Business news 15 August 2024
Inflation, Consumer confidence, Young entrepreneurs, markets, house prices, mortgages, pensions, insolvencies & more business news that we thought would interest our members.
James Salmon, Operations Director.
Breaking news : UK GDP rose 0.6% between April and June with the growth rate also up 0.9% year on year according to the Office of National Statistics. More in tomorrows post.
Inflation rises to 2.2%
Data from the Office for National Statistics (ONS) shows that UK inflation rose to 2.2% in July, with this the first increase in 2024. The Bank of England expects inflation to go up to 2.75% in the coming months before falling below its target rate of 2% next year. ONS chief economist Grant Fitzner said that while price growth “ticked up a little” in July, “inflation pressures at least in the short run are fairly moderate.” Economists predict that July’s slight increase in inflation could see policymakers opt to keep interest rates on hold in the immediate future. While Peter Arnold, EY UK’s chief economist, expects officials to keep the base rate at 5% in September before delivering another cut in November, RSM economist Thomas Pugh said the ONS data may not prompt a rate cut in September but “does open the door to two more cuts, rather than just one, later this year.” Sanjay Raja, chief UK economist at Deutsche Bank Research, says it is “entirely conceivable to think that we could get multiple more rate cuts this year,” Ruth Gregory, deputy chief UK economist at Capital Economics, said the latest ONS data “may not alleviate the Bank’s concerns about persistent price pressures entirely.”
Consumer Confidence
Consumer Confidence rose in Britain last month as sentiment around household finances moved into positive territory for the first time in three years, according to YouGov. A poll by the researcher showed consumer confidence across Britain climbed to 111.3 from 109.4 over the month, with figures above 100 representing a net positive outlook.
Young entrepreneurs skipping higher education
Research by GoDaddy’s research initiative Venture Forward suggests young entrepreneurs are skipping higher education in favour of starting their own businesses. The poll of digital micro businesses shows that 22% of entrepreneurs under 30 started their business after their A-levels instead of pursuing a university degree. Andrew Gradon, head of GoDaddy UK & Ireland, said the research “indicates entrepreneurship is becoming an increasingly attractive alternative to higher education.”
Markets
Yesterday, House-builders led the gains in London, with Berkeley Group, Persimmon and Taylor Wimpey all rising as much as 3%. Inflation data from the UK, showing prices climbed slower than expected last month, appeared to boost hopes for future rate cuts, in turn spelling good news for the housing market. The FTSE 100 closed up 0.56% at 8281.05 and the Euro Stoxx 50 closed up 0.70% at 4727.60.
Overnight in the US inflation rose in-line with expectations putting the 12-month inflation rate at 2.9%. The S&P 500 rose 0.38% to 5455.21 and the NASDAQ rose 0.03% to 17192.60. With Google’s parent Alphabet falling after news the Justice dept might be pushing for its breakup.
This morning on currencies, the pound is currently worth $1.2843 and €1.1669. On Commodities, Oil (Brent) is at $80.1 & Gold is at $2455. With stock markets, the FTSE 100 is up 0.05% at 8286 and the Eurostoxx 50 is up 0.23% at 4739.
Sun tan traders pick portfolios by the pool
A poll from digital investment platform Charles Stanley Direct shows that one in six do-it-yourself UK investors manage their portfolios from beside the pool while on holiday. While 22% said they disengage from market news for the length of their holiday and 21% take a break from trading, 18% have managed their portfolio during days out with their families. More than one in ten (13%) have spoken with their financial advisor while on holiday. Rob Morgan, chief investment analyst at Charles Stanley Direct, said: “These sun tan traders must be applauded for their commitment – but there is also merit to switching off.”
US inflation dips to three-year low
US inflation has slowed to the lowest rate since March 2021, with data showing that price growth hit 2.9% in July. This was down on the 3% recorded in June. July’s rate remains above the Federal Reserve’s target of 2% but is far lower than the 9.1% rate seen two years ago. Analysts say the slowdown in inflation strengthens the argument for the Fed to cut interest rates. Julian Howard, chief multi-asset investment strategist at GAM Investments, said a rate cut in September now looks “all but certain.”
Eurozone
The Eurozone Economy expanded by 0.3% over the second quarter, official data revealed on Wednesday. This was in line with expectations and marks a 0.6% increase on the same period a year ago.
Apple
Apple are building a table top robot combining an ipad like screen with a robotic limb.
House prices climb 2.7%
UK property prices rose by 2.7% in the year to the end of June, figures from the Office for National Statistics show. A 2.4% increase in England pushed the average house price above £300,000. The typical house price in England is now £305,000, compared to £216,000 in Wales, £192,000 in Scotland, and £185,000 in Northern Ireland.
One in three delay buying new home
Analysis from the Mortgage Advice Bureau shows that one in three people have delayed buying a home because of financial pressure stemming from matters such as high interest rates, steep rents and rising costs. The study shows that a fifth have taken on an extra job to increase their funds. In 1980, the average house price was only three times the average salary but in July this year, the average house price was eight times the typical annual wage. Around a quarter of first-time buyers have seen poor credit scores make it harder to access an affordable mortgage.
Mortgage rates could fall to 3.5%
Experts believe that mortgage rates could fall to 3.5% by the end of the year. Aaron Strutt of brokers Trinity Financial said it would be “pretty reasonable” to expect fixed deals to reduce if the base rate falls by another 0.5%, suggesting that the cheapest five-year fixes could be around 3.5%. This, he says, “would revive the property market and make mortgages more affordable.” Noting that markets expect policymakers to cut the base rate again this year, Nick Mendes of broker John Charcol, said: “Previously, I thought rates could reach 3.5% by early next year, but now I think we could see rates falling to that this year.”
Train Strikes
Aslef said train drivers will vote on a new deal with the UK government comprising a 5% backdated pay rise for 2022/2023 a 4.75% rise for 2023/2024 and a 4.5% increase in 2024/2025. The vote if in favour, could end the long running train dispute.
Admiral
Admiral posted a 32% rise in interim profits to £310m due to improved underwriting. The board declared a special payment of 19.7p alongside an interim dividend of 71p per share.
Pension tax raid risks hitting retirements
Dame Amanda Blanc, the chief executive of insurance giant Aviva, has warned Chancellor Rachel Reeves that a tax raid on pensions could disrupt millions of workers’ retirement plans. This comes amid reports that the Treasury is considering cuts to pension tax relief as officials look to plug an alleged £22bn black hole in public finances. It has been suggested that there could be a flat rate of tax relief at 30p in the pound, meaning higher-rate payers would face an effective 10% tax charge on their retirement contributions. Dame Amanda said: “If you really want people to save for the long term, pensions are a long-term game,” arguing that they “are not something that you do something with today and then don’t have consequences in five, 10, 15, 20 years’ time.”
Tech founders: Visa guidelines must be reassessed
The Government has been urged to reassess visa guidelines by tech bosses. New guidelines implemented earlier this year include a hike in the visa salary threshold for skilled workers. Centuro Global, an AI-powered SaaS platform, has called for a re-consideration of the guidelines, arguing that they have caused disruptions for UK businesses. Centuro Global believes that the new rules are detrimental to future generations of professional talent. The effects of the guidelines have already been felt by some firms and graduates, with job offers being withdrawn. A survey of senior business leaders by global relocation platform Jobbatical saw more than half say that new immigration policies have harmed UK businesses, while 60% say there is a need for more international workers.
Carpetright owed almost £350m when it collapsed
Carpetright owed nearly £350m when it collapsed into administration with the loss of more than 1,500 jobs before being rescued, according to a document filed with Companies House by administrator PwC. Carpetright’s secured creditor will not receive any of the £120m owed, while preferential creditors, mainly employees, are expected to receive all of their money. HMRC, which is a secondary preferential creditor, is owed an estimated £9.2m. Unsecured creditors are owed more than £213.8m. The carpet and tiling retailer was acquired by rival Tapi in July.
HMRC files winding up petition against Lycamobile
The tax office has hit mobile network operator Lycamobile with a winding-up petition – a formal legal process used against a company that is unable to pay its debts – over a long-running dispute over VAT worth £51m. A tax specialist tribunal last month ruled in favour of HMRC in the VAT dispute, while audit firm PKF Littlejohn said in June that it was unable to sign off Lycamobile’s accounts as it had “not been able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion.”
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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.