Business news 11 September 2024
GDP, Mortgage arrears, SME’s and workers rights, unemployment, pay growth, grocery inflation, Amazon, Apple, pensions, banks, WFH, markets, insolvencies & more business news that we thought would interest our members.
James Salmon, Operations Director.
GDP
The UK Economy continued to flatline in July on a month-on-month basis, flash figures published from the Office for National Statistics showed Wednesday. Gross domestic product came in below the expectations of economists polled by Reuters, who had forecast growth of 0.2%.
Value of mortgages in arrears nears £22bn
Bank of England data shows that the value of outstanding mortgages in arrears hit £21.9bn in the second quarter of this year. This marks a 32% increase on Q2 2023 and is the highest total since 2014. The proportion of loans with arrears also increased in Q2, rising to 1.32% from 1.29%.
Ministers to meet SMEs over workers’ rights reforms
Executives from the British Chambers of Commerce and Federation of Small Businesses are set to meet with Jonathan Reynolds, the Business Secretary, and Deputy Prime Minister Angela Rayner at Downing Street. This meeting follows a previous roundtable with larger employers and aims to address concerns regarding the Government’s proposed reforms to workers’ rights, including a ‘right to switch off’ and a ban on zero-hours contracts.
Unemployment and pay growth fall
Official figures show that unemployment dipped to 4.1% in the three months to July, from 4.2% a month earlier. The Office for National Statistics (ONS) data also shows that the British economy added 265,000 jobs in the three months to July, while vacancies were down to 857,000. Pay growth including bonuses fell from 4.5% to 4%, while regular pay growth has dropped to 5.1% from 5.4%. The number of payrolled workers fell by 59,000 between July and August, dipping to 30.3m. Susannah Streeter, head of money and markets at Hargreaves Lansdown, said: “With wage growth easing off again, it’ll cement expectations that the Bank of England will deliver two interest rate cuts by the end of the year.” While Rob Wood, chief UK economist at Pantheon Macroeconomics, said rate-setters “will be encouraged” by slowing private sector pay growth, Luke Bartholomew, deputy chief economist at asset manager Abrdn, said there are “still a few important data reports before the Bank needs to decide on interest rates again.” Yael Selfin, chief economist at KPMG UK, said the employment data pointed to “a softening over the coming months as hiring intentions continue to slow, which should see a gradual rise in unemployment.”
Grocery inflation eases
Grocery inflation slowed to 1.7% in the four weeks to September 1, according to Kantar Worldpanel, which tracks supermarket prices, sales and market share. This marks a decline on the 1.8% increase in prices recorded in the previous four weeks. Despite the slowdown in price increases, polling from Kantar shows that 60% of households remain worried about the rising cost of their shopping.
Markets
Yesterday, shares dropped globally as worries about both the US and Chinese economies spooked investors. The FTSE 100 closed down 0.78% at 8205.98 and the Euro Stoxx 50 closed down 0.66 % at 4747.20. Overnight in the US the S&P 500 rose 0.45% to 5495.52 and the NASDAQ rose 0.84% to 17025.88.
Brent crude, the global oil benchmark, briefly dipped below $70 a barrel for the first time since December 2021 amid slowing Chinese imports and lowered forecasts by OPEC.
This morning on currencies, the pound is currently worth $1.308 and €1.185. On Commodities, Oil (Brent) is at $70.8 & Gold is at $2522. On the stock markets, the FTSE 100 is currently down 0.1% at 8197 and the Eurostoxx 50 is up 0.37% at 4765.
Amazon in the UK
Amazon.com said it would spend £8 billion in the UK to grow its cloud business. The five-year investment by Amazon Web Services in data centers will support up to 14,000 jobs and contribute £14 billion to UK GDP between 2024 and 2028.
Apple’s tax bill
Apple lost its tax case and has been ordered to pay Ireland €13bn in unpaid taxes by Europe’s top court, after an 8 year battle. The European Commission accused Ireland of giving Apple illegal tax advantages in 2016, but Ireland has consistently argued against the need for the tax to be paid. The Irish government however, said it would respect the ruling. Apple said it was disappointed with the decision and accused the European Commission of “trying to retroactively change the rules”. A separate European Court of Justice (ECJ) ruling on Tuesday also brought a long-running case with Google to a close, with the company ordered to pay a €2.4bn (£2bn) fine for market dominance abuse. The EU antitrust chief Margrethe Vestager praised both judgements. “Today is a huge win for European citizens and tax justice,” she said.
Goldman Sachs expects tax hikes
Goldman Sachs says Chancellor Rachel Reeves is likely to raise taxes by “at least” £15bn to 20bn in the Budget as she looks to address a gap in the public finances. Warning that spending “may need to be around £25bn a year higher than budgeted for in Labour’s manifesto,” analysts at the Wall Street bank said Ms Reeves is likely to scrap certain inheritance tax reliefs, reform capital gains tax, and alter tax reliefs on pension contributions.
State pension set to rise by £460 in 2025
The full state pension is expected to rise by £460 a year from April, with the increase coming due to the triple lock which ties the annual increase to the highest of 2.5%, inflation, or average earnings growth. This year’s wage data shows an increase of 4%, with this exceeding inflation and the 2.5% rate. The full flat-rate state pension is expected to increase to £230.05 a week. This will take it to £11,962.60 a year, marking a rise of £460. The rate for those who reached state pension age before April 2016 is expected to go up to £9,167.60 a year, a rise of £353.60.
Lloyds, Barclays and NatWest could weather tax raid, analysts say
Bloomberg analysts say Lloyds, Barclays and NatWest would see their profits fall by “low single digits” if the Government increases taxes on banks in the Budget. They added that while a windfall tax on the banking sector is a “real risk,” the impact “looks manageable.” While ministers could target the sector in a number of ways, senior figures in the industry believe an increase to the corporation tax surcharge on bank profits is the most likely option. Bloomberg said a 3% increase in the surcharge is “a possible option as policymakers consider the impact on monetary transmission and credit supply.”
Firms cracking down on remote working
With firms including Deloitte and PwC intensifying their monitoring of remote workers to ensure compliance with company policies about working from other countries, the Mail looks at the impact of remote working. It highlights research commissioned by price comparison website MoneySuperMarket which found that one in five staff get frustrated when they find out some of their co-workers are logging on to virtual meetings from exotic locations. Nearly a quarter of staff voiced their concerns that those who are abroad are not being as productive as workers who are still in the office, while a quarter of office-based workers said their colleagues abroad missed deadlines because of time-zone differences.
Rightmove
Rightmove rebuffed a “wholly opportunistic” takeover approach from Australia’s REA Group. The firm said the tilt “fundamentally undervalued” the company. Rightmove said the proposal consists of 305 pence in cash and 0.0381 of a new REA share. Based on the closing price of REA on Tuesday, the proposal valued each Rightmove share at 698p, and the issued share capital at around £5.5 billion. It is a 26% premium to Rightmove’s closing price on August 30, the day prior to REA’s possible offer announcement.
The Spectator
The Spectator has been sold for £100m to Sir Paul Marshall, the hedge fund tycoon and a major investor in GB News. He beat 20 other bids to add the magazine to his media portfolio and he is understood to also be bidding for the Telegraph newspaper group. After the deal was announced, Spectator chairman Andrew Neil said he would resign with immediate effect, having previously stated that hedge funds should not be allowed to own news publications because of the risk of conflict of interest.
TSMC
Taiwan Semiconductor Manufacturing Company reported consolidated net revenue for August 2024 of approximately NT$250.87 billion, reflecting a 2.4% decrease from July 2024. However, the figure represents a significant 33% increase compared to August 2023, driven by strong demand for artificial intelligence chips.
JD Sports
JD Sports Fashion confirmed that it is closing a distribution warehouse in Derby, which will result in close to 200 jobs being lost. This follows a strategic review of its global supply chain network, with redundancy consultation begun in July.
Latest Insolvencies
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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.