Business news 15 September 2023
James Salmon, Operations Director.
Covid debt bill hits £7.4bn. Only a third of public investment replaced since Brexit. Arm, Markets, Retail sales, business council, house prices, insolvencies & more business news that we thought would interest our members.
Covid debt bill hits £7.4bn
The Government has paid out £7.4bn to settle bad Covid-era loans, with £2.23bn more in arrears and £750m in default. With data showing that the Government paid out £1.2bn to settle pandemic emergency loans that had gone bad in Q2, Department of Business, Energy and Industrial Strategy figures suggest taxpayers could ending up paying £11.5bn to cover pandemic-related loans. Around £77bn was lent under three separate Covid-loan schemes. Of this, £46.6bn was through the Bounce Back Loan Scheme, which handed up to £50,000 to SMEs and saw a 100% guarantee from the Government. Almost 15% of these loans have been settled by the Government. While 11.5% of borrowers have fully repaid their bounce back loans, 64.8% are on schedule to do so. Benjamin Wiles, managing director at insolvency firm Kroll, has voiced concern over “an uncomfortable level of suspected fraud” relating to the pandemic support initiatives. Across the bounce-back loans, £1.7bn has been flagged as potential fraud by lenders.
Only a third of public investment replaced since Brexit
The UK has only been able to replace a third of public investment since leaving the EU, according to the think-tank UK in a Changing Europe, which also flagged that just an eighth of infrastructure investment has been replaced. EU funding pumped £146bn into crucial infrastructure schemes over a 46-year period. However, in opting to exit the bloc, the UK lost access to the European Investment Bank (EIB) and created four new domestic development banks – the UK Infrastructure Bank, the Scottish National Investment Bank, the Development Bank of Wales and the British Business Bank. While the EIB invested an average of £6.4bn a year in real terms in the UK from 2009 to 2016, the domestic development banks invested £2.4bn in 2022. Between them, the development banks invested only 17% as much in infrastructure projects in 2022 as the EIB did in the years leading to the Brexit vote. Stephen Hunsaker, who co-authored the report, said: “It is not clear that the UK’s domestic development banks will be able to fill the hole left by the EIB by the end of the decade. They lack staff and expertise, inhibiting them from scaling up operations quickly.”
Arm
Following yesterdays IPO, Arm shares ended the day up almost 25% in their first day of trading, closing at $63.59 after the IPO priced at $51.
Markets
The FTSE 100 enjoyed one of the strongest trading sessions of 2023 so far, climbing 1.95% to 7673.08 after the European Central Bank raised interest rates but signaled this could be the last rise in this cycle. The index also received a boost by a surge higher in mining stocks.
Overnight in the US, the DOW rose 0.96%, the S&P 500 rose 0.84% and the NASDAQ rose 0.81%.
Oil prices extended recent gains, with Brent Crude rising to $93.5 per barrel. Oil majors BP and Shell both rallied in response.
US car workers
The United Auto Workers union is seeking a 40% pay rise and took almost 13,000 workers at three of America’s biggest carmakers—Ford, General Motors and Stellantis on strike at three plants in Detroit after failing to reach a pay deal.
France to block UK request for electric car trade deal extension
France will block a British request to extend a trade deal on exporting electric cars to Europe amid concerns about Chinese parts. The British Government, supported by car makers from across Europe, wants to delay Brexit trade tariffs on electric vehicles shipped between the UK and the EU until 2027. However, a senior French source stated that Brussels does not want Britain to be a back door for China to flood the bloc with cheap electric vehicles. Under the ‘rules of origin’ requirement, electric vehicles shipped from Britain to the bloc must have a certain percentage of their battery and parts sourced from the EU or UK. Failure to meet this criteria will result in a 10% trade levy.
Eurozone interest rates hit all-time high
The European Central Bank (ECB) has increased interest rates across the eurozone to a record high of 4%, warning that inflation is “expected to remain too high for too long.” Signalling that the increase – the tenth consecutive hike – may be the last for the moment, ECB officials said key interest rates “have reached levels that, maintained for a sufficiently long duration, will make a substantial contribution to the timely return of inflation to the target.” While inflation across the bloc is expected to average 5.6% over 2023, the ECB said it expects inflation to fall to around 2.9% next year and 2.2% in 2025.
US Retail
US Retail Sales picked in August, boosted by higher gas prices, as spending on other items grew modestly. Retail sales rose 0.6% in August, the Commerce Department reported Thursday. That’s a slightly faster pace than July’s revised 0.5% gain, and marks the fifth straight month of growth. It’s also well above economists’ expectation of a 0.2% increase.
China Retail
China Retail Sales and industrial production picked up pace in August with better-than-expected growth, according to National Bureau of Statistics data released Friday. Retail sales grew by 4.6% in August from a year ago, beating expectations for 3% growth forecast by a Reuters poll. The increase was also faster than the 2.5% year-on-year pace in July. Industrial production grew by 4.5% in August from a year ago, better than the 3.9% forecast and faster than the 3.7% increase reported for July.
Business Council holds first meeting
The British Chambers of Commerce’s (BCC) Business Council has held its first meeting, with BCC chair Martha Lane Fox leading a discussion on policy proposals to improve the UK economy. Speaking after the event, Lady Lane Fox said the Business Council “will help the voice of business to be heard loud and clear by policymakers.” The Council, which aims to “design and drive the future of the British economy,” has been formed at a time when the future of the Confederation of British Industry (CBI) remains uncertain following a scandal centred on sexual harassment and other misconduct allegations. It has been reported that the CBI is at risk of insolvency, while some sources say members could quit over a possible merger with manufacturing trade body Make UK.
House prices decline at fastest rate since 2009
House prices are falling at their fastest rate since 2009, with a net balance of 68% of property professionals reporting declining prices. The Royal Institution of Chartered Surveyors attributes this decline to high mortgage rates. New buyer inquiries also fell, with a net balance of 47% of professionals reporting a drop. Chief economist Simon Rubinsohn warns that there is “little sign of any relief” and a net 67% of those polled believe prices will continue to fall.
Latest Insolvencies
Petitions to wind up (Companies) – C ROBINSON TRANSPORT LTD
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Petitions to wind up (Companies) – ARK CONSTRUCTION LINCS LTD
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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!
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!
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.