Business news 12 February 2025
CEOs bullish on UK economy. Inflation risk is falling. But confidence falls at London SMEs. Climate, Heathrow, apprenticeships, tax evasion, Chancellors headroom, markets, insolvencies & more business news that we thought would interest our members.
James Salmon, Operations Director.
CEOs bullish on UK economy
Polling by EY-Parthenon reveals a significant increase in confidence in the economy among UK chief executives. A survey of 1,200 CEOs found that 82% are optimistic about the business landscape for the next year, a rise from 67% in September. Furthermore, 80% anticipate profit increases, with a similar percentage expecting income growth. Silvia Rindone, UK&I managing partner for strategy and transactions at EY-Parthenon, said the findings “reflect a resilient and forward-thinking mindset among UK CEOs.” Despite the Bank of England’s recent downgrade of its growth forecast for this year from 1.5% to 0.75%, the research suggests a resurgence in deal-making activity, with 99% of CEOs planning some form of transaction in the coming year.
Inflation risk is falling
Catherine Mann, a member of the Bank of England’s rate-setting Monetary Policy Committee, believes that an extended period of inflation is unlikely, with an impending “hump” set to be temporary. Ms Mann, who had voted against the Bank’s two prior rate cuts, last week called for a half-point rate cut. Explaining her thinking behind this, she said the persistence of “embedded inflationary behaviours” had diminished, adding that a predicted rise in inflation will come mainly from factors which are “not driven by underlying domestic inflationary pressures.”
Recession risk rising
The UK economy may have shrunk in the fourth quarter, putting the UK back on the brink of recession and adding to the pressure on Chancellor Rachel Reeves and her promise to return to growth. Economists beleive GDP fell 0.1% following a stagnant third quarter, following on from Reeves’ tax-raising budget. Surveys now point to a slow start to 2025, with the Bank of England estimating there is a 40% chance that Britain is already in a technical recession ( i.e. two consecutive quarters of contraction) for the second time in just over a year.
Confidence falls at London SMEs
Confidence among small business owners in London has dropped significantly, reaching a near two-year low, according to Novuna Business Finance’s Business Barometer. The percentage of owners predicting growth fell from 57% to 39% in just three months, marking the lowest level since Q2 2023. Key worries for these businesses include market volatility (41%), potential tax hikes (40%), and cash flow management (26%). The survey also revealed that 77% of small businesses are apprehensive about the impact of the new US administration on the UK economy.
Climate
Only 3 of the 10 world’s largest economies hit the deadline on Monday to submit updated emissions – showing how the plans for cutting emissions to the United Nations – and only one of the three, the United Kingdom, outlined a strategy for the next decade that keeps pace with expectations staked out under the Paris Agreement to hit the 1.5c goal.
Heathrow Expansion
London’s Heathrow airport will unveil a short-term expansion plan including a timely commitment to prioritize British steel under threat from US President Donald Trump’s tariffs, offering the hub a potential boost before a third runway is built. Chief Executive Officer Thomas Woldbye will reportedly give a speech later today announcing plans to upgrade the hub and increase passenger numbers in the coming years.
SMEs welcome new apprentice rules
The Government is set to relax rules around maths and English requirements for apprentices, saying trainees aged 19 and over will not be forced to complete functional skills qualifications in order to qualify. The Department for Education says the reforms will enable 10,000 more apprentices to undertake on the job training each year. Meanwhile, the minimum length of an apprenticeship will be cut to from a year to eight months to ensure workers in occupations experiencing shortages can take up roles sooner. Craig Beaumont, director of the Federation of Small Businesses, said the reforms are “encouraging” and new flexibility “should help SME employers fill skills gaps faster.”
Poor worst off
The National Institute of Economic and Social Research has warned that predicted rises in real disposable incomes in 2025 and 2026 will not compensate for the recent slump for the bottom 40% of households. For this group, living standards will not return to pre-2022 levels until the end of 2027, the think tank said in forecasts published this morning.
Steel
UK officials are planning talks with their counterparts in Donald Trump’s administration in an effort to avoid the 25% tariffs on US imports of steel and aluminum announced by the president.
£5.5bn tax evasion hit could be ‘vast underestimate’
The Commons Public Accounts Committee (PAC) has warned that the cost of tax evasion in the UK is likely much higher than the £5.5bn estimated by HMRC. Sir Geoffrey Clifton-Brown, chairman of the PAC, suggested that the “many billions rightfully meant for the public purse could just be the tip of the iceberg.” The report criticises HMRC for being “not sufficiently curious” about the true scale of tax dodging and highlights significant loopholes in the current system, particularly in VAT registration processes. The PAC has urged the tax office to develop a clear strategy to combat tax evasion and called for better collaboration with Companies House and the Insolvency Service. The report also notes that between 5% and 20% of UK registered companies may be fraudulent. An investigation into fraud through online marketplaces found that a number of Chinese firms selling cheap goods in the UK were not paying VAT or import tax.
Chancellor faces tax dilemma as headroom vanishes
Chancellor Rachel Reeves has exhausted the £9.9bn fiscal headroom she previously had, raising concerns that she may need to increase income tax to manage future economic shocks. The National Institute of Economic and Social Research (NIESR) warned that “zero fiscal headroom remains as the current budget is exactly balanced,” leaving no buffer for potential economic downturns. Despite her commitment to only borrow for investment and reduce debt as a share of GDP, the pressure is mounting on Ms Reeves. Stephen Millard, NIESR’s interim director, emphasised that “there are circumstances in which taxes might have to go up.”
Markets
London markets edged higher on Tuesday as investors digested mixed economic data and corporate earnings updates. The FTSE rose despite the shadow the shadow of new tariffs announced by U.S. President Donald Trump, which are set to impact steel and aluminium imports. Yesterday, the FTSE 100 closed up 0.11% at 8777.39 and the Euro Stoxx 50 closed up 0.61% at 5390.91.
Across the Atlantic, Fed Chair Jerome Powell emphasized that the Federal Reserve is not in a hurry to cut its short-term interest rates again, citing a “strong overall” U.S. economy with low unemployment and inflation that, while above the Fed’s 2% target, is making progress. Overnight in the US the S&P 500 marginally rose 0.03% to 6068.50 and the NASDAQ fell 0.36% to 19643.86.
This morning on currencies, the pound is currently worth $1.244 and €1.1995. On Commodities, Oil (Brent) is at $76.20 & Gold is at $2888. On the stock markets, the FTSE 100 is currently up 0.1% at 8786 and the Eurostoxx 50 is up 0.15% at 5399.
Budget dents retail investor confidence
Retail traders have been deterred from investing in the UK market due to October’s Budget, according to a poll from GraniteShares. The survey saw 26% of retail investors say they have cut their investment in the UK in response to the Budget, which introduced £40bn of new taxes including a capital gains tax hike. It was also shown that a fifth expect to cut their level of investment in UK markets in 2025. More than 1,000 British retail investors were surveyed and 61% expressed disappointment with the performance of UK markets over the past three years. A quarter (24%) have switched investments away as a result. While 23% of UK retail traders said the percentage of their portfolio invested in British stocks and funds has fallen in the past three years, a third estimate that it has increased.
Fintech CEO urges ministers to accelerate growth plans
Tim Levene, chief executive of Augmentum Fintech, has welcomed the Government’s focus on delivering growth but warned that “the pace of implementation is way too slow.” He said that he is optimistic that Government plans to boost growth and investment mean “money will flow to places where it hasn’t played before,” adding that this will “really create and stimulate innovation.” However, Mr Levene warned that he is less optimistic over “the pace of change and timeline,” adding: “I think that could be the biggest single barrier, and we can’t afford to wait.”
Wealthy households bear tax burden
New analysis by Civitas reveals that the richest fifth of households in the UK contribute over half of the income tax bill, paying 55% of direct taxes and 47% of all taxes. The top 10% alone account for 40.5% of national direct taxes. In contrast, more than half of households (52.6%) now receive more in cash benefits than they pay in tax, a significant increase since the financial crisis. This shift highlights the growing dependency of middle-income households on state support, with this exacerbated by wage stagnation.
Barratt Redrow
Barratt Redrow announced it will kick off a £100 million share buyback programme, and the housebuilder said it was “pleased” by its first half out-turn. Pretax profit in the 26 weeks to December 29 improved 23% to £117.2 million from £95.2 million a year earlier. Revenue rose 23% also to £2.28 billion from £1.85 billion. Those half-year numbers where only what Barratt Developments achieved a year prior, so does not include Redrow, an acquisition it sealed in August to form Barratt Redrow. Aggregated revenue, so including Redrow, amounted to £2.49 billion in the half year to December 31, 2023. Pretax profit totalled £186.9 million over that period
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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.