Business news 13 June 2023

James Salmon, Operations Director.

Barriers to post-Brexit trade likely to ‘deepen’ further, warns EU. Scotland sees biggest rise in business insolvencies in UK. Small businesses at risk from inflexible energy bills.  And more business news that we thought would interest our members.

Barriers to post-Brexit trade likely to ‘deepen’ further, warns EU
UK ministers had hoped that agreeing the Windsor Framework would improve relations with the EU, but European Commission VP Maroš Šefčovič said on Monday that trade barriers between the UK and EU are likely to deepen. Meanwhile, new research by the trade association BritishAmerican Business reveals US businesses have lost confidence in the UK since Brexit, partly due to the trade agreement with the EU but also because of political instability and high taxes.

Scotland sees biggest rise in business insolvencies in UK
Scotland saw the biggest rise in business insolvencies in the UK last year, with almost nine in ten UK local authorities recording a rise in liquidations compared to 2019. Retail and construction were the hardest hit sectors, according to a report from the BBC’s Shared Data Unit. The report found that 608 liquidations occurred in Scotland in 2021, up from 243 in 2019. The highest number of insolvencies was recorded by Glasgow City Council, with 134 companies folding. The report also noted that liquidations began to rise following the end of the UK Government’s furlough scheme in September 2021. Insolvency and restructuring trade body R3 predicts that insolvency figures will continue to rise, particularly in consumer-facing sectors.

Small businesses at risk from inflexible energy bills
The Federation of Small Businesses (FSB) has warned that small businesses are at risk of closure if energy suppliers do not offer more flexible payment options. Unlike households, companies are not protected by the energy price cap and must negotiate long-term deals with suppliers. FSB research shows that over 13% of small firms fixed their energy contracts in H2 2018, with 93,000 at risk of closure, downsizing or restructuring if suppliers do not show flexibility. The group has called on suppliers to offer ‘blend and extend’ options, where fixed contracts are lengthened in exchange for a reduced monthly rate. EDF last week offered support to small and medium-sized business customers who were worst impacted by fixing contracts during the peak of the energy crisis.

Tuffnells falls into administration
British delivery giant Tuffnells went into administration on Monday with the loss of 2,000 jobs. Interpath Advisory was hired to handle the bankruptcy after the Sheffield-based company failed to secure additional funding. The distribution giant has 33 depots across the UK and provides services to over 4,000 businesses.

Ofcom becomes latest victim of mass hack
Ofcom has confirmed that it is a victim of a cyber-attack by hackers linked to a notorious Russian ransomware group. The media watchdog suffered the loss of confidential data about some regulated companies and the personal information from 412 employees during the mass hack. Other companies affected include British Airways, the BBC and Boots, Transport for London and EY.

Companies rethink consultants as they fret about economic outlook
A new report shows more than three-quarters of professional services buyers had cancelled at least some existing projects or scrapped new ones as companies look to protect their profits.

UK mortgage rates set to rise further
Santander has joined the UK’s other major high street lenders in pulling its entire range of mortgage deals for new customers after it was flooded with applications from borrowers desperate to refinance. The bank said it would relaunch its full range on Wednesday. Nationwide and HSBC repriced their mortgage offers last week as rising gilt yields drove borrowing costs up. Meanwhile, NatWest said it was increasing rates for new residential and buy-to-let mortgages, with rates on a two-year fix for the latter going up to 6.79% from 5.22%. Brokers say many landlords will not pass the stress tests for such deals. According to financial data firm Moneyfacts, the average two-year fixed-rate mortgage deal is 5.86%, while a five-year deal has hit 5.51%. Last May they were 3.03% and 3.17% respectively.

Haskel: Further rate hikes cannot be ruled out
Jonathan Haskel, a member of the Bank of England’s Monetary Policy Committee, warned on Monday that further interest rate rises may be necessary to prevent inflation from becoming embedded in the economy. “My own view is that it’s important we continue to lean against the risks of inflation momentum, and therefore that further increases in interest rates cannot be ruled out. As difficult as our current circumstances are, embedded inflation would be worse.” The money markets are anticipating that rates could hit 5.5% by the end of the year, up from 4.5% now.

Business leaders say Tories have presided over a managed decline
Bloomberg reports on how global business leaders have been left disappointed with the UK’s policy approach post-Brexit, with many complaining of a “stifling” commercial environment, a lack of interest from government and more bureaucracy than before the country left the EU. Infrastructure-related planning is poor while the regulatory backdrop is suffocating growth. High taxes are dampening enthusiasm for investment and the Government appears to lack ambition, bosses say. Although leaders say the current administration appears to be trying to repair relations with business, but decisions such as scrapping VAT-free shopping for tourists is considered perverse. Bloomberg says the criticisms are a gift to Labour, which is enjoying a double-digit poll lead with its leader actively courting business.

UK car insurance costs set for further rise in 2024
A new sector forecast from Oxbow Partners predicts the cost of motor insurance will rise 14% overall this year, and 6% in 2024, before levelling out in 2025.

Apple

Yesterday Apple shares closed at a record high of $183.79, beating their last high set in January 2022.

Arm

The British Chip designer is reportedly in talks with strategic investors ahead of an IPO.

Twitter

The new CEO, Linda Yaccarino has said she wants the Musk owned platform to become the “world’s most accurate real-time information source” in a memo calling the move “Twitter 2.0”, claiming it could drive civilization forward.

Microsoft

The US Federal Trade Commission is reportedly set to join the UK CMA in blocking Microsoft’s  $69 billionacquisition of Games studio Activision Blizzard, as the the merger could suppress consumer choice.

Demand for London office space is crashing
Goldman Sachs has warned that demand for London office space is sliding steeply with deals in the sector down 40% compared with normal conditions. A rise in working from home since the pandemic has left over 14% of the capital’s floorspace is empty, up from around 9% before the pandemic. Meanwhile, high interest rates are putting developers’ finances under strain, leading some to consider selling off properties to reduce debt. Separately, the FT reports that investors have injected £2bn into converting unwanted London offices for new purposes as the shift to working from home reshapes the market.

Hunt launches review into state efficiency
The Chancellor launched a review into productivity in the public sector on Monday, insisting that increasing the efficiency of the state would improve living standards and drive growth. Speaking to the Centre for Policy Studies, Jeremy Hunt said that would mean a “boost not just to GDP, but GDP per capita” and “increasing tax revenues without increasing tax rates.” The review, to be carried out by John Glen, the Chief Secretary to the Treasury, will report back by the autumn. Pressure continues to mount on the Conservatives to cut taxes. Cabinet minister Penny Mordaunt joined calls from within the party for lower taxes following criticism that the party had drifted away from Conservatism.

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.

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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!

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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!

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The Credit Protection Association – Prompting Punctual Payments – Ethical, Effective, Efficient, Economical collections.