Business news 15 August 2023
James Salmon, Operations Director.
Unemployment & wages rises. Recession warning over rate hikes. UK ministers miss small business procurement spending target. Sustainability hub will help small firms decarbonise. Consumer Confidence. And more business news that we thought would interest our members.
Unemployment & wages rises
UK Unemployment rose unexpectedly in the three months to June, while at the same time wage inflation accelerated more quickly than expected, figures from the Office for National Statistics (ONS) showed this morning.
The UK jobless rate rose to 4.2% in the three months to June. Market consensus had expected it to remain unchanged from 4.0% in the three months to May.
Also in the three months to June, annual growth in average total pay, including bonuses, accelerated to 8.2% from the upwardly revised figure of 7.2% in the previous three-month period. June’s figures overshot consensus of 7.3%.
Regular pay grew by 7.8%, the highest annual growth rate since comparable records began in 2001.
Darren Morgan, the ONS’s director of economic statistics, said that basic pay “is growing at its fastest since current records began”. adding “Coupled with lower inflation, this means the position on people’s real pay is recovering and now looks a bit better than a few months back.”
It will be interesting to see the inflation figures due out tomorrow and how they compare.
Recession warning over rate hikes
Maggie Pagano in the Mail looks ahead to an important week for the economy, with several batches of official data set to be released. The first of these will see the Office for National Statistics (ONS) publish labour market numbers for Q2, with analysts forecasting an unemployment rate of around 4%. The ONS will also detail earnings growth, with many economists expecting annual growth in total pay of more than 7%.
Ms Pagano says Wednesday brings “the big number,” with July’s inflation figures released. Price rises are expected to have fallen below 7% for the first time since February 2022. While analyst forecasts vary, the rate is set to dip below June’s 7.9%. Ms Pagano says inflation falling below 7% coupled with signs that wage growth is slowing would mean the Bank of England “would not need to be in such a hurry to push up rates again” when the Monetary Policy Committee meets in September. She says that if the inflationary outlook “looks brighter,” the Bank has “a great reason not to put rates up again.” She adds that a further hike “would be dangerous, as it risks tipping the country into recession at such a fragile time.”
UK ministers miss small business procurement spending target
The Government failed to meet its target for channelling a greater proportion of procurement spending into SMEs last year, despite a record outlay of £21bn on goods and services from smaller providers.
Sustainability hub will help small firms decarbonise
The Government has launched the UK Business Climate Hub to support SMEs in their decarbonisation efforts. Developed by the Department for Energy Security and Net Zero and organisations including the Federation of Small Businesses, the hub offers resources and advice on cost-effective climate initiatives, carbon credits, business grants, sustainability training, and more. It also encourages SMEs to join the SME Climate Commitment, pledging to halve greenhouse gas emissions before 2030 and achieve net zero emissions before 2050. Research from Sage and International Chamber of Commerce shows that 90% of SMEs are keen to tackle climate change but find it difficult to know how or where to start.
Consumer Confidence
Consumer Confidence continues to decline as soaring mortgage rates hit household finances. Confidence, which had been improving since the aftermath of the mini-Budget, slid for the second month in a row in July, according to polling by YouGov and the Centre for Economics and Business Research (CEBR).
Savers lose £17bn to scams
Just over half (51%) of UK adults have, or know someone who has, experienced a financial scam attempt in the past 12 months, according to research by Canada Life. This equates to approximately 26.8m people. Of these, 3.6m went on to fall victim to the scam. The average amount lost to scams was £4,715 per person, meaning £17bn was lost in total. While 43% of victims got all of their money back, 26% did not recover any of their stolen funds. Scams involving tax or debt collection were the most common, accounting for 32% of cases, while 25% were advance fee scams and 23% were so-called “hello mum” scams where fraudsters pretend to be a family member in need of financial support. Julia Peake, tax and estate planning specialist at Canada Life, said: “With the cost-of-living crisis continuing to squeeze many households, it’s a real field day for criminals and scammers to target vulnerable people.”
UK Film Industry
The Hollywood strikes by actors and writers are having an impact here, across the pond, on the UK film industry. Pinewood Studios has said that the seven major films and shows currently being filmed at its studios are all on hiatus. Thousands of jobs are under threat as a result in production teams ranging from set construction to catering.
Triple lock set to remain
The Conservatives and Labour are expected to commit to the triple lock policy in their election manifestos, meaning pensioners will continue to see the state pension climb by the highest of inflation, average earnings or 2.5%.
Firms making counteroffers to keep staff
Research from the Chartered Institute of Personnel and Development (CIPD) has found that around 40% of employers have made counteroffers to keep hold of staff considering higher paying roles elsewhere in the past 12 months. While 38% of the employers who had made a counteroffer matched the salary promised by the new firm, 40% offered even higher wages. Jon Boys, senior labour market economist at the CIPD, said: “While pay is often the most typical focus of a counteroffer, there are other things employers should consider in making roles more attractive, such as flexible working, additional paid holiday, opportunities for career development, or better pension contributions.”
FCA starts ‘politically-exposed persons’ review
The Financial Conduct Authority (FCA) has asked MPs and peers whether they have faced problems with opening or maintaining a bank account. This comes as part of a wider investigation into ‘debanking’ following Coutts’ decision to close Nigel Farage’s account due to his political views. The City watchdog says it is reviewing how financial services firms have applied the politically exposed persons regime – and whether any changes are needed. The FCA has initially written to MPs, peers and the chairs of parties polling at more than 5%, It will also seek insight from senior civil servants and high-ranking members of the armed forces. The watchdog said responses will inform the upcoming review of the politically exposed persons regime, which is expected to report back by June next year.
America becoming a tax haven for the super-rich
Charlotte Gifford in the Telegraph says that while the financial systems of well-known offshore tax havens have become more transparent, the US has “grown into the biggest enabler of financial secrecy in the world.” This claim is made by the Tax Justice Network’s Financial Secrecy Index, which ranks jurisdictions by their “complicity” in helping wealthy individuals conceal their finances. The index ranks the scale of financial secrecy countries supply, rather than the scope for financial secrecy their systems allow. The US ranks first on the index for the first time, overtaking the likes of Switzerland, the Bahamas and the Cayman Islands, with the Tax Justice Network estimating that the US costs the world $21bn in lost tax. Ms Gifford details the impact of “pro-anonymity loopholes” introduced by some US states, suggesting these look to “feed a fast-growing wealth management industry and woo the world’s elite.” She highlights the role played by trusts and shell companies, saying secrecy around them makes it difficult to measure how many individuals are stashing their wealth inside the states in question or how much wealth they hide across the US.
Windfall tax on big four banks could raise up to £20bn
A windfall tax on the profits of Britain’s big four banks could raise between £5bn and £20bn, according to campaign group Positive Money. With banks having posted bumper profits amid a hike in interest rates, Fran Boait, co-executive director at Positive Money, said: “To allow banks to continue hoarding billions in record profits whilst millions struggle to keep the roof over their heads would be gross negligence.”
More ethnic minority workers in insecure jobs
Data from the Trades Union Congress (TUC) shows that the number of minority ethnic people in insecure work increased by 132% between 2011 and 2022. In the same period, the number of white people in this type of work increased by 9.5%. Overall, almost 3.9m people in the UK are in insecure work, which includes short-term and zero-hours contracts. Of the total, 21.5% of the workers are from minority ethnic backgrounds. The proportion of minority ethnic people in insecure jobs has risen from 12.2% in 2011 to 17.8% in 2022, while for white people the rate increased from 10.5% to 10.8%. TUC General Secretary Paul Nowak said: “Too many Black and ethnic minority workers are trapped in low-paid, insecure jobs with limited rights and protections, and treated like disposable labour.”
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Wilko bidders given deadline for rescue offers
Companies interested in buying retailer Wilko, which fell into administration last week, have been given until Wednesday to make an offer for the chain. Wilko was put into administration after failing to secure £75m in funding, with PwC handling the process. While sources suggest that retailers B&M, The Range, Poundland and Home Bargains have all expressed an interest in making an offer, private equity firms Alteri and Gordon Brothers are also reportedly interested in investing in the homewares chain.
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.
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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
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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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The Credit Protection Association – Prompting Punctual Payments – Ethical, Effective, Efficient, Economical collections.