Business news 14 March 2023
James Salmon, Operations Director.
Small firms at risk without energy bill support. Unemployment, investment zones, Silicon Valley Bank. Small Businesses to be excluded from fraud law. Inflation basket changes. And more business news.
Small firms at risk without energy bill support
Small businesses have urged Jeremy Hunt to extend business support for energy bills in the Budget. The Federation of Small Businesses (FSB) is calling for the Chancellor to allow businesses to agree new terms with suppliers or to extend the Energy Bills Relief Scheme (EBRS) until a point where wholesale costs are expected to have fallen significantly. Martin McTague, national chair of the FSB, said: “Energy suppliers should implement a ‘blend and extend’ approach for this vulnerable group, allowing them to renegotiate their contracts and sign up for another 12 months, or the Government could simply extend the EBRS for another 3 months which we believe would be affordable now as market prices have fallen.” The FSB estimates that 350,000 small businesses who signed fixed tariffs last year “could need to shrink, restructure or close if their bills revert to the higher rates in April.” This would equate to 28% of the UK’s small firms.
Unemployment
The UK Unemployment Rate was unchanged at the start of the year, defying expectations of a slowdown, figures showed. According to the Office for National Statistics, the UK jobless rate was 3.7% in the three months to January, unchanged from the three months to December. The reading topped market forecast of a slight rise in the unemployment rate to 3.8%. This time last year, the jobless rate was 4.0%. Annual growth in average total pay, including bonuses, was 5.7% and growth in regular pay, excluding bonuses, was 6.5%.
Investment Zones
Chancellor of the Exchequer Jeremy Hunt will announce plans for 12 new investment zones in his budget, pledging to “supercharge” growth across the UK through tax incentives and extra funding.
Silicon Valley Bank
The collapse of the Silicon Valley Bank continues to shake markets with global financials having lost $465 billion in market value since the bank’s implosion as traders look for contagion and other banks sitting on losses from bond holdings following the biggest banking failure in over 10 years.
Small business to be excluded from fraud law
Small firms are set to be excluded from new anti-fraud legislation, with a criminal offence targeting companies who fail to prevent economic crime only set to cover larger businesses.
London economy leads UK growth
London’s economic growth is outpacing the rest of the UK and could help ease a slump in GDP. Data from NatWest shows that the capital’s purchasing managers’ index climbed to 56 points in February, up sharply from 50.5 points in January and well above the 50 point threshold that separates growth and contraction. London’s figure was the highest in the country and beat the UK-wide reading of 53. Catherine Van Weenen of NatWest said: “The surprisingly marked uplift in business activity during February added to evidence that the capital has begun the year in a much better place than at the end of 2022.”
Inflation basket reveals shoppers’ changing habits
The Office for National Statistics (ONS) has updated the virtual shopping basket used to provide monthly inflation figures. The so-called inflation basket contains more than 700 goods and services, with the prices used to calculate the rising cost of living. The ONS, which reviews the basket once a year, has added 26 items, removed 16 and left 717 unchanged. Non-chart CD’s, non-film DVDs, digital cameras and alcopops are among the items which have been removed, while e-bikes, frozen berries and home security camera systems have been added. Mike Hardie, the ONS’ deputy director of prices transformation, noted that a new data source for rail fares will see “a big improvement” in its calculations on ticket prices. Electricity, gas and other fuels take up nearly 4.9% of the ONS’s new inflation basket, the highest share for over a decade. The ONS noted that the influence of the pandemic on the basket, “which has been so obvious over the last couple of years,” has now “faded from our shopping habits.”
Business confidence climbs
A net balance of 43% of UK businesses are optimistic about the economy over the coming year, according to research firm S&P Global and consultancy Accenture, with this this the highest level in a year and a jump from October’s 18%. Business confidence in Europe was a net 23%, while in the US, confidence hit 32%. Matt Prebble, strategy and consulting lead for Accenture in the UK and Ireland, said: “The renewed optimism among UK businesses once again demonstrates their resilience in the face of economic uncertainty.”
Britain after Brexit: The surprising surge in skilled migrants
Data shows that net migration to the UK hit a record high last year, with the increase partially driven by employers making greater use of the new, post-Brexit migration system than expected.
Poor mental health the main cause of long-term absence, say employers
A poll by PwC for the Times Health Commission suggests that mental illness is the main cause of long-term sickness in the workforce. The survey saw two-fifths of employers say they have seen an increase in employees taking long-term sick leave because of mental ill health. More than half of the 150 employers polled said the mental health of staff had worsened since the pandemic, while 53% said the cost-of-living crisis had had damaged the wellbeing of their employees. Almost two-thirds (64%) of firms said there has been an increase in the number of staff asking for counselling. More than 40% of employers have seen an increase in changes to working patterns due to ill health since the pandemic and almost half have had an increase in employees requesting flexible working patterns. Anthony Bruce, chairman of health industries at PwC, commented: “Helping employees to stay productive in work not only benefits organisations, it promotes the employee’s mental wellbeing and financial security at a time when stress and economic hardship are a worry for many.”
Pay set to trail inflation again
Official figures are expected to show that wages have fallen short of inflation for the 15th month in a row. Analysts expect Office for National Statistics (ONS) data to show that regular pay growth dipped slightly quarter-on-quarter to 6.6% in the three months to February. Inflation, which has fallen for three consecutive months, currently stands at 10.1%. Sanjay Raja, senior UK economist at Deutsche Bank, said pay growth could exceed forecasts if December’s quarterly figure is revised up. He also expects the ONS data to show the unemployment rate held steady at 3.7%. However, analysts at Nomura disagree, arguing that the rate will increase to 3.8%.
Higher taxes are here to stay
The Institute for Fiscal Studies has warned that an era of low taxes is coming to an end. Paul Johnson, the director of the economic think-tank, says that with neither ministers nor the public seemingly keen on cuts to spending on public services or the state pension, a higher tax burden is set to be “permanent.” Mr Johnson, a former head of public spending at the Treasury, noted that the tax burden is expected to hit a record high of 37.5% of GDP by 2025, compared with its average of 30% to 32% for the past four decades. He said this means low taxes are likely to be off the card for many years. He told the I: “Everyone wants better public services… they also want low tax,” adding that while the UK could cut spending, reduce the state pension or increase the state pension age, “I don’t detect a public appetite for these things.”
Heathrow
Heathrow Airport exceeded pre-pandemic passenger levels for the first time since C-19, thanks to the February half-term rush and lifting of restrictions in east Asia. The good news was fuelled by a late getaway last month as millions of Brits took the chance to escape for some sun. Figures from the airport showed that 26 February was the busiest single day in Terminal 5 since Christmas 2019 with over 94,000 passengers passing through.
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The Credit Protection Association – Prompting Punctual Payments – Ethical, Effective, Efficient, Economical collections.