Business news 14 August 2024
Inflation rises, unemployment falls and wage growth slows. Plus Google, Sainsburys, markets, insolvencies & more business news that we thought would interest our members.
James Salmon, Operations Director.
Inflation rises
UK inflation rose to 2.2% in July 2024 from 2.0% in June however core inflation fell to 3.3% from 3.5% according to the Office of National Statistics.A rise of 2.3% had been expected.
Unemployment falls and wage growth slows
Data from the Office for National Statistics (ONS) shows that unemployment fell to 4.2% from 4.4% in the three months to June compared to the previous three months. The ONS also revealed that estimated vacancies in the UK fell by 26,000 to 884,000 in the three months to July. Economic inactivity remains high at 9.41m, or 22.2% of the working-age population. Meanwhile, wage growth, excluding bonuses, came in at 5.4% year-on-year over the three months to June. This was down from the 5.7% annual growth seen in the previous quarter. Growth in total pay including bonuses fell from 5.7% to 4.5%. The National Institute of Economic and Social Research said that despite the decline in Q2, wage growth could push inflation higher, prompting the Bank of England to maintain higher interest rates. However, Capital Economics said the slowdown in wage growth may be enough to see the base rate reduced from 5% to 4.5% this year. Yael Selfin, KPMG’s chief economist, said falling pay growth could “help reassure the Bank’s Monetary Policy Committee that domestic inflationary pressures are subsiding.”
Food inflation rises for the first time in 17 months
Food inflation has increased for the first time since March 2023, analysis from Kantar shows, with supermarket prices up 1.8% in the four weeks to 4 August. This is up on the 1.6% rise recorded a month earlier. The increase follows 17 consecutive months of food inflation falling, having hit a peak of 17.5%. Overall, grocery sales by value were up 3.8% year-on-year. The analysis also shows that Tesco increased its share of the grocery market by 0.6 percentage points to 27.6%, while Asda saw its share of the market fall by 1.1%.
Worker health tax incentives could boost economy – CBI
Worker health tax incentives could offer a £2.65bn boost to the UK economy, according to the Confederation of British Industry (CBI). Making employee assistance programmes full tax-free benefits could generate £10 for each £1 spent, while relaxing rules on tax relief for employer-funded medical treatment could generate £5 for every £1 spent. The CBI estimates that these measures could boost Britain’s GDP by £2.65bn over the next four years. The CBI is recommending additional measures, including abolishing the limit on tax-free health screenings and medical check-ups; introducing a new tax exemption for adult vaccinations and virus testing; and ensuring tax relief covers all staff health and safety eye tests. CBI chief executive Rain Newton-Smith said: “A healthy economy needs a healthy workforce.”
Entertainment sector set to surpass £100bn
The UK entertainment market is expected to surpass £100bn this year, according to analysis by PwC. By 2028, the sector is projected to generate £121bn in revenue, making it the largest in Europe. The growth is driven by increased advertising spending and higher consumer spending on video streaming, social networking, and gaming.
Markets
Yesterday, Stocks jumped and bond yields fell after data showed U.S. producer prices increased less than expected in July, reinforcing market expectations that cooling inflation will allow the Federal Reserve to cut interest rates soon. In line with speculation of monetary policy easing, Treasury yields fell. The FTSE 100 closed up 0.30% at 8235.23 and the Euro Stoxx 50 closed up 0.49% at 4894.92. Overnight in the US the S&P 500 rose 1.68% to 5434.43 and the NASDAQ rose 2.43% to 17187.61 after a 6.5% jump from Nvidia.
This morning on currencies, the pound is currently worth $1.284 and €1.165. On Commodities, Oil (Brent) is at $81.3 & Gold is at $2474. With stock markets, the FTSE 100 is up 0.52% at 8278 and the Eurostoxx 50 is up 0.55% at 4721.
European Investors eye Britain
The London stock market is now the top choice among European investors, a survey by Bank of America has revealed, with an increasing number of investors planning to buy UK-listed shares over the next year. The share of investors planning to be ‘overweight’ in UK equities over the next 12 months rose to over 30% in August from less than 10% in July. This comes just 18 months after Bank of America analysis suggested that UK stocks were the most disliked globally. Meanwhile, analysis by economic research institute ZEW shows that economic sentiment towards the eurozone is falling, with this driven by political uncertainty in France and a potential recession in Germany.
AstraZeneca becomes Britain’s first £200bn firm
AstraZeneca has become the first UK firm to be valued at £200bn, with shares in the pharmaceutical firm having risen by 1.1%. This gave it a market capitalisation of £200.3bn. This puts it well ahead of the three other FTSE 100 firms valued at more than £100bn, Shell (£175bn), HSBC (£119bn) and Unilever (£118bn). It falls short of the two largest American firms, however, with Apple and Microsoft each worth more than $3trn. Danni Hewson, head of financial analysis at stockbroker AJ Bell, said: “AstraZeneca’s growth has been steady rather than showy, the tortoise rather than the hare,” adding that the pandemic “gave us a new respect for pharma giants.”
Google
The Justice Department in the states is reportedly considering forcing a break up of Alphabet Inc.’s Google after a judge ruled that the company monopolized the online search market. It would be the authorities first attempt to break up a monopoly since they failed to break up Microsoft two decades ago. Alternatively they may opt to force Google to share more data with competitors and take steps to prevent the Search giant from gaining an unfair advantage in AI.
Sainsburys
J Sainsbury revealed it had made its largest market share gain in nearly three decades over the last quarter. UK market share for the country’s second-largest supermarket rose from 14.8% in 2023 to 15.3% in the quarter to August 4, marking its largest leap since 1997 and keeping it on track to be the fastest-growing traditional supermarket.
Aviva
Aviva interim profit measured under IFRS accounting standards rose to £654m from £415m with assets under management of £186bn up £16bn. UK premium income jumped 18% to £3.81bn. Aviva said it has completed its £300m share buyback during the first half but did not commit to a new share buyback.
Balfour Beatty
Balfour Beatty has reported interims profit of £112m up from £82m and lifted the dividend by 9% to 3.8p per share. Underlying EPS rose 18% to 15.3p.
UBS
UBS reported a Q2 net profit of US$1.14bn ahead of analyst forecasts. The board said it had achieved $900m of cost savings around 45% of its target level but would incur a $1.1bn integration related expense in Q3.
TUI
TUI AG reported underlying earnings of €232m for the April to June quarter above €217m estimates. The group benefited from the bankruptcy of German rival FTI. TUI said pricing was up 3% year on year with no slowdown in bookings at the higher price level.
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Why you should become a member of CPA!
The Credit Protection Association (CPA) has been assisting thousands of UK businesses to get paid, since 1914. We have supported our members through all sorts of difficult trading environments. With high interest rates and a struggling economy and elevated insolvencies, our services can help your business navigate these difficult waters.
Unlike other credit management and debt collection companies, we offer a range of services to our members that are all included as part of a fixed annual subscription, tailored to your needs.
Under your annual subscription you will have access to our main services:
- Our Creditcare credit reports provide credit ratings and limits along with a host of detailed information on your potential customers to enable you to trade with confidence and set appropriate credit policies for new customers.
- Our monitoring service will alert you to any significant changes in the status of those customers.
- Our Overdue account recovery service can be used to chase up payment on any invoices to those customers that have not been paid on time. Unlike other debt collection companies, this service directs your customer to pay direct to you and allows you to maintain your goodwill with them, rather than inserting ourselves into your relationship with you customer and insisting they pay CPA instead. Our Overdue account recovery service resolves over 80% of accounts referred to us.
All of the above services and other complimentary services such address verification, are included in your subscription!
And for the small minority of debts not resolved through our Overdue account recovery service, you can refer the debt to our collections department to escalate the late payment collections process.
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 and be warned of any potential risks. CPA has been improving business cash flow for over 100 years, by tackling late payers and campaigning against the late payment culture in the UK.
Unlike other credit management companies, we offer our members a fixed annual subscription regardless of how high the value of their debts maybe!
Rather than to borrowing more money to improve your cashflow, CPA suggests that business owners tackle the problem at its source. If late payments are a strain on your cashflow, then talk to CPA about how we can help you reduce those late payments.
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’s collection department 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.