Business news 12 December 2023

James Salmon, Operations Director.

Insolvencies rising due to high interest rates. FCA urged to act over ‘harsh’ banking practices. 7 in 10 work for unproductive firms. WFH, London, recruitment, interest rates, tax cuts & more business news that we thought would interest our members.

Insolvencies rising due to high interest rates

Higher interest rates are pushing an increasing number of companies into insolvency, according to insolvency specialist Begbies Traynor. The firm said that while it is mainly smaller businesses that are going under, administrations, which typically involve larger, more complex cases, are approaching pre-pandemic levels. Ric Traynor, executive chairman at Begbies, said the company had seen an “increase in insolvency numbers reflecting the current interest rate and inflation environment.” Jamie Murray, an industry analyst at Shore Capital, has warned that insolvency and administration numbers are likely to increase, “given the myriad economic headwinds which negatively impact UK businesses.” Data from the Insolvency Service shows that corporate liquidations have risen to their highest level since the global financial crisis. The number of businesses going insolvent rose by a around 17%, to 24,326, in the year to the end of September. The number of firms going out of business in the third quarter was 10% higher than in Q3 2022.

FCA urged to act over ‘harsh’ banking practices

The Federation of Small Businesses (FSB) has called on the Financial Conduct Authority (FCA) to tackle “harsh” lending practices that are hindering small firms, saying that banks “excessively demand personal guarantees for business loans.” This, it says, can stall business growth and hinder entrepreneurs. FSB’s national chair, Martin McTague, said these personal guarantees, which come on top of higher rates, are “clamping down on small firms’ appetite and ability to grow and invest.” With the FSB lodging a super complaint to the regulator, Mr McTague said the FCA “needs to find a balance so that lending is neither overcautious nor reckless.” The FCA said it will “consider the complaint carefully, in line with the relevant legal framework, and respond.”

Unemployment steady

UK Unemployment was steady in the three months to October, figures from the Office for National Statistics showed on Tuesday. The unemployment rate for the period from August to October was 4.2%, unchanged from the July to September period. The unemployment rate came in line with market consensus. In the three months to September, annual growth in average total pay, excluding bonuses, was 7.3%. This was slightly lower than market consensus of 7.4%.

7 in 10 work for unproductive firms

Office for National Statistics (ONS) analysis shows that 70.6% of workers are employed by companies that have a below-average level of productivity. The ONS says these “laggard firms” contributed 0.1 percentage points to the UK’s annual productivity growth rate between 2011 and 2019. From 2020 to 2021, they made a negative contribution. In contrast, “frontier firms” – those with a productivity rate in the top 10% – generated 0.75 percentage points of the average annual productivity growth rate of 1.19% between 2011 and 2019. This represented 63% of improvements over the period, up from 49% between 1998 and 2007. The ONS said: “Between 2001 and 2007 the annual average job creation and destruction rates stood at 13.7% and 12.3%, respectively. But between 2011 and 2019, job creation averaged 11.1% and job destruction averaged 9.6%.” This, it added, “implies that there has been slower reallocation of workers from low to high-productivity firms, which helps explain slower overall productivity growth.”

Young professionals more productive in the office

Young professionals in London say they are more productive when working in the office, according to a survey by Hays. While the majority of the capital’s workers prefer to work from home, 46% of 20 to 29-year-olds said they were most productive in the office. By contrast, just 33% of 40 to 49-year-olds said the same. Chetan Patel, managing director of Hays London City, said being in the office is “crucial” at the beginning of a worker’s career, saying: “You need to be able to learn from others, make connections, get to know the company you are working for, embrace the workplace culture.” Yvonne Smyth, director and HR specialist at Hays, said a “one-size-fits-all” approach may not be in employers’ best interest, urging firms to “appreciate that this hybrid working debate is not black and white.”

London sees surge in business activity

NatWest analysis of business activity shows that London outperformed all 11 other UK regions in November, with a rating of 56.5 on an index where a score over 50 represents growth. This exceeded the 53.8 recorded in October. Only one other region saw growth, with the West Midlands scoring 50.6. The North East saw the steepest decline, at 44.9. NatWest’s chief economist, Sebastian Burnside, said: “Firms in London are thriving, with business activity in the capital showing robust growth as we head towards the end of the year.” He added: “In most other places, output levels are suffering as a consequence of downward pressure on demand from high-interest rates and general customer uncertainty.”

Firms still recruiting despite economic pressures

A survey of more than 2,000 British businesses by recruitment firm Manpower Group shows that most firms are still looking to hire as they try to plug gaps in their workforces amid a shortage of skilled talent. Plans to bring in more staff come despite economic pressures including high inflation, weak consumer confidence and spiralling interest rates. The poll shows that 27% of firms plan on hiring more staff in the first quarter of 2024. It was also found that eight in ten companies, across all industries, are reporting skills gaps, with this the highest proportion in 18 years. Michael Stull, a director at Manpower Group UK, said: “The UK job market is increasingly divided into two, with demand for mid-level, white-collar roles waning, while vacancy rates for specialists across multiple sectors and geographies remain consistently high.”

Google

Google lost an antitrust case brought by game developer Epic, accusing the appstore and payment services on Android devices was a monopoly and anti competitive. Epic lost a similar case against Apple in 2021.

CBI: Interest rates won’t be cut until 2026

The Confederation of British Industry (CBI) does not expect the Bank of England to cut interest rates until 2026, predicting that the base rate will stay at 5.25% for at least two more years. The CBI’s forecast is based on projections showing that consumer price inflation will not reach the Bank’s 2% target until Q3 2025. The business lobby group has warned that prolonged high interest rates will hit consumer spending and business investment, with this contributing to sluggish economic growth. The CBI expects the economy to grow 0.8% next year after expanding 0.6% in 2023. Louise Hellem, chief economist at the CBI, said: “Businesses are gearing up for another tough year ahead, with our forecast expecting weak growth to persist over 2024. Given that this is coming after an already challenging few years, it’s clear that the 2020s have yet to roar.”

Hunt could have £20bn of extra headroom for tax cuts

The Chancellor could have more than £20bn extra headroom for tax cuts at next year’s Budget, with lower borrowing costs and wage growth boosting Treasury coffers. Analysis by Capital Economics suggests that Jeremy Hunt’s hopes of delivering tax cuts could be given a boost by falling yields on UK bonds known as gilts, with faster fall in Bank of England interest rates and stronger pay growth also having an impact. Ruth Gregory of Capital Economics says the Treasury can expect to see a “buffer” of £35bn against meeting the Chancellor’s main fiscal limit, compared to £13bn at the Autumn Statement. On the tax cuts that the Chancellor may consider, the Mail says a 1p cut in income tax would cost around £7bn a year, while halving the rate of inheritance tax would cost £3.6bn and abolishing it completely would mean a £8.4bn hit for the Treasury. Some economists have suggested a more cautious approach may be required, however, with Ben Zaranko of the Institute for Fiscal Studies saying: “We shouldn’t be fine-tuning fiscal policy in response to changes in… uncertain market expectations for interest rates four or five years hence. That doesn’t make for good policy.”

Pension funds can steer UK out of ‘doom loop’

Former Chancellor Philip Hammond has warned of a “quite shocking” lack of investment by UK pension funds in domestic markets. Lord Hammond said a priority to tackle underinvestment and weak economic growth should be steering UK pension funds “back towards investing in UK assets.” He warned that growth-stage businesses preparing for an IPO see valuations on Nasdaq coming in two or three times more than those in London. Lord Hammond added: “We’re clearly not doing enough on capital formation in the UK economy.” He also said a warning by economists that the UK was in a “doom loop” of high debt, higher interest rates and low growth had “some validity” but added that the phrase “implies that we can’t get out of it. And I don’t think that’s true.”

Skills shortage ‘threatens transition to net zero’, says LinkedIn co-founder

There is a global shortage of workers with the skills to carry out the transition to net zero, according to Allen Blue, co-founder of LinkedIn. He said that while there is growing demand for employees with green skills, such as renewable energy deployment and heat pump installation, the availability of these skills is not keeping pace. A recent LinkedIn report found that job postings requiring green skills increased by 22.4% in 48 countries, while LinkedIn users claiming to possess such skills grew by just 12.3%. Mr Blue has also emphasised the need for carbon accountants to help companies track greenhouse gas emissions and comply with disclosure rules. He urged countries to address the skills gap in their climate plans and consider subsidising degree courses for green skills, warning that a failure to prioritise green talent could have damaging consequences for businesses.

UK house lending predicted to fall by 8% in 2024

UK lending for house purchases is predicted to fall by 8% in 2024, according to a report by UK Finance. The trade association expects lending for house purchases to fall from £130bn this year to £120bn in 2024, saying higher interest rates and household costs will make it harder for people to access mortgage credit. Arrears of over 2.5% of the outstanding balance are forecast to rise from 105,600 cases by the end of 2023 to 128,800 by the end of 2024. UK Finance said there had been an estimated 4,400 repossessions in 2023, noting that this was “an incredibly low number by historic comparisons.” It also highlighted that over 99% of the 10.8m mortgages in the UK are not in arrears, due to strict affordability tests and low unemployment.

Firms face scrutiny over non-financial misconduct, say lawyers

Lawyers have warned that the Financial Conduct Authority (FCA) is increasingly looking at non-financial misconduct, with James Alleyne, legal director at Kingsley Napley, warning firms that this is “clearly a priority” for the City watchdog. With the FCA and Prudential Regulation Authority having recently set out proposals to boost diversity and inclusion to support healthy work cultures, including new rules and guidance over misconduct such as bullying and sexual harassment, Mr Alleyne said regulated firms are “certainly more conscious than ever about staff behaviour in all forms.” James Green, director at Burges Salmon, noted that there have been “some recent very serious instances of misconduct where the regulator is taking action.” He added: “Firms would expect this type of behaviour to merit strong action from the regulator”.

Latest Insolvencies

Appointment of Liquidator

SHEDALI LTD
ROBERT BRAITHWAITE LIMITED
R. KENNEDY & CO. (BALLYMENA) LIMITED
HENRY SCHEIN UK FINANCE LIMITED
JRDSQUARE LTD
SCOTTISH AIRPORTS LIMITED
GLENMACHRIE PROPERTIES LTD
LONDON AIRPORTS 1993 LIMITED
INTERQUEST GROUP LIMITED
INTERQUEST FINANCIAL MARKETS LIMITED
AIRPORT HOTELS GENERAL PARTNER LIMITED
HOLLYCREST DEVELOPMENTS LIMITED
KILMINGTON CROSS SERVICES LTD
METIS MANAGEMENT & CONSULTING LIMITED
THOMAS BOND CONSULTANCY LIMITED
NORTH PROPERTIES ST ALBANS LIMITED
ALIE1420 FREEHOLD LIMITED
CLAREMONT PROPERTY SOLUTIONS LTD
THE COMMUNICATION HUB LTD
ALIE1420 LIMITED
HALENA LOUISE INVSTMENTS LIMITED
TRINITY COURT SIPP OPERATOR LIMITED
COMPASS TOPCO LIMITED
SHELTON FM LIMITED
SIMPSON & CO (SAFETY CONSULTANTS) LTD
NJB QUARTZ LIMITED
MERCER STREET SECURITY SYSTEMS LIMITED
ASHKIRK PROPERTIES LIMITED
ASHRIDGE FINANCIAL MANAGEMENT LIMITED
SCION FILMS SALE AND LEASEBACK SIXTH LLP
SAPPHIRE PROPERTY SERVICES LIMITED
DMILES LIMITED
PORTRESET LIMITED
CENG CONSULTANTS LIMITED
ANTHONY MCKALE LIMITED
PETRIE AND PARTNERS LTD
ANIMAL DREAMS (BRADFORD) LIMITED
MARK BROWN WEALTH MANAGEMENT LIMITED
TRIO RESEARCH LIMITED
SQUARE IT SOLUTIONS LIMITED
YANG SOFTWARE LIMITED
ABRDN SMALLER COMPANIES INCOME TRUST PLC
MITREGLOW LIMITED
CPRM LIMITED
WINDYRIDGE SOLUTIONS LIMITED
MOUSKOS LLP
THREE GATES FARMING LIMITED
DEVED LIMITED
ANHINGA VENTURES LTD
ASSURED BRICKWORK LONDON AND KENT LIMITED
WYC CONSULTING LTD
PCMCO LIMITED

RAFT CONSULTING LTD
COMMUNIC@TIONS LIMITED
PILGRIM BEARSTED CONSULTING LTD
JANUS UK HOLDINGS CORPORATION LIMITED
MITCHELL J LIMITED
P AND P PRODUCTS LIMITED
SENTINEL ENGINEERING FORENSICS LTD
BLUEBELL CONSULTANCY SERVICES LTD
CRYOGENIC GRAPHICS LIMITED
CLOVERLEAF COTTAGES LIMITED
WOKING AGE CONCERN
ASTUTE MOBILE DATA SOLUTIONS LIMITED
WALTMAN HOLDINGS LIMITED
STEVE LEMON LTD
SAMBROOKS CONSULTING LTD
UNIQUE NEW HOMES LONDON LTD
SWIFTCOM BUSINESS SOLUTIONS LIMITED
BROOKGRASS LIMITED
SWIFTCOM SOLUTIONS GROUP LIMITED
ANOTHER SMALL F LIMITED
PROJECT AF LIMITED
S A MALLETT LIMITED
SHARP SOFTWARE SOLUTIONS LIMITED
NANOBYTE BUSINESS SOLUTIONS LIMITED
UTOPIAN PRODUCTIONS LIMITED
JOHNSON POLYMERS LIMITED
PHOENIX INVESTMENT MANAGEMENT LTD
MCHUGH PROPERTIES LIMITED
EDSCALE.IO LIMITED
THE URO CHARITABLE TRUST LIMITED
EXPOSURE FILMS LIMITED
CLAY CROSS SMILES LIMITED
WALL ACCOUNTANCY LTD
MBM CONSULTANTS LIMITED
CROWDBACK LIMITED
HOLLBEN PROJECTS LTD
HPC NOMINEES LIMITED
WILKINS MACKENZIE ASSOCIATES LIMITED
ANNEDO LIMITED
AVOLON AEROSPACE UK 8 LIMITED
AVOLON AEROSPACE UK 9 LIMITED
INFINITE BITS CODING LTD
DISHLEY 101 LIMITED
4 WALLS ENGINEERING & CONSTRUCTION LIMITED
MWL TECHNOLOGIES LTD
CR&DJH CONSULTING LIMITED
NORTH STAR DESIGN LIMITED

G & S ROOFING SPECIALISTS LIMITED
JIM RYAN – DRY LINING LIMITED
WINNING HYGIENE LIMITED
ARTHUR WEBB & SONS (QUARRY BANK) LIMITED
XYZ (CUMBRIA) LTD
FLUENT FINANCE LIMITED
EMERGENCY RESPONSE SOLUTIONS LIMITED
ASHWORTH BLACK LIMITED
SB DRAUGHTPROOFING LIMITED
HALL ALLIANCE LIMITED
AD WALKER ACTUARIAL SERVICES LIMITED
SWIFT EXPLORATION LIMITED
LOWTHER PROPERTIES LIMITED
ORRELL MARINE LIMITED
G CORNELL & SONS HOLDINGS LIMITED
TALENT MIDCO 1 LIMITED
REDMANIAN SECURITIES LIMITED
NAUTILUS H LTD
MIRA VISWANATHAN CONSULTANCY SERVICES LIMITED
CONGER FINANCE LIMITED
MANSONS GUITAR SHOP LTD
BARN BUILDING LTD

Appointment of Administrator

THE CHEMISTRY GROUP (HOLDINGS) LIMITED
SMART GRAPHICS (UK) LTD.
THE CHEMISTRY GROUP LIMITED
UPPER CLAPTON LIMITED
PARAMOUNT LABELS & TAGS LIMITED

MARINE MATTERS UK LIMITED
WHP FACILITIES LTD
CHAMBERS LING LTD
CUBE PRECISION ENGINEERING LIMITED
WHP ENGINEERING LTD

ACE SCAFFOLDING (M/CR) LIMITED
MEDICAL INNOVATIONS CENTRE LTD
THE ANSWER (CONSTRUCTION) LIMITED
FIRST CHOP BREWING ARM LTD
PAPER LONDON LIMITED

Winding Up Petitions

MACKIE PROPERTY INVESTMENTS LIMITED
HOW BUILDERS LTD.
CASTLE HOMES (LONDON) LIMITED
FINEPOINT ESTATES LTD
NEATH HILL AUTOS LIMITED
THE OM GROUP CORPORATION LIMITED
BARRINGTON CADDICK ESTATE AGENTS AND LETTINGS LTD.
INSPIRED GARDENS LIMITED
COMFORT HEALTHCARE SERVICES UK LTD
PERFORMANCE SOUND & LIGHT LTD.
ACE SUPPORT FM LTD
LEGAL ASSIST LTD
WERECON LIMITED
PARADIGM GLOBAL EVENTS LTD
WALCOM INTEGRATION LTD
WADSWORTH CARE HOMES LTD
KORNCHAIN LIMITED
THOMAS HAMMOND INTERIORS LIMITED
NC HOSPITALITY MANAGEMENT LTD
M-TEK (ASSEMBLY) LTD
HIGHLAND TIMBER CONSTRUCTION LIMITED
FOUIN & BELL ARCHITECTS LIMITED
BELLIAR LTD
D M LAUNDRY SERVICES LTD
HAYRE BUILDERS LIMITED
OYSTER ENTERPRISES LIMITED
OCG CONTRACTORS LTD
JONES & BROTHERTON PLUMBING & HEATING LIMITED
PEARCE BENTLEY SECURITY LIMITED
THE TEACHING FACTORY LTD
OFFICE X LTD
900 DEGREES LTD
FVINARU LTD
HARTREEL LIMITED
POLISH BUILDERS AND DECORATORS LIMITED
UNISONIUS CONSULTING LTD
CITY LIGHTS PRODUCTIONS LIMITED
FRANCIS BUILD SPECIALIST LTD
SATCHI HOLDINGS PLC
APAX PROPERTY LIMITED
TINGDENE HOMES LIMITED

DESIGN&CONSTRUCT LTD
FORMTEK LTD
KINSELLIS SERVICES LTD
FAST PAYROLL UK LIMITED
SHEEHAN COURIERS LIMITED
BLUE LIGHT LEISURE LIMITED
FAILSAFE LABS LIMITED

ACQUA E FARINA LIMITED

Winding Up Order Notices

INSITE DIGITAL SOLUTIONS LIMITED
THE WOODMAKERS (LITTLEPORT) LIMITED
PROREAL INTERNATIONAL GROUP LTD
WORKFORCE SOLUTIONS (ENG) LTD
INYANGA MOON LIMITED
S BEST LODGE LIMITED
CITI NESTS LIMITED
SQUIBB GROUP LIMITED
PARAGRIM LIMITED

GM DESIGN AND BUILD LTD
OLD CHANNEL PROPERTY LIMITED
VALLUGA GROUP 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.