Business news 14 November 2024
Retailers: Tax hikes will mean job losses and price rises. Ministers outline plans for rates reform. Pension reforms to ‘unlock tens of billions of pounds of investment’. Homebase, WFH, Jaguar, FCA, markets, insolvencies & more business news that we thought would interest our members.
James Salmon, Operations Director.
Retailers: Tax hikes will mean job losses and price rises
Retail bosses have told the Chancellor that they will be forced to increase prices and cut jobs due to tax hikes set out in last month’s Budget. In a letter co-ordinated by the British Retail Consortium (BRC), retail bosses warned that job losses were “inevitable” and higher prices are a “certainty.” Highlighting the “sheer scale of new costs” and the “speed with which they occur,” signatories said: “It will not be possible for businesses to absorb such a significant increase to their cost base over such a short timescale.” The BRC has estimated that an increase in employers’ National Insurance contributions and a lower wage threshold for the tax will see retailers’ tax burden jump by £2.3bn a year. While brokers at Peel Hunt estimate that retail firms will see pre-tax profit fall by an average of 7.5% as a result of the tax increase, analysts at Panmure Liberum say the tax hike combined with a minimum wage increase could knock 10% off retailers’ pre-tax profit. Meanwhile, more than 200 hospitality bosses have told the Chancellor of their “grave fears” about the impact on the sector, which they estimate will incur nearly £14bn of extra costs during this parliament, voicing concern in a letter orchestrated by lobby group UKHospitality.
Ministers outline plans for rates reform
The Government has introduced draft legislation aimed at reforming the business rates system, with the intention of providing permanent cuts for high street businesses. The proposed changes, set to take effect in 2026, will reduce rates for retail, hospitality, and leisure properties valued under £500,000. To finance these cuts, rates for properties exceeding this value, including large distribution warehouses and online retailers like Amazon, will increase. James Murray, Exchequer Secretary to the Treasury, commented: “For too long the business rates system has been working against our high streets.” The reforms aim to support local businesses and address the challenges posed by the current rates system, which has been linked to rising shop closures. Craig Beaumont from the Federation of Small Businesses expressed optimism about the changes, highlighting the need for a rates system that aligns with modern economic demands.
Pension reforms to ‘unlock tens of billions of pounds of investment’
Rachel Reeves is set to unveil a pensions shake-up that could unlock up to £80bn of investment in British infrastructure and business. The Chancellor plans to merge pension schemes in a move that could unlock a wave of private sector investment. Under the plans, 86 local authority pension schemes, which control assets worth almost £500bn, will be required to consolidate their assets in a “handful of megafunds.” These megafunds will need to meet rigorous standards, such as needing to be authorised by the Financial Conduct Authority, the Government said. Ministers will also legislate to create a minimum size for private sector defined benefit schemes. Ms Reeves says the “biggest set of reforms to the pensions market in decades” will “unlock tens of billions of pounds of investment in business and infrastructure, boost people’s savings in retirement and drive economic growth.” Zoe Alexander, director of policy and advocacy at the Pensions and Lifetime Savings Association, said: “Larger pension schemes can help achieve better outcomes for savers through economies of scale, stronger governance, negotiating power and additional resources.”
Markets
Yesterday, the FTSE 100 closed up 0.06% at 8030.33 (After briefly going below 8000 for the first time since April) and the Euro Stoxx 50 closed down .09% at 4740.34. Overnight in the US the S&P 500 rose .02% to 5985.38 (with energy and consumer discretionary leading the index while communications and tech were in the red.) and the NASDAQ fell 0.26% to 19230.73.
This morning on currencies, the pound is currently worth $1.2025 and €1.1266. On Commodities, Oil (Brent) is at $72.3 & Gold is at $2553. On the stock markets, the FTSE 100 is currently up 0.12% at 8040 and the Eurostoxx 50 is up 0.94% at 4785.
Mann plans to ‘move big’ when ready to cut rates
Bank of England policymaker Catherine Mann says she will “move big” on interest rate cuts when it is clear that pressures on inflation have been eliminated. Ms Mann, a member of the Bank’s Monetary Policy Committee (MPC), told the BNP Paribas Global Markets Conference that she voted to hold rates at the last meeting “because, in my view, there is outside risk to inflation, already embedded potentially going forward… and in that environment it is important to hold for longer.” She added: “And then, when I have evidence that there has been a removal or sufficient moderation of inflation persistence, then I will move at a bigger step.” She added that as part of her “activist strategy … when I move, I will move big.”
Jaguar
Jaguar are suspending sale of new cars until 2026, as it pivots toward high end electric only vehicles.
Thames
Thames Water won essential support from its creditors to move forward with the plan to raise £3 billion in emergency funding.
Experian
Credit Agency Experian said profit fell in the first six months of its current financial year despite revenue growth, as a result of adverse interest rate movements. The Dublin-based consumer credit checker said pretax profit in the six months that ended September 30 was $718 million, falling 5.9% from $763 million last year. This was due to ‘non-cash movements in the fair value of our interest rate swaps, as well as movements on put options and a devaluation of the Brazilian real exchange rate’.
Fuller, Smith & Turner
Fuller, Smith & Turner reported an improvement in interim profit as it revealed it is on track to meet market expectations for the full-year. In the six months to September 28, the London-based pub chain said pretax profit rose 95% to £29.0 million from £14.9 million the prior year, bolstered by the disposal of The Mad Hatter in July for £20 million.
Homebase sold to CDS in rescue deal
Homebase has been sold to retailer CDS Superstores, parent company of The Range and Wilko, in a pre-pack rescue deal that will secure up to 1,600 jobs and 70 stores, administrator Teneo has announced. Despite the deal, it is understood that around 2,000 jobs and 49 shops remain at risk. Owner Hilco bought Homebase for £1 in 2018, snapping it up from Australian firm Wesfarmers.
Climate
PM Keir Starmer is increasing the UK’s climate ambitions, announcing a new greenhouse gas emissions reduction target for 2035. The move keeps Britain at the forefront of the battle against global warming. The UK will now aim to cut emissions 81% from 1990 levels by 2035, Starmer said Tuesday at the United Nations’ annual climate summit in Baku, Azerbaijan.
US Inflation
US Inflation ticked up in October though pretty much in line with Wall Street expectations, the Bureau of Labor Statistics reported Wednesday. The consumer price index, which measures costs across a spectrum of goods and services, increased 0.2% for the month. That took the 12-month inflation rate to 2.6%, up 0.2 percentage point from September. The readings were both in line with the estimates.
China began generating power from the world’s largest offshore solar plant, 8km off the coast of the eastern province of Shandong. It has the potential to generate 1.8bn kilowatt-hours annually and power 2.7m homes.
City embraces hybrid working
The City of London is witnessing a significant shift in working patterns, particularly with the rise of hybrid working. According to the latest ONS data, 40% of the workforce is still working from home at least part of the week, with older, educated individuals being the most likely to adopt this model. However, a recent KPMG survey found that 83% of UK CEOs anticipate a full return to pre-pandemic working methods within three years. While some companies are enforcing a return to the office, the Government is introducing legislation to allow employees to request flexible working arrangements.
FCA to publish ‘fundamentally reshaped’ name and shame plans
Nikhil Rathi, chief executive of the Financial Conduct Authority (FCA), has announced that the watchdog’s contentious plan to publicly name companies under investigation will be “fundamentally reshaped” following significant industry backlash. The plan, which aims to enhance transparency and deter wrongdoing, has faced criticism for potentially leading to “naming and shaming” of firms, especially since most investigations conclude without further action. Mr Rathi, who was appearing before the House of Lord’s Financial Services Regulation Committee with FCA chair Ashley Alder, said the regulator will “absolutely not be announcing every investigation,” adding that “this is not a case of us opening up the entire book of investigations, that was never our intention.” The revised plans are set to give companies at least 10 days’ notice before disclosing they were being investigated, instead of just one day as initially proposed. Mr Rathi noted that the City watchdog plans to update the market on its plan “within the next week or so” and that its board will make a decision on the way forward in the first quarter of next year.
FCA set to extend motor finance deadline
The Financial Conduct Authority (FCA) is considering giving lenders more time to respond to consumer complaints about motor finance commissions, a move which could delay potential compensation payouts. This follows a Court of Appeal ruling in October which said a broker could not lawfully receive commission from a lender without obtaining the customer’s fully informed consent. The City watchdog said an extension would “help prevent disorderly, inconsistent and inefficient outcomes for consumers making complaints, motor finance firms and the market.” The Finance and Leasing Association, the trade body for motor finance providers, described the FCA’s plan as a “sensible move.” Meanwhile, the FCA has said motor finance firms should ensure they have the resources to issue final responses to complaints, adding that lenders should also consider whether they need to make “financial provisions.”
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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.