Business news 12 December 2022
James Salmon, Operations Director.
Manufacturers expected to fall into deep recession. Delivery firms struggle with demand amid Royal Mail strike. Power prices hit record high as temperature drops. High streets ‘on cliff-edge’ as cost of living crisis bites. And more business news.
Manufacturers expected to fall into deep recession
The latest Make UK/ BDO Q4 Manufacturing Outlook survey predicts a slump for manufacturers next year due to rising costs and weakening consumer demand. Industrial output shrank by 4.4% over the past year, reflecting the boost to manufacturing in 2021 as the world emerged from pandemic curbs, rather than particular weakness. But the rising cost of supplies, tighter fiscal and monetary policy and a slowdown in consumer demand will lead to a further decline of 3.2% in 2023, according to the survey. Make UK expects overall GDP to fall by 0.9% next year after expected growth of 4.4% in 2022.
Stephen Phipson, chief executive at Make UK, said: “There is simply no sugar-coating the outlook for next year and possibly beyond…the UK risks sleepwalking into an acceptance that little or no growth is the norm. Government needs to work with industry as a matter of urgency to deliver a long-term industrial strategy that has growth at national and regional levels at its heart.”
Meanwhile, the S&P Global/CIPS purchasing managers’ index for November showed that the manufacturing sector was in sharp contraction as factories produced less, exported less, employed fewer people and suffered a reduction in orders for new work.
Delivery firms struggle with demand amid Royal Mail strike
Private delivery firms are suffering severe delays after a stream of customers sought an alternative to Royal Mail amid strike chaos. Retailers using companies such as DPD and Evri, formerly Hermes, have been forced to issue statements apologising for delays to orders. Members of the Communication Workers Union (CWU), which represents 115,000 postal workers, staged walkouts on Friday and Sunday, with further dates planned for December 14, 15, 23 and 24.
Keeping the borders open.
The PM is planning to deploy the army and other civil servants to keep the ports and borders running as border staff strikes.
Fusion
For the first time, in a majr scientific breakthrough, scientists in the US reportedly achieved a “net energy gain” from nuclear fusion.Nuclear fusion such as that in the sun could be the gateway to huge energy supplies without any radioactive or greenhouse gas waste.
Power prices hit record high as temperature drops
Power prices surged to a record high over the weekend as sub-zero temperatures swept across Britain and low wind speeds reduced the amount of electricity generated from renewable energy. Day ahead UK power prices jumped to an all-time high of £675 a megawatt hour while the cost of power at the peak hours of 5pm-6pm soared to a record £2,586 a megawatt-hour. The Telegraph notes that National Grid chief John Pettigrew has warned of the risk of rolling blackouts in January and February.
High streets ‘on cliff-edge’ as cost of living crisis bites
Retail analyst Simon Walton has warned that high streets such as Sheffield’s could soon be hit by a wave of closures due to the cost of living crisis and rising energy prices. He said that a fifth of shops in parts of Sheffield were on the brink of shutting for good. Business closures in the city have gone up by 16% in 2022 and industry leaders have said the worst is still to come. Mr Walton said: “We are walking along a cliff-edge which is liable to collapse at any moment.” He said he feared a “shakeout” in which hundreds of Sheffield’s businesses went bust in the coming months.
Meanwhile, Kris Wigfield, managing partner at insolvency specialist Begbies Traynor’s Sheffield office, said 35,000 companies across Yorkshire as a whole were in “significant distress”.
Policymakers increasingly divided over how to tame inflation
Economists are predicting that the Bank of England’s Monetary Policy Committee will vote for a 0.5% interest rate rise on Thursday, down from the 0.75% hike decided at the last meeting. This would push the base rate from 3% to 3.5% in December. However, analysts suspect there could be the first ever four-way split between MPC members on slowing the increases, with a recession and an ultra-tight jobs market coming up against widespread strikes that could lead to wage growth – further stoking inflation, causing a policymaking headache.
Roger Bootle, the chairman of Capital Economics, writes in the Telegraph that he believes rate rises have much further to go for inflation to be brought under control. New figures on GDP and jobs will come from the ONS today and inflation data are due on Wednesday. Markets expect a 0.4% rise in growth for October and inflation coming down from 11.1% to 10.9%, signalling that it has passed its peak.
New start-up owners rush to understand tax rules
With a record number of new businesses being launched last year accountants are preparing for a wave of requests for help as start-up owners get to grips with regulations ahead of the January 31 deadline for returns. More than 600,000 – one in 10 – report suffering panic attacks while one in five endures sleepless nights, new research from online accounting experts Sage shows. Almost half of owners say they would struggle to explain terms like MTD (Making Tax Digital) or ITSA (Income Tax Self-Assessment) to somebody else. Many would rather clean the oven, stand on a plug or visit the dentist than file their return.
Sage is working with podcaster and BBC Radio 5 Live presenter John Robins to create a tax jargon buster to untangle returns. “We want bosses to know the benefits of going digital for business accounting,” Sage’s product marketing leader Andreas Georgiou said.
PO deposit limits a threat to small business cash service
The Post Office has complained about the limits imposed by banks on the amount of cash small businesses can deposit at local post offices. Unless the banks adopt a more conciliatory approach, the Post Office fears many small businesses will have no choice but to become cashless, further restricting the ability of households to use cash on the high street. The limits were put in place at the behest of the Financial Conduct Authority last year in an attempt to curb money laundering. But the Post Office says cash deposit limits are “a blunt instrument – taking a sledgehammer to crack a nut and impacting thousands of legitimate businesses that cannot deposit their cash takings without a long journey to a now distant bank branch.” The FCA, banks and the Post Office are due to meet on Monday in an attempt to resolve the dispute.
Chancellor warned “tourist tax” could cost 100,000 jobs
Business leaders are demanding a review of Jeremy Hunt’s decision to scrap VAT-free shopping for international visitors, arguing that the “tourist tax” will cause the loss of more than 100,000 jobs. Bosses at Harrods and Selfridges are among those saying the move puts London at a serious disadvantage to rival cities, including Paris and Madrid which are said to be targeting visitors from outside the European Union by promoting the incentive at airports and shopping destinations.
Yorkshire sees biggest rise in exports to China
A report from the China-Britain Business Council (CBBC) reveals Yorkshire has seen the biggest rise in exports to China out of any region in the UK, fuelled by surging petroleum exports. Yorkshire and the Humber saw goods exports increase 41% year-on-year – the biggest rise in the country, driven by a 680% rise in petroleum exports. The report also highlighted the successes that companies like Leeds -based jukebox maker Sound Leisure and Leeds-based health tech company TPP have had in the Chinese market. UK goods exports to China have grown 495% over the past 15 years, making China the UK’s third largest goods trading partner.
Chancellor warns unions not to jeopardise Britain’s recovery
Jeremy Hunt has warned unions their high pay demands will hamper the fight against inflation, jeopardising Britain’s recovery and harming the very people they purport to represent.
Public’s view of Bank of England falls to all-time low as prices soar
A survey published by the Bank of England reveals the public’s satisfaction with its performance has fallen to a new all-time low, standing at minus 12%, down from minus 3% in August.
Dark forces or not, Kwarteng admits they blew it
Former Chancellor Kwasi Kwarteng has admitted he and ex-PM Liz Truss went too fast with their tax cutting plans. He told the FT he regrets the lack of “tactical subtlety” in their approach and conceded they were too impatient in trying to push through such dramatic policy changes via the mini-Budget.
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The Credit Protection Association – Prompting Punctual Payments – Ethical, Effective, Efficient, Economical collections.
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The Credit Protection Association – Prompting Punctual Payments – Ethical, Effective, Efficient, Economical collections.