) suggests that firms are concerned about the potential impact of the Government’s workers’ rights package. The survey saw 57% of business leaders say they will be less likely to hire as a result of Labour’s workers’ rights package, while just 2% said it would make them more likely to hire. The proposed package, which minister say is “unashamedly pro-worker and pro-business,” will ban “exploitative” zero hours contracts and give workers day-one employment rights.
Meanwhile, the Low Pay Commission expects to increase the national living wage to £12.10 from April next year, an increase of 5.8%. Alexandra Hall-Chen, principal policy advisor for employment at the IoD, said the combined impact of the workers rights’ package and a higher minimum wage would be “considerable disincentives” for employers to hire.
Federation of Small Businesses (FSB) analysis shows that 64% of small firms adopted more risk-averse recruitment practices after the minimum wage rose in April. Tina McKenzie, policy chair at the FSB, said: “With the National Living Wage set to rise, it’s vital that small firms have the support they need to reduce the pressure that higher wage costs will put on their finances.”
Debt must be steered off unsustainable course
A House of Lords committee has voiced concern over national debt becoming unsustainable, saying tough decisions and new rules on the public finances are needed to bring down debt which is currently just under 100% of annual national income.
The Lords report said: “If we wish to maintain the level and quality of public services and benefits that we have come to expect, we face a choice: taxes will need to rise or the state will need to do less.”
Lord Bridges, chair of the House of Lords’ Economic Affairs Committee, said peers were raising a “big red flag” on the need to reduce the national debt, warning that the committee’s report “highlights a grim reality: our national debt risks developing on an unsustainable path.”
Darren Jones, the Chief Secretary to the Treasury, said: “The Lords could not have been clearer about the dire state of the country’s finances. We have inherited a decade of lost economic growth, an economy that isn’t working, a £22bn black hole in our public finances and unsustainable long-term debt.” He added: “That is why we have to take tough decisions now to fix the foundations of our economy, so we can rebuild Britain and make every part of the country better off.”
Think-tank calls for tax hikes
The Resolution Foundation think-tank has urged Chancellor Rachel Reeves to implement significant changes to capital gains tax and inheritance tax in the upcoming Budget, saying reforms could potentially raise over £20bn annually for the Treasury. With a £22bn gap in public finances, the think-tank emphasised that tax increases are a traditional response following elections, with principal economist Adam Corlett saying: “Tax rises are a dead cert and time-honoured tradition.” The report suggests that the CGT regime is “ripe for reform” and that changes could bring in £12bn a year. It added that closing “loopholes” in inheritance tax could raise a further £2bn, while levying National Insurance on employers’ contributions to staff pensions could potentially generate another £9bn a year. Mr Corlett said: “The Chancellor’s self-imposed constraints on not raising income tax, VAT, National Insurance or corporation tax don’t leave her much room for manoeuvre if she doesn’t want to break manifesto commitments. But there are still several areas of tax she should focus on.” He added: “Long-overdue reforms to IHT, CGT and pension contribution reliefs would fit the bill and could raise over £20bn if needed, while also making the tax system fairer and more consistent between different taxpayers.” The think-tank has also called on ministers to “get the ball rolling” on longer-term tax reforms to business rates, council tax and road pricing.
IFS backs CGT on second homes
Chancellor Rachel Reeves has been urged to implement capital gains tax on second homes and businesses after their owners pass away. The Institute for Fiscal Studies (IFS) estimates that eliminating the current relief could generate £2bn annually for the Treasury, which is facing a £22bn budget deficit. Helen Miller, head of tax at IFS, said: “It is a bad tax relief and I would love it if the Government scrapped it.” Speculation is rising about potential reforms in the upcoming Budget, with investment bank Citi predicting tax increases that could raise £15bn to £25bn annually. Ms Miller notes that aligning capital gains tax rates with income tax could yield “high single digit billions” for the Government.
Surge in SEIS investments
Investment in the Seed Enterprise Investment Scheme (SEIS) has surged by 188% year-on-year since the election, according to Wealth Club. The increase in funding is attributed to concerns over potential tax rises under the new Labour government, with many investors seeking the scheme’s generous tax reliefs. Alex Davies, founder and CEO of Wealth Club, said: “Since the election everyone has been expecting tax rises, with wealthier investors likely to bear the brunt.” The SEIS offers up to 50% income tax relief and 50% capital gains tax relief, making it an attractive option for those willing to invest in higher-risk start-ups.
Markets
Yesterday, markets bounced a bit from last weeks worst fall of 2024, as the FTSE 100 closed up 1.09% at 8270.84 and the Euro Stoxx 50 closed up 0.86% at 4778.66. Overnight in the US the S&P 500 rose 1.16% to 5471.05 and the NASDAQ also rose 1.16% to 16884.61.
This morning on currencies, the pound is currently worth $1.309 and €1.186. On Commodities, Oil (Brent) is at $71.5 & Gold is at $2502. On the stock markets, the FTSE 100 is currently down 0.4% at 8239 and the Eurostoxx 50 is up 0.3% at 4794.
Recruitment & Employment
The UK Unemployment Rate edged lower in the three months to July, but wage growth abated, numbers showed. According to the Office for National Statistics, the jobless rate faded to 4.1% in the three months to July, from 4.2% in the three months to June. The latest figure landed in line with market consensus. Wage growth eased. Averages earnings excluding bonuses rose 5.1% in the three month, cooling from 5.4% in the three months to June. The figure for July was in line with expectations.
Meanwhile the UK Labour Market showed further signs of weakness in August 2024, with recruitment for both permanent and temporary job placements continuing to fall, according to the latest survey from KPMG and the Recruitment and Employment Confederation. The report cited economic uncertainty, inflationary pressures, and a focus on cost control as the main factors behind the ongoing hiring slowdown.
Ministers set to agree Tata Steel subsidy
Ministers are in the process of finalising a £500m rescue deal for Tata Steel’s Port Talbot plant, with union sources saying the agreement comes with assurances over future investments. The steelmaker plans build an electric arc furnace, replacing the existing coal-powered process. It has said it will invest £750m in building the furnace, while also funding a support package for employees made redundant during the transition. Ministers have been speaking with unions and Tata Steel over further commitments which would maintain steel production in south Wales. While Labour had pledged to honour the £500m grant agreed by the Conservatives, it has also committed £2.5bn towards the future of steelmaking.
Apple
Apple revealed the iPhone 16 yesterday, along with new Airpods and watch models. The tech titan is hoping it can entice consumers to upgrade to its AI friendly new device, despite modest hardware upgrades (including a new physical button to control the camera). The iPhone 16 was built for AI “from the ground up,” said CEO Tim Cook, though the AI functionality will only be gradually be integrated to the phones via future software updates. Apple appears to still be playing catch up.
China
China Exports rose by 8.7% year-on-year in US dollar terms in August, according to the customs agency. That was higher than the forecast for growth of 6.5% year-on-year in US dollar terms, according to a poll. Imports grew by 0.5%. That was less than the expected 2% increase from a year ago in US dollar terms, the poll showed. In July, exports rose by 7% from a year ago, while imports increased by a more-than-expected 7.2%.
Meanwhile the Chinese stock market is under pressure. The CSI 300 is approaching its lowest point since January 2019 as investors continue to sell off in a crisis of confidence over the worlds second largest economy.
Wickes
Wickes said trading early in the third-quarter “has seen an improved trend”. It said half-year revenue declined, but profit rose. Its bottom line was helped by “planned management action taken to mitigate impact of inflation”. Revenue in the 26 weeks to June 29 fell 3.4% on-year to £799.9 million from £827.7 million. Pretax profit rose 8.5% to £22.9 million from £21.1 million a year prior.
Centamin
Anglogold are buying the Egypt focused gold miner for £1.9 billion (at a 37% premium to the market price), giving it control of one of the best gold mins in the world – Sukari mine in Egypt.
Record dismissals at HMRC
Dismissals for gross misconduct at HMRC have reached a five-year high, with 179 workers having their employment terminated in 2023, marking a 43% increase since 2020. The total, obtained through a Freedom of Information Act request, marks the highest recorded in at least five years. Steve Sweetlove from RSM comments: “An uptick in dismissals for gross misconduct could be seen as a troubling trend but it may highlight that a firmer stance is being taken by HMRC in staff disciplinary matters.” An HMRC spokesman said: “We take all allegations seriously to ensure we work in an inclusive environment that is friendly, tolerant and respectful.”
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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?
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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!
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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.