Business news 13 January 2022
James Salmon, Operations Director.
Bosses now more likely to rationalise unethical behaviour. Insolvency Service clears Thomas Cook bosses of wrongdoing. Survey finds demand for staff continues to grow. Visa survey finds small firms are eying crypto. Poorest Brits suffer most from cost of living woes. And more business news.
Bosses now more likely to rationalise unethical behaviour
Corporate leaders are more likely than before to mislead auditors or regulators to improve their pay or bonuses, according to a survey by EY. The firm’s latest Global Integrity Report found 18% of board members would engage in such unethical conduct, compared with 14% in a 2020 report. Some 42% of board members said unethical behaviour in senior or high performers was tolerated in their organisation, while 17% would ignore unethical behaviour by third parties and 15% would falsify financial records. More than half of those questioned said they believed standards of integrity had either stayed the same or fallen over the last 18 months while just over two in five said the pandemic had made it harder to do business with integrity. “The COVID-19 pandemic has had a serious impact on integrity standards for companies around the world,” said Andrew Gordon, EY Global Forensic & Integrity Services Leader. “Hybrid working makes it difficult to undertake effective compliance monitoring, and fraud risk factors typically increase at a time of crisis,” he added.
Insolvency Service clears Thomas Cook bosses of wrongdoing
The Insolvency Service has apparently cleared Thomas Cook’s directors of wrongdoing over the travel group’s collapse more than two years ago after considering the findings of the Official Receiver. City AM notes that while the watchdog’s investigation has cleared the firm’s board members, the audit of Thomas Cook’s financial statement continues to be under scrutiny by the Financial Reporting Council.
Hilco reaps dividends from Homebase despite accepting millions in aid
Homebase owner Hilco took a £25m dividend payment from the DIY chain in 2020 despite accepting at least £10.6m in government aid. The total amount of government assistance booked by Homebase has previously been estimated at up to £40m. The Guardian points out that Homebase’s decision to hold on to government support, including business rate relief, contrasts sharply with other large retailers.
The Guardian
Arcadia’s unsecured creditors set for modest return
Unsecured creditors in Arcadia are likely to receive a return of about 10p-15p in the pound against their outstanding claims, according to Deloitte, which was appointed administrator in November 2020.
Survey finds demand for staff continues to grow
A poll by KPMG and the Recruitment and Employment Confederation (REC) found demand for staff is growing across the country, pushing up rates of starting pay for permanent and temporary workers. Computing and IT saw the biggest demand for permanent jobs, while for temporary positions it is nursing and care. Claire Warnes, of KPMG, commented: “Employers in all sectors haven’t lost their appetite to hire, but many will be frustrated by the pressure these inflationary and competitive conditions, which are likely to continue for some time, are putting on their operating costs and ability to expand.” REC chief executive Neil Carberry added: This survey shows again how tight the labour market was at the end of last year. Demand for staff is growing across every sector and region of the UK, and candidate availability is still falling.”
Partnerships start to identify wrongly claimed coronavirus support
Data analysed by Pinsent Masons show around twenty-five professional services partnerships have admitted to overclaiming furlough, with the total amount wrongly claimed coming to £309,588, an average of £12,384 per firm. The numbers are likely to increase further as many tax returns are still to be submitted, the law firm pointed out. Many firms will have made “genuine mistakes” in their applications for furlough and other Covid support schemes, said Andrew Sackey, partner at Pinsent Masons. Confusion would also have arisen from modifications to the scheme. “Many firms were operating under considerable strain at the time they made these applications, being forced to adapt quickly to an unprecedented situation. Some will have subsequently discovered that staff, well-meaning or otherwise, may have worked in breach of the rules,” he concluded.
Financial services enjoys steady growth
A survey of financial firms by the CBI and PwC found the sector grew for the third quarter in a row in the last three months of 2021 and at their fastest pace since mid-2017. However, CBI Chief Economist Rain Newton-Smith said that although volumes and profitability growth across the financial services sector remain buoyant, the softening of optimism due to the near-term concerns over COVID-9 needed to be closely watched. In the first three months of 2022, firms expect activity to remain robust and at a strong pace, the survey found. Additionally, some 40% of firms were prepared for new rules on disclosure of climate-related financial data, which come into force from April 2022, while 14% said they were not ready, and the remaining companies reported that they were fairly or very prepared.
Visa survey finds small firms are eying crypto
Nearly 25% of small businesses in nine countries around the world plan to accept digital currencies as a form of payment in 2022, a survey by Visa has found. Additionally, some 13% of consumers in those countries expect retail stores to begin offering crypto payments this year and beyond. Almost three-quarters of businesses surveyed worldwide reported that accepting new forms of payments is “fundamental” to their business growth. “I think more people are feeling more confident with crypto,” said Jeni Mundy, Visa´s global head of merchant sales and acquiring, adding that for many smaller companies that are moving into new forms of digital payments, adopting crypto may be a natural evolution.
IFS: Poorest Brits suffer most from cost of living woes
Less wealthy Brits will have more of their income eroded from the cost of living crisis than their wealthier compatriots. Analysis by the Institute for Fiscal Studies (IFS) shows poorer households tend to spend almost three times as much of their budgets on gas and electricity. This will result in them absorbing a roughly 7% shock to their income this year from inflation. “Many households on middling incomes, and especially those with particularly high energy costs, will not find it easy to adjust to extra costs upwards of £500 per year,” the IFS added. Brits in the top of the income distribution will be saddled with just over 5% inflation this year. The findings underline separate research carried out by KPMG which found nearly one in three Brits plan to cut spending this year. Over half of households intend to cut back on eating out, while 49% plan to cut back on takeaways and nearly half intend to cut back on essentials such as the weekly shop.
Brexit
The Foreign secretary Liz Truss, in her first meeting since taking over Brexit negotiations from Lord Frost, will meet the European Commission’s Maros Sefcovic to discuss the Northern Ireland protocol today. The question is whether she will look for a fight to appease the hard line brexittiers or look to cut a deal to avoid a trade war. Businesses who trade with Europe will be keenly watching.
Blue Chip News
Tesco upgraded its annual profit outlook saying it is on track to be slightly above previous guidance of £2.5bn to £2.6bn. It reported like for like sales growth of 0.3% over the key Xmas period. ASOS reported revenues rose 2% to £1.39bn in the four months to end December. The board has decided to move from AIM to the main market by the end of February 2022. Marks & Spencer said its annual pre-tax profit would reach £500m after reporting Q3 sales of £3.27bn up 19%.
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