Business news 12 January 2024
GDP rises, inflation forecasts, Brexit on London, snow coming, going nuclear, covid, markets, insolvencies, petrol, apple, bitcoin, commercial property and more business news that we thought would interest small businesses.
By James Salmon, Operations Director.
GDP
UK GDP rose 0.3% month on month in November, following a 0.3% decline the previous month, according to data from the Office for National Statistics, stronger than the 0.2% growth forecast by economists. The figures were lifted by 0.4% growth in services output in November which followed a fall of 0.1% in October, revised up from a 0.2% fall.
Analysts: Inflation will fall to 2% by April
The Bank of England may be forced to bring forward cuts to interest rates after economists predicted that inflation will halve before April. Analysts at Investec, Deutsche Bank and consultancy Oxford Economics believe that consumer prices index (CPI) inflation, which fell to 3.9% in November, will fall below the Bank’s 2% target within four months. Andrew Goodwin, chief UK economist at Oxford Economics, expects the CPI to average 2.1% in 2024, down from a forecast of 3.1% in November. Phil Shaw, senior UK economist at Investec, believes inflation will fall to 1.5% in Q3, adding that he expects the first rate cut to be implemented in June. Economists at Deutsche Bank predict that UK inflation could drop “a little below 2% in April and May”, before hovering around 2% to 2.5% for the rest of 2024.
Brexit dragging down London economy, says mayor
The mayor of London, Sadiq Khan, has warned that Brexit is “dragging down” the capital’s economy. Mr Khan is calling for a “new settlement” with the EU to “turbocharge” the economy. A study by Cambridge Econometrics predicts that by 2035, the value of goods and services produced in the capital will be 7% less than without Brexit. The analysis also suggests Brexit has cost London’s economy £30bn so far. It also calculates that there are 290,000 fewer jobs in the capital than would have been created without the UK leaving the EU. However, the report notes that productivity growth is expected to be stronger in London than the UK as a whole, adding: “London’s economy is expected to be more resilient and experience relatively less damage from Brexit than the rest of the UK.”
Let it Snow
The UK is to face potential disruptions next week when we are hit by a mass of arctic air bringing snow. Met Office Deputy Chief Meteorologist David Hayter said, “While the initial snow risk from Sunday onwards is looking most likely to be coastal areas in the north of the UK, including North Sea and Irish Sea coasts, there’s an ongoing likelihood of some disruptive snow through the middle to latter part of next week. What we’re keeping an eye on for this disruptive snow is where exactly this milder air from the southwest bumps into the cold air that will be in place over the UK.”
Going Nuclear
The government are going to build another major nuclear pwer plant, beyond the other green lit projects being done by EDF, marking Britain’s biggest expansion of nuclear energy in 70 years. Hinckley C is due to start two new reactors in 2027 and 2028 The site is to be determined once the final decision is made on Sizewell C. The plan is to quadruple the atomic power generated over the next 26 years. The minister for renewables, Andrew Bowie said “There is no net zero without nuclear. No one is trying to suggest that it’s not expensive to deliver, but it’s an expense we can’t afford not to spend.” The government says it will reach a final investment decision on two more nuclear projects by the end of 2029. Those could use small modular reactors or other advanced nuclear technologies.
Covid
The UK is set to be hit by a Covid wave that could be bigger than any before and the nation has been warned to prepare for a major surge.
Markets
London blue chips ended 1% lower yesterday following disappointing US inflation data (it unexpectedly rose to 3.4% from 3.1% when a fall had been anticipated) and concern that US interest rates would remain unchanged in the short term. Investors have assumed that the US Federal Reserve would sharply reduce rates over H1 2024.
Petrol
Petrol prices have fallen to their lowest in three years with the average price now 140p. RAC fuel spokesman Simon Williams said, “Prices at the pump have fallen more than 50p since the record high of 191.5p was set in early July 2022, a saving of £28 a tank, with a complete fill-up for a 55-litre family car now costing under £77.
Apple
Apple was briefly no longer the world’s most valuable company,as it lost that position in early trading to Microsoft before trading back. Microsoft climbed 57% in 2023 on the back of the AI wave while Apple has suffered from weakened sales and lawsuits.
Nisbets & Bunzl
Nisbets founder, Andrew Nisbet is in talks with Bunzl over a sale of the distributor for between £450m to £500m.
Oil
Oil Prices rose more than 2% this morning as the United States and Britain carried out strikes against Houthi military targets in Yemen in retaliation for attacks by the Iran-backed group on shipping in the Red Sea starting from late last year. Brent is at $79.0 and WTI is at $73.6
Burberry
Burberry expects full-year results to be below expectations amid “challenging” trading conditions and a “backdrop of slowing luxury demand”. Chief executive officer Jonathan Akeroyd said: “We experienced a further deceleration in our key December trading period and we now expect our full year results to be below our previous guidance.”
Bitcoin
The first Bitcoin ETF’s started trading yesterday. Around a dozen exchange traded funds launched with almost $5 billion traded in a busy opening session.
Commercial property values continue to decline
Commercial property values in Britain fell by 3.9% in 2023, with offices experiencing the biggest decline of 11.5%. Retail capital values also dropped by 4.2%, while industrial property values rose by 1.4%. However, rents saw an increase, with shop rents rising by 1.1%, office rents climbing by 2.1%, and industrial rents growing by 6.9%.
Many top earners do not feel rich
Many top earners in Britain, including those in the top 10%, do not feel wealthy despite their high incomes.
Research from Redfield & Wilton Strategies shows that a third of six-figure earners do not feel rich, and 60% of Britons earning £80,000-£100,000 consider themselves “about average” on income levels.
The analysis suggests that the nature of the UK’s income distribution means that within the top 10% of earners, there are both billionaires and those earning £68,000 a year who may struggle to get a mortgage.
The cost of living crisis and recent tax changes have also affected the spending power of high earners. For example, a £125,000-a-year earner can be left with just £1 for every £10 they make after taxes and and student loan repayments, pension contributions of 8%, a 25-year mortgage of £600,000 at 4.25% and childcare costs of £1,000 a month. Stefanie Tremain from Blick Rothenberg said that if this particular worker received a £10,000 pay rise, they would only receive around 35% of their pay rise.
Treasury to make £12.7bn from new global minimum corporation tax
The Treasury expects to make nearly £13bn from the new global minimum corporation tax proposed by the Organisation for Economic Co-operation and Development (OECD). Over the first six years of the tax’s introduction, Treasury estimates suggest it will bring in around £12.7bn. The new tax regime, which will see a 15% minimum tax rate on corporate profits, is part of a global attempt to clamp down on corporate tax evasion. The Treasury said that implementing the rules will protect the UK from “aggressive tax planning by large multinationals” and help “level the playing field for tax competition that has been tipped in favour of no or low tax jurisdictions”.
Latest Insolvencies
Petitions to wind up (Companies) – POINT CONSTRUCTION (PEMBS) LTD
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Appointment of Liquidators – CRS (PROFESSIONAL SERVICES) LIMITED
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!
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.