Business news 12 June 2024
SMEs unsure whether election will boost business. GDP growth set to hit zero. Mortgage arrears up in Q1. Protectionism is slowing growth. Unemployment rate climbs to 4.4%. Markets, Insolvencies & more business news that we thought would interest our members.
James Salmon, Operations Director.
SMEs unsure whether election will boost business
British SMEs are divided on what a change in government could mean for the future of their businesses, according to a poll for accountancy and business advisory firm Xeinadin. The poll saw 41% of SMEs say that a change in government will have “little” impact on small business growth within their area, while just over a quarter (26%) believe an incoming government could “bring the spark back” to the entrepreneurial sector. Tim Halford, chief commercial officer at Xeinadin, said: “Whichever party is in power come July, it is time for politicians to start prioritising the businesses that form the backbone of this country.”
GDP growth set to hit zero
Economic data for April is expected to show that growth was flat, with analysts predicting that GDP was unchanged between March and April. Experts forecast GDP to have expanded by 0.6% year-on-year, with this down from 0.7% the month before. Sanjay Raja, senior economist at Deutsche Bank, said: “weaker services activity and industrial production” would have an impact on the reading, adding that wet weather will not have helped.
Mortgage arrears up in Q1
The number of mortgages in arrears, relative to all outstanding mortgage balances, increased to 1.28% in Q1, according to figures from the Bank of England. This is up from 1.23% in the final quarter of 2023, taking it to the highest proportion since the end of 2016. The value of outstanding mortgage balances with arrears increased by 4.2% quarter-on-quarter, hitting £21.3bn. This was 44.5% higher than a year ago. The report shows that cases of new arrears were two percentage points down on the previous quarter, with new arrears representing 11.4% of the total outstanding balance of late mortgages.
World Bank: Protectionism is slowing growth
The World Bank has warned that protectionism is leading to slower global growth. It said 80% of the world’s population are living in countries where growth would be slower in the next three years than in the pre-pandemic decade. The report added that although the global economy had avoided recession, it has stabilised at a lower level than in the years leading up to the start of the pandemic. Indermit Gill, the World Bank’s chief economist, said that despite having seen a “soft landing,” policymakers “would be wise to keep their eye on the ball: growth rates remain too slow for progress.” He added: “Without stronger international cooperation and a concerted push for policies that advance shared prosperity, the world could become stuck in the slow lane.” The World Bank expects global growth of 2.6% in 2024 and 2.7% in 2025.
Unemployment rate climbs to 4.4%
Office for National Statistics (ONS) data shows that the unemployment rate climbed to 4.4% in the three months to April, up from 4.3% the month before. This marks the steepest increase since September 2021. Across all sectors, the number of people unemployed rose by 138,000, taking the total to just over 1.5m. Regular earnings – which exclude bonuses – rose at an annual pace of 6%, the same pace as the previous month. With inflation stripped out, however, pay increased by 2.9% – the highest rate since August 2021. The ONS report shows that the number of job vacancies fell, dipping by 12,000 to 904,000 in the three months to May. It also reveals that 22.3% of working-age adults in the UK are deemed to not be actively looking for work. The ONS said: “This month’s figures continue to show signs that the labour market may be cooling, with the number of vacancies still falling and unemployment rising, though earnings growth remains relatively strong.” With the ONS figures set to be studied by the Bank of England as officials decide whether to cut interest rates, KPMG’s chief economist, Yael Selfin, said the “mixed” data was “unlikely to shift the dial” at the Bank, predicting that it would keep rates unchanged this month. Jake Finney, an economist at PwC, said the latest ONS data “presents a headache” for the Bank, adding: “A broad set of indicators suggests that the labour market is cooling but pay growth has not fallen to the extent they would like to see.”
Councils moving too slowly to settle debt dispute
A dispute about £40m of debt between two councils has been going “too slowly,” according to the auditor looking at their finances. The disagreement follows the splitting of the former Northamptonshire County Council into two unitary authorities. Mark Stocks of Grant Thornton said the situation “makes it difficult” to offer a “true view” on the financial position of the councils. He added that if a solution could not be reached, auditors would have to step in with “statutory powers” to find a resolution.
Markets
Yesterday, the FTSE 100 closed down 0.98% yesterday at 8147.81 and the Euro Stoxx 50 closed up 1.02% at 4965.09. Overnight in the US the S&P 500 rose 0.27% to 5375.32 and the Nasdaq rose 0.88% to 17343.55.
Apple shares lead the rally in US stocks following its annual Worldwide Developers Conference, where it announced a number of new features in its products related to AI and a partnership with OpenAI.
Today the pound is currently worth $1.276 and €1.185. Brent is at $82.76, Gold is at $2312. And at the time of writing the FTSE 100 is up 0.69% at 8204 and the Eurostoxx 50 is up 0.63% at 4997.
Rentokil
Rentokil shares rose 14% in early trading after Trian, an investment vehicle run by US activist Nelson Peltz picked up a ‘substantial’ stake that has yet to be disclosed. Trian has reached out to Rentokil to discuss shareholder return enhancing strategies. It is suspected with more than half of Rentokil’s revenue coming from the other side of the pond, the main strategy will be to push for a movie of its listing to New York.
Tory manifesto outlines £17bn of tax cuts
Rishi Sunak has unveiled a Conservative manifesto that pledges to deliver £17bn of tax cuts. The Prime Minister said the Tories would cut National Insurance by a further 2% by 2027 – adding that it would eventually look to phase out the “double-tax on jobs” completely “when it is affordable to do so.” Mr Sunak also pledged to scrap stamp duty on properties worth up to £425,000 to boost first-time buyers. The Conservatives, who have already committed to not increasing income tax or VAT rates, said the plans would mean a total tax reduction of £1,350 for the average worker on £35,000. In total, the Conservatives estimate their tax cuts would reduce the total tax take by £17.2bn a year by 2029/30. Mr Sunak insisted that the policies were fully funded, saying that reducing the welfare bill and cracking down on tax avoidance and evasion would collectively raise £18bn.
Reform accused of ‘unaffordable’ tax-cutting pledges
Reform UK has been accused of making ‘unaffordable’ tax-cutting pledges in its manifesto. Party leader Nigel Farage and chairman Richard Tice announced plans to increase the income tax threshold to £20,000 and pledged to raise the higher rate threshold to £70,000. The party claims the pledges could be funded by scrapping interest paid to banks by the Bank of England. However, experts have questioned the feasibility of these proposals, with the Institute for Fiscal Studies stating that the amount raised would be much less than the suggested £40bn.
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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 last one was particularly deadly for suppliers and we are still seeing elevated insolvencies as businesses struggle.
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.