Business news 15 November 2024
GDP stalls. Business bosses in NI hike warning. NIC change will see hiring freeze. Monetary policy ‘needs to be more forceful’. markets, insolvencies & more business news that we thought would interest our members.
James Salmon, Operations Director.
GDP stalls
The UK Economy grew less than expected in the third quarter of the year (July to September), showing only marginal growth following a rebound at the start of the year, initial figures showed Friday. Gross domestic product came in at 0.1% in the three months to September compared to the previous quarter. That’s below the 0.2% growth expected by economists polled by Reuters and follows an expansion of 0.5% in the second quarter of the year.
The stalling of growth is being blamed on the worries in the economy over the potential tax rises that were being anticipated in Labour’s first budget in October.
Labour made boosting economic growth its top priority when it came into power but Chancellor Rachel Reeves said she was “not satisfied” with these latest figures which cover the first three months of the new government.
Our relationship with the EU
The Bank of England’s governor, Andrew Bailey, used his Mansion House speech to investors to give some of his strongest comments yet on Brexit, saying one of its consequences has been weaker trade.The UK must “rebuild relations” with the EU “while respecting the decision of the British people” who voted to leave in 2016, he said.
Mr Bailey said the changed relationship with the EU has “weighed” on the economy. Adding “The impact on trade seems to be more in goods than services. But it underlines why we must be alert to and welcome opportunities to rebuild relations while respecting that very important decision of the British people.”
Business bosses in NI hike warning
Business leaders have warned the Chancellor that the decision to increase employers’ National Insurance contributions from 13.8% to 15% will mean prices will rise and jobs will be cut. Bosses have also warned of the impact of a reduction to the threshold at which employers start paying the tax. John Longworth, chair of the Independent Business Network, described the Budget as “anti-growth”, while Dr Roger Barker, director of policy at the Institute of Directors, said the increase in employer NICs takes “no account of whether a business is profitable or not.” Meanwhile, Rain Newton-Smith, chief executive of the Confederation of British Industry, warned: “Chief executives look at some of the measures in the budget and say this is going to make it harder to make the decisions to invest in the UK.”
NIC change will see hiring freeze
A survey of 400 business founders by entrepreneurs community Helm shows that 59% plan to “hold off on hiring additional staff” due to the increase in employers’ National Insurance contributions set out in the Budget. It was also found that 16% of founders plan to reduce staff numbers due to the increase in costs. Andreas Adamides, chief executive of Helm, said: “After years of struggling with high inflation, tight margins, and a challenging economic environment, this increase in National Insurance could undo the hard work and progress made by scale-ups.” He added that hiking employers’ NICs to 15% is “a threat to our nascent recovery and should be reversed before it does major damage.”
Monetary policy ‘needs to be more forceful’
Bank of England rate-setter Catherine Mann says officials need to take a “more forceful” approach to setting policy amid increasing uncertainty in the global economy, warning that policymakers “might need to reconsider some of the fundamentals of how we believe monetary policy works.” Warning that greater instability in financial markets can “blur the signal” policymakers wish to convey through monetary policy, Ms Mann said: “In such a world, I believe monetary policy actions and communications must be more forceful to cut through the noise”
Pubs face tax hit
Pub group Young’s is set to incur an annual loss of £11m due to increased employer taxes announced in the Budget. Chief executive Simon Dodd said the rise in employer National Insurance payments and the minimum wage would lead to “significant increased costs for our industry in the near term.”
Markets
Overnight in the US the S&P 500 fell 0.61% to 5949.17 and the NASDAQ dropped 0.64% to 19107.65. Markets fell Jerome Powell indicated the Federal Reserve was in no rush to cut interest rates.
This morning on currencies, the pound is currently worth $1.266 and €1.199. On Commodities, Oil (Brent) is at $71.6 & Gold is at $2565. On the stock markets, the FTSE 100 is currently down 0.35% at 8042 after closing strongly above 8000 yesterday. The Eurostoxx 50 is down 0.8% at 4795.
Some of the market headlines: Apple Faces $3.8 Billion Antitrust Legal Claim Over iCloud. Amazon Questioned by Congress Over Growing TikTok Relationship. ASML and Siemens Earnings Drive Rebound on Stoxx 600. Ford Fined Up to $165 Million by Safety Agency Over Camera Recalls. US Regulators Plan to Investigate Microsoft Cloud Business.
Reeves vows to cut City red tape
Chancellor Rachel Reeves plans to tear up red tape for the City of London, saying that while tighter regulation was the right way to go following the financial crisis, it has “gone too far” and delivered “unintended consequences.” Warning that the UK “has been regulating for risk, but not regulating for growth,” the Chancellor suggested that the financial services sector is “the crown jewel” in the economy and will “play a central part” in Labour’s plans for economic growth. The Treasury says reforms designed to push competition across financial services will include sending “growth-focused remit letters” to regulators and overhauling the system for consumer compensation to give customers and firms “clearer expectations” about redress. It is noted that Ms Reeves has written to the Financial Conduct Authority, Prudential Regulation Committee, Financial Policy Committee and Payment Systems Regulator to push for a greater focus on growth. David Postings, chief executive of UK Finance said he “strongly welcomed” the reforms to boost growth. He added: “Key to this is the regulatory environment, with the new remit letters rightly stressing the importance of growth and competitiveness in regulators’ work.”
End of uncertainty to boost M&A activity
Analysts expect UK markets to see an increase in merger and acquisition (M&A) activity as the Budget and US election result bring an end to a period of uncertainty. Office for National Statistics data revealed that uncertainty over the UK election pushed the number of M&A deals to a four-year low in June, while Peel Hunt said activity remained subdued in the run-up to the Government’s first Budget and the US election. With these both now in the books, Peel Hunt believes that “the stage is set for a sustained increase in UK M&A activity.” James Wild, head of M&A at RSM UK, said the “much-needed clarity for businesses” can “only be a positive for the deals market,” with falling interest rates also set to play a part in driving an upturn in activity.
Judge says LCF was a Ponzi scheme
A High Court judge says collapsed investment firm London Capital & Finance (LCF) operated as a Ponzi scheme, highlighting that it frequently paid funds from new bondholders to borrowers, which subsequently returned these amounts to the firm. Mr Justice Miles, ruling in a case bought by LCF’s administrators, said former LCF executives “knowingly participated” in fraudulent conduct, deliberately creating a false impression of the company and misleading auditor PwC. LCF collapsed in 2019 after the Financial Conduct Authority intervened when the firm was shown to be marketing unregulated mini-bonds and misleading promises of returns.
Treasury rejects call to rethink IHT shake-up for farms
The Treasury has rejected a proposal from the Department for Environment, Food and Rural Affairs (Defra) to soften changes to inheritance tax for farms, which will end the exemption for properties valued over £1m from April 2026. This change will impose a 20% inheritance tax rate, significantly impacting farmers. The National Farmers’ Union has labelled the decision “disastrous,” warning it could “snatch away the next generation’s ability to carry on producing British food.” Clive Bailey, founder of the Farming Forum, argues that the rules are “poorly thought out,” emphasising the unique economic circumstances of farming. The Treasury maintains that the policy is “fair and balanced,” despite concerns that it could create significant challenges for rural communities. While Treasury analysis suggests that 28% of farms will be affected by the shift in tax policy, Defra says up to 66% could be hit by the tax reforms.
Minister rules out four-day week
Pensions Minister Emma Reynolds has ruled out the possibility of civil servants moving to a four-day working week, saying it will not happen as “we’re not living in the 1970s.” Her comments come after staff at the Department for Environment, Food and Rural Affairs said shifting to a four-day week with full-time pay could save £21.4m a year by cutting staff turnover and sickness, while a Public and Commercial Services union report argued that working a four-day week was “essential for a happy and healthy life.” Ms Reynolds said that while she can “see the benefit for those who want to have the flexibility to be able to work part time … I don’t think as a whole that civil servants as a general rule should work four days rather than five.”
Gender gap persists in top jobs
New research from Russell Reynolds Associates’ Center for Leadership Insight reveals that only 21% of senior full-time roles leading to chief executive positions in the UK are held by women. Despite an increase in female representation on FTSE 100 boards, this growth is primarily in part-time, non-executive roles, with only 11% of FTSE 100 CEOs being women. Laura Sanderson, co-head of Europe, Middle East & India at Russell Reynolds Associates, emphasised the importance of fostering a skilled cohort of women leaders, saying: “Establishing a cohort of skilled women leaders needs to be treated as a business imperative as it supports all aspects of a firm’s performance.” The study highlights that while female representation in boardrooms has risen from 12% in 2010 to 42% now, only 12 FTSE 100 companies have achieved gender parity in their senior leadership teams.
Typhoo faces administration
Typhoo, one of the UK’s oldest tea brands, is exploring rescue options after reporting a loss of £38m, up from £9.7m the previous year. The company has filed a notice to appoint administrators from EY, a move which allows it to seek breathing space from creditors. Typhoo’s revenues have fallen from £34m in 2022 to £25m last year, with issues exacerbated by a costly break-in at a factory. Typhoo incurred £24m in exceptional costs during the 2023 financial year, significantly impacting operations. Typhoo’s debts have risen to £73m as of September 2023, compared to £53m a year earlier.
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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.