Business news 15 July 2022
James Salmon, Operations Director.
Poll flags poor mental health among SMEs
Research from the Association of Chartered Certified Accountants (ACCA) and the Corporate Finance Network reveals that financial pressure is causing a dramatic spike in reports of worsening mental health in the SME sector. The number of those in the sector reporting worsened mental health has more than doubled in three months, climbing from 13% in March to 35% in June. ACCA chief executive Helen Brand says the mental health outlook in UK SMEs is “poor”, with data showing similar levels of distress to those experienced at the peak of the pandemic.
IMF warns of recession risk as outlook ‘darkens significantly’
Kristalina Georgieva, managing director of the International Monetary Fund (IMF), says the outlook for the global economy has “darkened significantly” in recent months. Pointing to the cost-of-living crisis and increasing risk of recession within the next 12 months, she said the situation is “only getting worse.” Ms Georgieva said the outlook “remains extremely uncertain,” suggesting that further disruption in the natural gas supply to Europe could “plunge many economies into recession and trigger a global energy crisis.” She went on to warn that it is “going to be a tough 2022 – and possibly an even tougher 2023, with increased risk of recession.”
Businesses call for help over post-Brexit labour shortages
The British Chambers of Commerce has warned that more than 60% of firms need to recruit more staff and urged ministers to overhaul the post-Brexit list of occupational shortages.
G20
G20 finance ministers said in Indonesia that the ‘world is watching for solutions’ in response to the food and energy challenges posed by the war in Ukraine.
Sunak: Inflation the priority, not tax cuts
Former Chancellor Rishi Sunak said his first economic priority if he becomes Prime Minister will be tackling high inflation, not cutting taxes. The Conservative leadership hopeful told BBC Radio 4’s Today programme: “I think our number one economic priority is to tackle inflation and not make it worse.” He added: “I will get taxes down in this parliament but I’m going to do so responsibly, because I don’t cut taxes to win elections, I win elections to cut taxes.” While other candidates have suggested they will deliver tax cuts sooner, Mr Sunak said: “Of course I want to cut taxes and I will deliver tax cuts. But we will do that in a measured way. And the only way to really do that sustainably over time is to ensure that the Conservatives win the next general election.” Meanwhile, a senior ally of Mr Sunak has told the Times that the former Chancellor will prioritise further income tax cuts over reducing corporation tax. They suggest that Mr Sunak may either bring forward a 1p cut to income tax to next year or increase the thresholds. The source added that Mr Sunak will pledge to cut taxes only if inflation begins to fall.
Truss vows to review taxes for families
Conservative leadership candidate Liz Truss has pledged to overhaul taxes to make it easier for people to stay at home to care for children or elderly relatives. Ms Truss said that as Prime Minister, she would look into how families are taxed as part of efforts to ease the cost of living crisis, saying: “We will review the taxation of families to ensure that people aren’t penalised for taking time out to care for children or elderly relatives.” The Foreign Secretary also promised to create “new low-tax regulation zones” to attract investment.
ESG faces reckoning, says EY sustainability chief
Steve Varley, EY’s global vice chair of sustainability, has warned that the ESG label has been “hijacked” by marketeers. This came as EY called for greater scrutiny and regulation to prevent the ESG industry falling into “disrepute.” In a new report, EY said the industry faces a “make or break” moment due to a lack of standardisation, regulation and common purpose. Mr Varley said: “Over the last five or so years, financial marketeers used ‘ESG’ to express ‘impact’, I think that’s where it’s run into trouble … ESG has been hijacked by several stakeholders and it’s been stretched from a basis for risk management into something to do with doing ‘well’.” He warned of “a danger that ESG funds can fall into disrepute, because there are not enough standard definitions.”
Liquidators brought in for Albert Docks firms
Administrators have been called in to liquidate firms involved in a major regeneration project at the Royal Albert Docks. PwC has appointed three joint liquidators for 23 firms after China-based ABP Group failed to pay creditors over the last two years. ABP was served with a Final Termination Notice over its failures to pay in August last year, before its guarantor Dauphin Holdings Group took on the obligations.
Fevertree Drinks
Fevertree Drinks reported a 14% revenue increase to £160.9m with a promising recovery in On-Trade. However the board flagged the impact of logistics and cost headwinds and revised EBITDA guidance of between £37.5m to £45m.
Deal-making declines
Companies reined in deal-making during the first half of 2022 amid concerns over inflation, interest rate hikes and a recession. Figures from Refinitiv show that companies announced $2.2trn worth of buyout deals in the first half of the year, with this representing a 21% drop from a year earlier. The number of deals also dipped, falling 17%.
China
China Q2 GDP growth slowed to 0.4% lower than forecasts for 1% in part due to lower factory output and property market weakness.
Private rents reach record highs
Average private rents in Britain have hit record highs, jumping by more than 20% in some areas. Data from Rightmove shows that the average advertised rent outside London is 11.8% higher than a year ago, while in the capital it is up by 15.8%. Between April 1 and June 39, the average advertised asking rent outside London hit a record of £1,126 per calendar month. This figure is up 19% – or £177 – in the two years since the pandemic started. London has seen a new record average advertised rent of £2,257. While London saw an annual rate of growth of 15.8%, Manchester topped the ranking of rental price hotspots, with the average asking rent climbing 23.4% in a year, hitting £1,127 in Q2.
Amazon joins UK’s 10 biggest employers
Amazon is to create 4,000 new permanent jobs this year, taking its UK total up to 75,000. This will make the firm one of the country’s biggest private sector employers. The 4,000 jobs being created by Amazon will be distributed around the country and throughout its businesses – including at new warehouses in Wakefield and Knowsley.
Ramsden: More rate rises likely
Bank of England deputy governor Dave Ramsden says interest rates are “very likely to have to go up further” to prevent persistently high inflation. He said: “We will have to respond to whatever happens but we want people to understand that we’re not going to let high inflation become sustained and get out of control like it did in the 70s and 80s.”
Sunak leads in Tory leadership contest
Former Chancellor Rishi Sunak has won the second round of voting to choose Boris Johnson’s successor as Conservative leader. Mr Sunak won 101 votes, Penny Mordaunt secured 83, and Liz Truss came third with 64. Five candidates remain after Attorney General Suella Braverman was knocked out in yesterday’s vote. Ms Braverman has now backed Foreign Secretary Ms Truss
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