Business news 14 June 2023
James Salmon, Operations Director.
UK sees five-fold increase in company closures in pandemic. UK GDP. Britain’s ten-year export record near-worst in G7. UK wages rise at fastest pace on record as unemployment falls. And more business news that we thought would interest our members.
UK sees five-fold increase in company closures in pandemic
Experts have found that company closures in the UK increased by five times in some areas last year compared to 2019. The retail, hospitality and construction industries were the hardest hit. The Federation of Small Businesses’ Michael Weedon said the rise was down to a “perfect storm” where firms recovering from the pandemic and paying off COVID-19 bounce-back loans were hit by surging costs because of the war in Ukraine. Independent traders also did not have the same reserves as big high street names, which would enable them to cope with the leap in stock and energy costs.
Breaking news – UK GDP
UK GDP data for April showed the economy grew 0.2% in line with forecasts. Strong gains in retail and creative industries offset falls for construction and manufacturing.
The UK economy is just 0.3% bigger than it was before the pandemic hit in 2020.
Britain’s ten-year export record near-worst in G7
Figures from the United Nations Conference on Trade and Development (UNCTAD) show the UK’s goods and services exports rose by just 6% between 2012 and 2021. This is the worst exports record of any member of the G7 besides Japan. In response, a government spokesperson said exports were up year on year: “In the 12 months to March 2023 the value of UK exports were up 24% in current prices and services exports reached a record high of £415bn.”
UK wages rise at fastest pace on record as unemployment falls.
British wages shot up and unemployment fell unexpectedly in April, the latest signs that the resilient UK economy continues to defy efforts to cool demand and dampen inflationary pressures.
Figures from the Office for National Statistics show growth in average regular pay, excluding bonuses, strengthened to 7.2% in the three months to April – the highest level on record, excluding the Covid pandemic. This was up from 6.7% and higher than forecasts of 6.9%. The introduction of a higher national minimum wage and living wage in April helped drive up wage growth with almost 2m workers getting a near 10% wage boost. Industrial action also forced up pay in some sectors but the main driver was in higher-paying sectors such as finance and manufacturing.
Annual private sector wage growth accelerated to 7.6% while public sector wage growth was 5.6%, the highest level since 2003. However, real wage growth remained negative due to the double-digit inflation reported in February and March.
Unemployment showed the tightening pressure on the labour market, as it fell coming in at 3.8%, below the 4% forecast as economists had expected the market to loosen.
Yael Selfin, chief economist at KPMG, commented: “Continued strength in pay growth will warrant higher interest rates. The pickup in regular pay growth is the latest sign that inflation is driving up pay demands, which in turn is making inflation stickier.”
Industrial Production falls
Industrial production in the UK fell 0.3% month on month, with an overall annual decline of 1.9%
UK post-Brexit border charges will increase food prices, warns industry
New post-Brexit controls on food imports from the EU will drive up prices for consumers and disrupt supply chains, the food and logistics industry has warned.
Lenders urged to support customers struggling with higher borrowing costs
Banks have been instructed by the Prime Minister to protect struggling homeowners from soaring mortgage costs as traders price in further interest rate hikes following the release of strong wage growth data. Markets are forecasting that rates could rise as high as 6%, sending Government borrowing costs to their highest since 2008. The yield on two-year gilts rose to as high as 4.9%, surpassing the peak of 4.65% reached in the autumn. Mortgage rates have been climbing sharply in recent weeks, cutting further into household disposable income and diminishing profits for landlords. Rishi Sunak’s spokesman said: “The Chancellor has made clear his expectation that lenders should live up to their responsibilities and support any mortgage borrowers who are finding it tough right now.”
Labour promises to revitalise Britain’s high streets
Labour is to pledge a high street revival as the party promises not to be judged by figures on a spreadsheet, but by the “look and feel” of communities. Senior shadow cabinet member Jonathan Reynolds is expected to say today: “Hospitality is where people spend their hard earned money and use the services we value in our day to day lives”. The Labour party “will be judged by how our high streets look and feel, by working people having more money at the end of the month to treat themselves and their families and by pubs, shops and restaurants thriving, investing and growing.” Mr Reynolds will also renew Labour’s pledge to reform business rates to help pubs and restaurants and raise the threshold for Small Business Rates Relief b increasing the Digital Services Tax paid by online giants like Amazon.
Work satisfaction falls, especially for state employees
A wave of “quiet quitting” among public sector workers is being driven by high levels of dissatisfaction, according to a survey by the Chartered Institute of Personnel and Development (CIPD). Fewer than 50% of public sector staff said they were willing to work beyond their scheduled hours to get ahead or meet the organisation’s needs. There was a 10% drop since 2019 in the number saying they would go above and beyond to 44%. In the private sector, 52% of staff said they would go above and beyond, a drop of five percentage points since 2019. The term “quiet quitting” represents the idea of doing the bare minimum at work to get by and has gained popularity with younger generations. Jonny Gifford from CIPD said public sector workers were becoming increasingly disillusioned because of large workloads and perceived poor pay.
UK and Switzerland to sign professional qualifications agreement
The UK and Switzerland will today sign an agreement to recognise each other’s professional qualifications in services sectors like architecture and auditing. The agreement will introduce a system for recognising qualified professionals from the start of 2025, and will also set out a bespoke route for recognition of some legal professionals. The deal on recognising professional qualifications will replace an interim UK-Swiss agreement which replicated the arrangements Britain had when it was a member of the European Union for a time-limited period.
MPs ask if WFH led to HMRC helpline closure
HMRC has been criticised by MPs for closing a self-assessment phone line for three months from Monday. The Treasury Committee has demanded to know if HMRC’s working from home policy was behind the decision. Government figures show fewer than a third of HMRC staff were in the office in the last week of May. The committee also asked HMRC whether it had consulted an external body prior to the shutdown, how it planned to monitor the impact of the closure and what support was available to vulnerable taxpayers and those unable to use digital services. Elaine Parry of Cheap Accounting said she had never seen HMRC “at such low ebb” in her 40 years in accountancy. She said: “The direction of travel for the operations of HMRC is very much heading downhill.”
Sterling
The pound has enjoyed strong support so far in June amid the expectation the Bank of England (BoE) will raise interest rates as high as 5.5% by the end of 2023. During this time GBP/EUR strengthened from 1.15 to peak at 1.17, while GBP/USD climbed from 1.23 to 1.26.
Telegraph and News Corp
News Corp as said to be considering a bid for the struggling Telegraph titles whose holding company was put into receivership by Lloyds Bank last month.
US inflation
Inflation in the US eased to 4% year on year last month, in May, beating economists’ expectations. It is the lowest rate since March 2021, although it is still double the Federal Reserve’s target rate. The fall could lead to a pause in interest rate hikes across the pond.
Gas
EU gas prices jumped 15% after Norway reported outages at three major gas plants. The EU has been very dependent on Norwegian supplies since mid 2022.
Manchester United
Manchester United class A shares jumped $2.66 to $22.90 per share in NY trading after Qatari news sources claimed that the Glazer family had accepted Sheikh Jassim’s offer. However the source for the news, Al-Watan is a news organisation owned by Sheikh Jassim’s father.
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!
No face-to-face meeting required – 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.