business news 15 October 2021

James Salmon, Operations Director.

Loan defaults likely to rise, say lenders.  Business bodies warn that tax hikes could hit the UK’s recovery. Policing the ‘wild west’ of UK insolvencies.  MPC members urge caution on interest rate rise. And more business news.

Loan defaults likely to rise, say lenders
A Bank of England survey of lenders suggests that more households are expected to have defaulted on mortgages and other loans by the end of November. The Bank’s credit conditions survey asks banks and building societies to detail the climate over the previous quarter and what they expect in the next three months. While mortgage default rates had decreased in the three months to the end of August, they are expected to increase by the end of November, as are default rates on other types of loans, including credit cards. Lenders also anticipate an increase in the number of SMEs defaulting on loans, while default rates are likely to remain unchanged for large firms. The report shows that lenders expect the availability of mortgages and other loans to households to increase by the end of November. Mortgage demand is predicted to slip but demand for re-mortgaging is likely to climb, respondents said. Corporate credit availability is expected to remain unchanged, with it also shown that demand for business loans is forecast to increase for large businesses and rise slightly for SMEs.

Business bodies warn that tax hikes could hit the UK’s recovery
Kitty Ussher, chief economist at the Institute of Directors, has warned that imposing punitive tax hikes on businesses will hurt the UK’s post-pandemic economic recovery. “Our economy is now within sight of its pre-pandemic size. To maintain an upward path, particularly as government support is phased out, it’s crucial that businesses should now have the confidence to invest,” she insisted. Offering a similar warning, Mike Cherry, national chair of the Federation of Small Businesses, said small firms trying to navigate their way out of the pandemic “need to see more done to encourage growth”, adding: “Imposing further taxes on small firms who are the backbone of our economy is not the way forward.”

Policing the ‘wild west’ of UK insolvencies
The FT says that insolvency “seems vulnerable to cowboys”, arguing that an independent regulator “with serious fining powers” may be required and suggesting the Financial Reporting Council could be an option.

MPC members urge caution on interest rate rise
Two of the Bank of England’s nine-strong Monetary Policy Committee (MPC) have suggested they would like to see the path inflation takes before voting for a rise in borrowing costs.

Catherine Mann, a former chief economist at the Organisation for Economic Co-operation and Development and US bank Citi, said the BoE could hold off on raising interest rates as financial market traders are betting on tighter monetary policy, saying that speculation about the Bank’s intentions is increasing the cost of borrowing in financial markets – the outcome a higher rate would be looking to achieve.

Meanwhile, fellow MPC member Silvana Tenreyro, a former London School of Economics professor, said pushing rates higher could be “self-defeating” if inflationary pressures turn out to be temporary. She suggested that while the global price of energy and other commodities is pushing up inflation, “these effects in general tend to be short-lived”. “The prices go up, but they don’t keep going up sustainably, so you have a one-off price effect and in that sense inflation should be transitory,” she added.

IMF in inflation warning
The International Monetary Fund (IMF) has warned of the threat to the global economic recovery posed by an outbreak of inflation, urging central banks to respond quickly if current inflation pressures prove not to be transitory. The IMF also warned of the impact of the ongoing coronavirus pandemic, calling on wealthy nations to boost coronavirus vaccination rates in poorer countries.


European Commissioner Maros Sefcovic, the bloc’s Brexit negotiator, told member states they should expect a dramatic response if the U.K. walks away from its commitments over Northern Ireland. The two sides are starting a new round of negotiations after the U.K. demanded extensive changes. Earlier this week, the EU was reportedly ready to offer a package of concessions to ease trade barriers.


Global equity markets moved firmly higher, shrugging off inflation concerns.  The FTSE 100 pushed through 7,200 points yesterday, with mining stocks leading the way. Anglo American, Antofagasta, BHP Group, Glencore and Rio Tinto all added more than 3%. Oil majors BP and Royal Dutch Shell gave trading in London a further boost, after tracking Brent Crude prices higher. US Markets rallied Thursday after better-than-expected earnings reports from Walgreens Boots Alliance, UnitedHealth, Bank of America and other major companies.  Asian Markets were mostly higher, after firmly positive cues overnight from Wall Street, as traders reacted to upbeat earnings news and better-than-expected labor data from the US, with the spike in crude oil prices also providing support.

UK set to keep cap on bankers’ bonuses
The UK is set to keep the EU’s cap on bankers’ bonuses, with the Treasury reportedly set to focus on a range of other measures to reform financial services regulation post-Brexit. The cap, which was introduced following the 2008 financial crisis and is overseen by the Prudential Regulation Authority, limits bankers’ bonuses to no more than 100% of their fixed pay – or double that if shareholders back the move. Despite concern that the cap hurts London’s ability to attract the best global talent, a source close to Rishi Sunak said scrapping the measure is “just not a priority and the Chancellor isn’t looking at it.” Matthew Lesh, head of research at the Adam Smith Institute think-tank, comments: “Scrapping the bonus cap would immediately attract thousands of highly paid financial sector workers, boosting our economy and Treasury receipts.”

Black people ‘invisible’ in UK boardrooms
Claudine Reid, chair of Lloyds’ Black Business Advisory Committee, has warned that black people remain ‘invisible’ in UK boardrooms, saying that while they are “visible because of the colour of their skin”, they are “invisible when it comes to the skill, talent and ability that they can contribute to the boardroom.” Analysis by leadership consultancy Green Park shows that there are no black people in the top three executive roles at any FTSE 100 company. Ms Reid’s comments come as a report from Lloyds shows that only 43% of black business owners trust banks to have their best interests in mind.

Menopause forces women to miss work and leave jobs
Lack of support for women going through the menopause is forcing many to take time off work or even leave their jobs, according to a survey for menopause expert Dr Louise Newson. The poll saw 99% of women say their symptoms led to a negative impact on their careers, with more than a third describing the impact as significant. Almost 60% took time off work due to symptoms, while one in five passed up the chance to go for a promotion they would have otherwise considered, 19% reduced hours and 12% resigned. Six in 10 respondents said their workplace offered no menopause support. Dr Newson, who runs the not-for-profit Newson Health Research and Education, says the study shows there is “an urgent need to improve menopause support in the workplace”.

Average house price up £50k in five years
Zoopla analysis shows that the average price of a home in Britain has risen by £49,257 in the last five years, with the total value of the country’s housing stock jumping 20% to £9.2trn in the period. The data shows that more than a third of the £1.6trn increase has come in the past year. The report found that more than two-thirds of homes in 53 of the country’s 367 local authority areas have risen by more than £49,000. Grainne Gilmore, head of research at Zoopla, said: “The value of Britain’s residential property has continued to climb over the last five years, speeding up over the last 12 months as house price growth has escalated.”

Pension age changes spark retirement fears
Trust in the Government to fulfil its pension promises appears to be falling, according to the Great British Retirement Survey by Interactive Investor. One in five people yet to retire said they did not know whether they would receive any state pension at all once they retire – this uncertainty rose to 26% among people in their thirties and 53% of people aged between 24 to 29.

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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.