Business news 12 August 2023
James Salmon, Operations Director.
Minister demands an explanation for withheld payments from Amazon. Economy grows by 0.2% in Q2 . Housing costs a struggle for 4 in 10. Savers pull £80bn out of Britain’s four biggest banks. Riskier mortgages rise by £30bn. And more business news that we thought would interest our members.
Minister demands an explanation for withheld payments from Amazon.
Small business minister Kevin Hollinrake has written to Amazon to ask them to explain how the retailer will “mitigate” the impact on sellers of its new policy of witholding payments to its small business partners.
Amazon’s recently amended policy is to hold back some money from sellers in case buyers demand a refund. The policy change has left sellers with cashflow difficulties. Many have payments in the hundreds of thousands withheld and are unable to pay bills.
Amazon says the policy will only hold money from seven days from the delivery date, however in reality this can mean up to two additional weeks, which for many sellers, is a hit to their cashflow on an already tight marhgin, that they can’t cover. The new policy was implemented on 3rd August across the UK and EU for sellers who registered with Amazon before August 2016.
Mr Hollinrake wrote to John Boumphrey, the country manager for Amazon UK, saying “I would be grateful if you could explain how Amazon intends to help mitigate the impact on its sellers of this change, as this is a challenging time for many small businesses who are already struggling with cashflow issues.”
Mr Hollinrake added “I am sure you will share my desire to ensure the livelihood of small businesses are not being jeopardised by Amazon’s approach.”
Economy grows by 0.2% in Q2
Office for National Statistics (ONS) data shows that the UK economy grew by 0.2% in Q2, outpacing the 0.1% growth recorded in the first quarter. On a monthly basis, June saw growth of 0.5%. Darren Morgan, the ONS’s director of economic statistics, noted that the manufacturing, services and construction sectors had a strong month in June. Chancellor Jeremy Hunt welcomed the ONS figures, commenting: “ The actions we’re taking to fight inflation are starting to take effect, which means we’re laying the strong foundations needed to grow the economy.” James Smith, research director at the Resolution Foundation think-tank, said that growth of 0.2% between April and June showed the UK’s “relative resilience.” However, he added: “The big picture is that the UK economy has expanded by just 0.4% since the start of 2022 – the weakest growth in 65 years outside a full-blown recession.” Paula Bejarano Carbo, of the National Institute of Economic Research, said: “We expect the UK to avoid a recession both this year and next.” The latest forecasts from the Bank of England also state that the UK is set to avoid a recession. RSM economist Thomas Pugh believes growth is “likely to remain around current levels through the rest of this year,” but sees growth “falling back in 2024 as the impact from the rise in interest rates continues to grow.” He adds: “We think the economy will avoid a recession, but only just.”
Housing costs a struggle for 4 in 10
Research from the Office for National Statistics (ONS) shows that 38% of people found it difficult to afford their rent or mortgage payments over the past month. This marks an increase on the 29% who said the same in August 2022. The poll saw 61% of respondents say housing costs are one of the most important issues facing people in the UK. On how they are navigating the soaring cost of living, more than two-thirds said they are spending less on non-essentials, with 51% using less gas or electricity in their homes.
Savers pull £80bn out of Britain’s four biggest banks
Savers have pulled close to £80bn out of Britain’s biggest four banks, with NatWest, Lloyds, HSBC and Barclays seeing outflows of around £78bn in the 12 months to June 2023. This comes as savers looked to move money to secure better rates or needed cash amid the soaring cost-of-living. Anna Bowes of analyst Savings Champion said the figures suggested some savers “have finally realised how much interest they are missing out on by remaining loyal to their high-street provider, or by leaving their cash to languish because it’s convenient.” Data shows that the banks still hold around £1.4trn in customer deposits.
Riskier mortgages rise by £30bn
Financial Conduct Authority data obtained by Mazars shows that banks lent more than £30bn in riskier mortgages in the year to March, despite rising interest rates. The analysis shows that lenders provided £30.6bn of mortgages to people borrowing four and a half times their income or more. Since 2014, lenders have faced Bank of England limits on the proportion of mortgage business they can carry out at higher loan-to-income ratios, with the proportion of a lender’s new residential mortgages that can have ratios of four and half times or more capped at 15%. Paul Rouse, a partner at Mazars, said: “The scale of risky lending is a clear sign that many borrowers were stretching their finances to the limit even as interest rates were rising.”
HMRC call wait nears 22 minutes
Call waiting times at HMRC have risen to an average of almost 22 minutes, prompting concern that customer service continues to deteriorate at the tax office. Just 63% of calls were answered in the three months to June, down from 73% a year earlier. Caroline Miskin from the ICAEW has warned that slipping standards had caused “inconvenience, frustration and delays” to taxpayers. “Although HMRC is trying to make the best use of limited resources, significant improvement is required,” she said. The tax authority has closed its self-assessment helpline until September 4 as part of a “seasonal model” trial which it claims will free up 350 advisers to take urgent calls on other lines.
Oil
Global oil demand reached a record high of 103m barrels per day in June, according to the International Energy Agency. The IEA reckons that crude prices will continue to rise as OPEC+, the world’s largest oil cartel and allies, cuts production.
Starmer urged to target wealth with taxes
Sir Keir Starmer has been urged to launch a tax raid on wealthy Britons’ assets if Labour wins the next election, with the Trade Unions Congress (TUC) saying it is “time to start a national conversation about taxing wealth.” Under plans proposed by the TUC, wealthy individuals would pay a “one-off” tax of 1.7% on their assets over £3m. This would rise to 2.1% on wealth above £5m, and 3.5% on assets over £10m. Pension pots would be the only asset excluded under the plan. Paul Nowak, the TUC’s general secretary, has accused wealthy households of “coining it in” and “hoarding wealth … getting richer and richer, while working people struggle to get by.” As well as calling on Labour to target wealth with taxes, the TUC wants Chancellor Jeremy Hunt to use his autumn statement to “make sure the wealthiest pay their fair share of tax.” However, Tom Ryan at the Taxpayers’ Alliance said wealth taxes “simply don’t work,” warning that such levies “fail to raise significant revenue and introducing one now would hinder already sluggish growth.” He suggests that the best way to bolster public finances “would be to cut taxes and tackle the spiralling cost of government.”
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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 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!
No face-to-face meeting required – 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.