Business news 14 December 2023

James Salmon, Operations Director.

Economy shrinks 0.3%. SME lending falls by 20%. Christmas concern for small business. Shoplifting, housing, supermarkets, HMRC, tax, audits, card fees, insolvencies, & more business news that we thought would interest our members.

Economy shrinks 0.3% in October

The economy declined by more than expected in October, with Office for National Statistics (ONS) data showing that GDP was down 0.3%. This followed growth of 0.2% in September and is a steeper fall than the 0.1% predicted by analysts. Darren Morgan, the ONS’ director of economic statistics, commented: “Our initial estimates suggest that GDP growth was flat across the last three months,” explaining that increases in services, led by engineering, were offset by falls in both manufacturing and housebuilding.

Chancellor Jeremy Hunt said: “It is inevitable GDP will be subdued whilst interest rates are doing their job to bring down inflation,” adding: “But the big reductions in business taxation announced in the Autumn Statement mean the economy is now well placed to start growing again.”

Shadow Chancellor Rachel Reeves said that economic growth is “going backwards,” with this “leaving working people worse off.”

Suren Thiru, economics director at the ICAEW, noted that October’s negative GDP “puts the Prime Minister’s target to get the economy growing in jeopardy.”

Thomas Pugh, an economist at RSM UK, said that “the big picture is still one of a stagnating economy” and warned that the UK’s recession indicators were now “flashing red.”

However, Yael Selfin, chief economist at KPMG UK, said: “Despite continued difficulties, the UK economy is expected to keep its head its above water,” adding: “We expect the UK economy to escape a recession.”

Martin Beck, chief economic advisor to the EY Item Club, said: “Monthly GDP data can be quite noisy, and there’s a good chance that output will rebound in November.”

The British pound fell to its lowest levels in twenty days following the bleak GDP numbers as the data did bring forward expectations of potential Bank of England interest rate cuts in 2024.

The Bank of England is likely to leave interest rates at a 15-year high today, with concerns that inflation is persisting balancing signs the economy may be tipping into a protracted slump. Next year, however, markets are already ramping up bets on interest-rate cuts after the soft GDP data reinforced the view that policymakers won’t be able to keep monetary policy tight for so long.

Goldman Sachs has cut its expectations for UK gross domestic product for 2023 and 2024 after today’s weaker-than-expected data. Economist James Moberly said the 0.3% fall was a “downside surprise.” He pointed out that the fall in output in October was driven by declines in all major sectors.

SME lending falls by 20% in Q3

The latest Business Finance Review by UK Finance has revealed a 20% year-on-year drop in lending to SMEs. Gross lending to SMEs was £3.5bn in the third quarter of 2023, compared to £4.4bn in the same period last year. The report attributes the decline to “demand uncertainty, higher interest rates and the impact of lending taken out during the pandemic.”

Traditional lenders are becoming more cautious about lending to small firms, leading to a reliance on savings instead of new funding. The report highlights that SMEs are increasingly drawing on cash deposits, with total deposits falling 4.5%. Overdraft approval numbers have also dropped, possibly due to an easing in cost pressures.

David Raw, managing director of commercial finance at UK Finance, said: “Our data suggests that SMEs are leaning more heavily on existing resources, particularly cash deposits, rather than seeking new finance. The higher interest rates environment will also be suppressing firms’ appetite to borrow.”

Christmas concern for small business bosses

One in three small business owners are feeling stressed about how well their business will perform this Christmas, with 21% saying this could define their growth for the next 12 months.

A survey of 500 business owners commissioned by payment platform Lopay found that 60% believe the weeks leading up to Christmas are their most important period of the year, with 58% worried about what low sales in December could mean for the year ahead. The ongoing cost-of-living crisis has meant 34% of owners have noticed their customer numbers have dropped recently.

Many are putting measures in place to help boost sales, including seasonal discounts, extended operating hours, and buying more stock. Others are considering how they can make it easier for customers to pay, with 62% using contactless card readers. However, as many as one in four have had to wait for their payment provider to transfer the money to them.


The Met Police appears to have decriminalised shoplifting as they attend less than half of incidents reported across London.

Housing market stabilises

Analysis by the Royal Institution of Chartered Surveyors shows that the property market saw signs of recovery in November. Its measure of new buyer enquiries rose to a net balance of -14 last month from upwardly revised -25 in October. This marked the strongest reading since April 2022. A measure of forecasted sales over the next three months rose to +6 in November, having come in at -17 in October. Agreed sales were up to a net balance of -11% in November, from -23% in October. Analysis measuring the gap between the share of surveyors seeing rises and those seeing falls rose to -43, with this up from a revised reading for October of -61.


Sainsbury continues to gain market share from discount retailers, Aldi and Lidl, according to research from Barclays. The broker report on ‘switching data’ covering the 12 weeks to 26 November showed that Sainsbury was once again the standout performer, making gains from both discounters.

HMRC criticised for chasing trivial sums

HMRC has been accused of spending taxpayers’ money in pursuit of small tax debts. While the tax office has a legal duty to collect all tax owed to the Exchequer, a number of cases involving small sums have reached tribunals. Each one these is likely to have cost HMRC tens of thousands of pounds and the costs could even be higher if an expert witness is required. Sian Marsden of RSM has questioned whether it makes sense for HMRC to chase small amounts of tax through the tribunal process, saying that the tax officials involved in such cases may be better utilised working on cases where a larger tax liability could be at stake. Noting examples where cases have centred on trivial sums, Ms Marsden said: “It’s HMRC’s job to pursue tax but this highlights how flawed the system is and why it should be reviewed.” With it noted that the High Income Child Benefit Charge has seen tribunals where the penalty in dispute was worth less than £1,000, Robert Salter of Blick Rothenberg comments: “The charge is complex, there is limited guidance from HMRC on the issue and it creates artificially high tax charges on people with relatively modest incomes.”

PM promises ‘gear shift’ on taxation

Rishi Sunak has vowed to deliver tax cuts next year, telling the Spectator: “Our priority, going forward, is to control spending and welfare so that we can cut taxes.” The Prime Minister said ministers are “in a position to be able to do all that because we have got inflation down,” adding: “The economy has turned a corner and that means that there can be a gear shift in how we approach taxes.”  Saying that he is a “Thatcherite in the truest sense,” Mr Sunak insisted: “As Nigel Lawson and Margaret Thatcher said: cut inflation, cut taxes. That’s what we’ve done!” Pointing to an Autumn Statement which delivered a reduced rate of National Insurance for workers and a move to make full expensing permanent, the Prime Minister said: “We have delivered more tax cuts in one fiscal event than at any point since the 1980s.” He also argued that critics who focus on the rising tax burden rather than these tax cuts are taking a “glass-half-empty” approach.

Tax cuts would keep interest rates higher, economists warn

The Prime Minister has been warned that significant tax cuts would lead to interest rates staying high until the end of 2024. Andrew Sentance, who sat on the Bank of England’s Monetary Policy Committee (MPC) between 2006 and 2011, warned: “If the thinking in Government is to cut taxes, that won’t help the cause of cutting interest rates,” while Willem Buiter, another former member of the MPC, said: “Any significant net fiscal stimulus – for example a tax cut – could delay the timing of the first Bank Rate cut to the end of 2024 or beyond.” Of the six economists polled by the I- including three who previously sat on the Bank’s rate setting committee – three said the Bank is unlikely to cut rates until September 2024 at the earliest. Mr Sentance does not foresee a rate drop until 2025.

FRC criticises ‘unacceptable’ audit quality at smaller firms

The Financial Reporting Council (FRC) says the work being carried out by Britain’s smaller auditors is “unacceptable,” with little-more than a third meeting the required standard. The watchdog looked at audits of public interest entities carried out by 11 tier-two and three firms over the past 12 months and found that only 38% met its expected standard and required no more than limited improvements. A further 38% needed significant improvements, while 24% required “more than limited improvements.” A number of deficiencies identified in the inspections were in “routine areas,” such as the audit of journal entries and complying with archiving requirements.

While noting that its findings were based on a “small, risk-based sample” of work, the FRC insisted that the results “continue to indicate an urgent need for improvements in audit quality in this sector of the market.” The FRC analysis does show an improvement in quality compared to a year ago, when 75% of audits fell short of expectations. Sarah Rapson, executive director of supervision at the FRC, said ongoing supervision of the largest audit firms “has helped to deliver audit quality improvements at those firms, but it is important that all firms step up to improve the overall health and resilience of the audit market.” She added that the watchdog has developed a “comprehensive, forward-looking supervision approach to ensure audit quality is prioritised” at smaller auditors.

PSR to clamp down on card fees

The Payment Systems Regulator (PSR) has proposed a cap on fees that credit card firms charge retailers for payments between the EU and the UK. The payments watchdog says these fees, which cost UK firms an extra £150m to £200m last year, have risen to an “unduly high level” since Brexit. While the EU has a cap on cross-border interchange fees, these no longer apply in the UK. The PSR says that since Brexit, Mastercard and Visa have “significantly raised” the fees charged to retailers in Britain. Chris Hemsley, managing director at the PSR, said a market review has provisionally found that the fees charged to UK businesses “are likely too high.” He added: “In short, at this stage, we do not think this market is working well.” A Visa spokesperson said: “We strongly dispute the findings of the PSR’s interim report and believe that the proposed remedies are not justified,” while Mastercard said: “We do not agree with the PSR’s findings and will continue to educate them on the critical importance of electronic payments to the UK economy.”

Federal Reserve expects rate cuts next year

The Federal Reserve has opted to keep rates unchanged at a 22-year high of 5.25%-5.5% for the third consecutive meeting. Looking ahead, projections show that none of the US central bank’s rate-setting committee believe they will have to raise rates further next year, with a majority expecting to cut rates below 5% in 2024. The Federal Open Market Committee said it is “strongly committed to returning inflation to its 2% objective.”

Stocks and bonds rallied globally after the US Federal Reserve signaled multiple interest-rate cuts next year, reigniting a bullish pulse across markets as inflation eases.

The yield on 10-year US Treasuries fell below 4% for the first time since August.


BP said former chief executive Bernard Looney has been dismissed without notice after concluding he had “knowingly misled the board”. The oil major said Looney will receive no further salary, pension allowance or benefits from the date of his dismissal, effective from Wednesday. It also plans to clawback 50% of the cash portion of the annual paid to him in respect of the financial year 2022, and he will forfeit a chunk of his award of shares that vested in August 2023. It seems the serious misconduct in his personal relationships with other employees will cost him up to £32 million!

Latest Insolvencies

Appointment of Liquidators – HARLEQUIN LIMITED
Appointment of Liquidators – GRT MANAGEMENT SERVICES U.K. LTD
Appointment of Liquidators – GAINMILL HOLDINGS LIMITED
Petitions to wind up (Companies) – R & M METAL FINISHING LTD
Appointment of Liquidators – JOSEPH ADAMSON (HYDE) LIMITED
Appointment of Liquidators – VICTORIA PROPERTY RENTALS LLP
Appointment of Liquidators – CUSTANCE PROPERTIES LIMITED
Appointment of Liquidators – TALENT TOPCO LIMITED
Appointment of Liquidators – ERMS UK (HOLDINGS) LIMITED
Appointment of Liquidators – DH BUILDING DEVELOPMENTS LTD
Appointment of Liquidators – HARLEQUIN GROUP LIMITED
Appointment of Liquidators – A LA CARTE RENTALS LIMITED
Appointment of Liquidators – B2B INTERNATIONAL LTD
Appointment of Liquidators – HOTSON ROAD LIMITED
Appointment of Liquidators – SECOND WAVE MUSIC 1 LIMITED
Appointment of Liquidators – J BRAIM DRILLING LTD
Appointment of Liquidators – SOUND WAVE MUSIC 11 LIMITED
Appointment of Liquidators – GPH SOLUTIONS LTD
Petitions to wind up (Companies) – ALLWAYS MOTORCYCLES LTD
Winding up Order (Companies) – INNOVATIONS HOLDINGS LTD
Appointment of Liquidators – TOMECO LIMITED
Appointment of Liquidators – S & S STEEL FABRICATIONS LIMITED
Appointment of Liquidators – GROSVENOR LAND LIMITED
Appointment of Liquidators – SECOND WAVE MUSIC 3 LIMITED
Appointment of Liquidators – SECOND WAVE MUSIC 2 LIMITED
Appointment of Liquidators – MARUSIA LTD
Appointment of Liquidators – TOYODA GOSEI UK LTD.
Appointment of Liquidators – VINE SECURITIES LIMITED

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


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


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