Business news 15 February 2023
James Salmon, Operations Director.
Downturn drives small firms to legal action. Corporate insolvencies up 7% and compulsory liquidations up 52% in January. Inflation, pay growth, the great unretirement, work from home, strikes, FTSE100 and more business news.
Downturn drives small firms to legal action
Lawyers have reported an increase in legal cases by small businesses, with this said to be a common occurrence in an economic downturn as firms follow up contract disputes to pull in funds. Tahina Akther, a barrister at Wildcat Law, said: “As economic problems grow, so too do legal cases. We have seen an increase in enquiries across a number of areas of law but the correlating factor is economic pressure and worries.” Nick Jervis, a former solicitor and business consultant, added: “As businesses feel the pinch and cash flow slows down, they are quicker to resort to litigation to recover monies owed to them.”
If you are owed money on unpaid debt, CPA can help you recover those payments, without resorting to legal action. We can help you retain the goodwill with your customer and avoid those high legal costs.
Inflation Breaking news
UK CPI in the year to end January 2023 rose 10.1% according to official data, down from 10.5% in December, more than five times the Bank of England’s official target.
Corporate insolvencies up 7% and compulsory liquidations up 52% in January
Figures from the Insolvency Service show that corporate insolvencies rose 7% year-on-year in January, while the number of compulsory liquidations jumped by 52%.
The analysis shows that 1,671 companies went insolvent in January and there were 189 compulsory liquidations.
Christina Fitzgerald, president of insolvency and restructuring trade body R3, said: “It’s been an unhappy New Year for businesses in England and Wales,” noting that a number of household names have entered an insolvency process in an attempt to resolve their financial issues. January saw 1,382 creditors’ voluntary liquidations, with this 2% higher than January 2022, while 612 bankruptcies were registered – 5% more than in January last year.
Ed Macnamara, head of restructuring at PwC, said the data “serves as a reminder that we are still in the midst of a difficult trading environment with rising interest rates and high inflation which, when combined, generally results in more company failures.” Simon Monks, a restructuring and insolvency director at Azets, said the “peak of business failures” had not yet been reached.
Are your credit customers at risk? Are you monitoring and credit checking them? CPA members have access to the credit information on their business customers to help them mitigate the risk of being exposed to those companies on the brink of insolvency.
Pay growth climbs but falls behind inflation
Office for National Statistics (ONS) data shows that while regular pay has grown at the fastest rate in more than 20 years, it is still failing to keep up with inflation. Pay, excluding bonuses, increased at an annual pace of 6.7% between October and December 2022. However, regular pay fell by 2.5% when adjusted for inflation and average wages when including bonuses fell by 3.1%. The ONS report also reveals that regular pay in the private sector rose 7.3% year-on-year between October and December, while public sector workers saw an increase of 4.2%.
With ONS figures showing that unemployment remained unchanged at 3.7%, Chancellor Jeremy Hunt said the fact the rate remained close to record lows was “an encouraging sign of resilience in our labour market.” The ONS figures also show that more than 2.4m days were lost to strikes between June and December, with this the highest total for a calendar year since 1989. Reflecting on the ONS report, Yael Selfin, chief economist at KPMG UK, said regular pay growth “could be around its peak already.”
Jobs data reveals ‘great unretirement’
The second half of 2022 saw a rise in the number of people entering or returning to the workforce, with data from the Office for National Statistics (ONS) showing that a record number moved out of economic inactivity between July and December. The increase was driven by people in the 16-24 and 50-64 age groups.
Darren Morgan, director of economic statistics at the ONS, said fewer people remained outside the labour market in Q4, with some moving straight into jobs and others starting to seek work again, noting: “This meant that although employment rose again, unemployment also edged up.” Helen Morrissey, head of pension analysis at Hargreaves Lansdown, pointed to a “great unretirement” that saw people returning to work after an “exodus from the workplace” during the pandemic.
One in six work from home all week
Office for National Statistics (ONS) data shows that one in six employees are still based at home five days a week, while more than a quarter of the labour force are on a hybrid working pattern. The report shows that between September 2022 and January 2023, 16% of working adults described themselves as entirely home-based, while 28% were hybrid – both working from home and traveling in, while 56% always went out to work. It was also shown that 48% of public sector workers were based at home part or all of the time, compared to 40% in the private sector.
Strikes
The UK lost nearly 2.5 million working days to strikes in the second half of 2022 as Britain suffered its most severe industrial action since the days of Margaret Thatcher. The Office for National Statistics (ONS) announced yesterday that 843,000 working days alone were lost in December – the worst month in more than a decade -taking the total for June to the end of the year to 2,472,000 days lost.
Buy Now Pay Later firms to be regulated
The government is pushing ahead with long-awaited plans to regulate “buy now, pay later” lenders such as Klarna, Clearpay and PayPal who will be required to give consumers key information about loans and perform affordability checks before issuing credit. Borrowers will have also the right to take complaints to the Financial Ombudsman Service.
FTSE 100 nears new landmark
The FTSE 100 nearly hit the 8,000 point mark for the first time yesterday, gaining 0.08% to close at 7,953.86 points. Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown, has urged caution over the optimism seen on the index so far this year, saying that the “UK’s market mood can change on a dime.” She added that while the economy is “holding up well for now,” questions remain over corporate margins and consumer spending power, “which the forward-looking FTSE may not have correctly priced in.”
Work From Home
95.2% of Lodon’s office workers are now permitted to work from home (WFH) and 73% of londoners said they would quit their job if the flexibility was removed.
Meanwhile Londoners have cut back on eating out at lunch time. At the dramatic fall is not all down to WFH practices which only accounts for 11% of the move, with inflation appearing to be the major factor.
Ford
Ford have announced they are cutting 11% of their European workforce, with 1300 to lose their jobs in the UK. The cargiant has opted to build its new Electric car plant in Valencia and is dropping the Fiesta from it’s lineup.
Former BoE economist: Hunt has no room for tax cuts
Former Bank of England economist Sir Charlie Bean says that while Chancellor Jeremy Hunt may have some “wiggle room” on spending in his March Budget, there will not be enough to offer significant tax cuts. Sir Charlie said the Chancellor has some “room for manoeuvre” in the “short term,” adding that “the important thing is that you’ve got a credible plan over the medium term, which has the public finances on a sustainable trajectory.” Considering the options available to Mr Hunt ahead of the Budget, Sir Charlie, the former deputy governor for monetary policy at the Bank, said: “I think it’d be quite difficult for him to do something like cutting the basic rate of income tax.”
Senior Tory MP: Cutting taxes would be ‘irresponsible’
A senior Conservative MP has warned that it would be “irresponsible” for Chancellor Jeremy Hunt to cut taxes at the Budget next month. Caroline Nokes, a former minister and current chair of the Women and Equalities Select Committee, said she “would be happy with no tax cuts,” telling TalkTV: “I think it would be irresponsible to have tax cuts and we saw back in the autumn, didn’t we, the dangers of unfunded tax cuts.” Her comments come at a time where Tory colleagues appear split on tax cuts, with allies of former Prime Minister Liz Truss planning to hand the Chancellor an alternative low-tax Budget.
Tax officials raid BBC India offices
Indian tax authorities have raided the BBC’s New Delhi and Mumbai offices. Officers told local media the searches were part of a “tax evasion” investigation. The raids come just weeks after the broadcaster aired a critical documentary on Prime Minister Narendra Modi’s actions during sectarian riots in 2002. India’s government blocked videos and tweets sharing links to the documentary, using emergency powers under its information technology laws. The BBC said it was “fully cooperating” with authorities.
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!
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Check our compensation calculator to see how much your business could be owed!
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The Credit Protection Association – Prompting Punctual Payments – Ethical, Effective, Efficient, Economical collections.