Business news 16 January 2025
Inflation, borrowing costs, rate expectations, tax, household insurance, audit, markets, insolvencies & more business news that we thought would interest our members.
James Salmon, Operations Director.
Breaking – GDP rises 0.1% in November – it had been forecast to rise 0.2% – more tomorrow.
Monthly real gross domestic product (GDP) fell by 0.1% in October, following a decline of 0.1% in September and growth of 0.2% in August. The data comes as the Bank of England considers whether to lower interest rates at its next meeting on 6th February.
Inflation falls to 2.5%
Data from the Office for National Statistics (ONS) shows that inflation fell to 2.5% in December, marking a slight fall from the 2.6% recorded in November. While December’s rate remains above the Bank of England’s 2% target, it came in below the 2.6% that had been forecast by analysts. December’s fall in inflation will ease pressure on Chancellor Rachel Reeves amid a fall in the value of the pound and an increase in government borrowing costs. Suren Thiru, economics director for the ICAEW, said the surprise decline “provides some timely respite amid the financial markets turmoil.” Ruth Gregory, deputy chief UK economist at Capital Economics, said the inflation figure “strengthens the case” for the Bank to cut interest rates to 4.5% in February. Looking ahead, the EY Item Club expects inflation to average nearly 3% in 2025.
Lower inflation sees borrowing costs fall
The Government’s borrowing costs have fallen after an unexpected drop in inflation in the UK and the US increased the likelihood that lower interest rates are on the horizon. The yield charged on key government debt fell below 4.8% on the back of the inflation data, having last week soared to the highest level in 16 years. Analysts said UK inflation falling to 2.5% in December would give the Bank of England greater room to deliver lower rates. Susannah Streeter, head of money and markets at Hargreaves Lansdown, warned that borrowing costs remain high, despite easing somewhat. She said that while costs have begun to edge downwards, they remain at “multi-decade highs as investors assess Britain’s debt burden.”
Economists expect four rate cuts in 2025
The Bank of England will cut interest rates four times this year, according to economists polled by Reuters, with 60% of experts surveyed saying they expect four quarter-point cuts. This would take the base rate to 3.75% by year-end. All 65 economists polled expect a quarter percentage point cut when Bank officials meet on February 6.
War the biggest threat to global economy
The world economy is experiencing unprecedented division, according to the World Economic Forum’s Global Risks Report. The survey of over 900 risk managers found that 23% view armed conflict as the primary threat to global stability. Mirek Dusek, managing director at the WEF, said: “Rising geopolitical tensions, a fracturing of global trust and the climate crisis are straining the global system like never before.” Extreme weather events caused by climate change were identified as the biggest risk by 14% of respondents, while 8% said that geo-economic confrontation – such as steeper trade barriers – would constrain the economy. Just 1% of those polled of respondents identified a new global pandemic as the greatest threat.
Markets
Yesterday, the FTSE 100 closed up 1.21% at 8301.13 and the Euro Stoxx 50 closed up 1.04% at 5032.31 as US & UK inflation eased and treasury yields fell.
US inflation data was a mixed bag. According to the Department of Labor, annual US consumer price inflation picked up to 2.9% in December, from 2.7% in November. The reading was in line with consensus. There were, however, some hopeful signs in the fight against inflation, with the report from the Labor Department on Wednesday showing a measure of underlying price pressures subsiding after barely budging for four straight months. That prompted financial markets to bet on a rate cut in June.
In the UK, consumer price inflation slowed by more than expected in December, data published by the Office for National Statistics showed. The consumer price index rose 2.5% in December from a year before, slowing from a 2.6% annual increase in November. The market consensus had expected inflation to pick up to 2.7%.
Overnight in the US the S&P 500 rose 1.83% to 5949.91 and the NASDAQ rose 2.45% to 19511.23.
This morning on currencies, the pound is currently worth $1.219 and €1.186. On Commodities, Oil (Brent) is at $81.91 & Gold is at $2707. Bitcoin is $99,150. On the stock markets, the FTSE 100 is currently up 0.8% at 8367.9 and the Eurostoxx 50 is up 1.16% at 5091.
The German Economy contracted by 0.2% in 2024, in the country’s second consecutive yearly slowdown, data from statistics office Destatis showed Wednesday. The drop was in line with the expectations of economists polled by Reuters, according to LSEG data. The European Commission and a group of Germany’s leading economic institutes had both independently forecast a 0.1% dip in the German GDP in 2024.
Taiwan Semiconductor shares jump 7.5% in premarket trading after the company delivered a strong outlook, fueling hopes that AI hardware spending will stay resilient. The results are giving a boost to tech stocks and Nasdaq 100 futures.
Hindenburg
The founder of Hindenburg Research said he would disband the activist short-selling firm. Nathan Anderson explained that his team had “finished the pipeline of ideas” it had been working on. Over the past seven years Hindenburg has published several reports accusing companies of committing fraud and profiting when their shares subsequently plummet. Notable targets included Adani Group, an Indian conglomerate, and Nikola, an electric-lorry firm.
PM: Government ‘can’t tax its way out of problems’
Amid concern over high government borrowing costs, Sir Keir Starmer has reiterated a commitment to the Government’s fiscal rules and says ministers cannot “tax our way out” of the situation. This came after Conservative leader Kemi Badenoch urged the Prime Minister to rule out any new tax rises this year. Sir Keir said the Labour has “an ironclad commitment to our fiscal rules,” adding that the Government “can’t just tax our way out of problems” left by the previous government. He went on to add that the Government’s focus is “absolutely on growth.” Speaking at Prime Minister’s Questions, Mr Starmer also said he stands by Chancellor Rachel Reeves’s commitment to only have one Budget this year.
Frozen thresholds pull 2.5m workers into 40% tax band
The Office for Budget Responsibility (OBR) predicts that a freeze on tax thresholds means that the number of taxpayers liable for the higher rate will climb by 2.5m in 2025/26. The analysis shows that 7m people will pay 40% tax, with this 55% more than if income tax thresholds had never been frozen. While 3.5m workers will start paying income tax because of the freeze that began in 2021, 2.5m will be lifted into the higher tax band which applies to earnings over £50,270. Around 400,000 will be dragged the additional-rate threshold, paying 45% on earnings above £125,140. Sarah Coles of Hargreaves Lansdown said: “Gone are the days when being a higher-rate taxpayer was the preserve of the very wealthy – now around a fifth of taxpayers pay higher or additional rates.”
UK property insurance payouts hit highest level since 2007
Property claims paid by insurers in 2024 will total £5.5bn, marking the highest level since 2007, according to new analysis by Deloitte.
Audit industry ‘did not sit still’ after Carillion
ICAEW chief executive Alan Vallance looks at the impact of the collapse of outsourcer Carillion, detailing how it triggered calls for reform of audit and corporate governance. He says that while there have been consultations and reviews, “what we haven’t seen is legislation.” Mr Vallance says he is hopeful that Business Secretary Jonathan Reynolds “will be the person to finally make the change” after the Government included audit and corporate governance reform in the King’s Speech in July. Reflecting on the sector’s response to the issues, he says the profession “did not sit still,” noting that audit quality has improved and that firms have separated the operations of their audit and non-audit practices. The Financial Reporting Council, he adds, has acknowledged these voluntary improvements. Mr Vallance says that while the audit sector is doing well, “finally creating a strong corporate ecosystem which injects trust into the economy will mean it can thrive.”
Latest Insolvencies
Appointment of Liquidators – EXPORTAR LTD
Appointment of Liquidators – GANE INTERNATIONAL LIMITED
Appointment of Administrator – COAST HOTELS AND LEISURE LIMITED
Appointment of Liquidators – ANN I.T. CONSULTING LTD.
Appointment of Liquidators – ANALYTICS GOLD LTD
Appointment of Liquidators – SALVO’S RESTAURANT (HOLDINGS) LIMITED
Appointment of Liquidators – PF CAD PROJECTS LTD
Appointment of Liquidators – HUTCHINSON DISCOUNT LIMITED
Appointment of Liquidators – STEPHEN BOND LIMITED
Appointment of Liquidators – COUNTRY INNOVATION LIMITED
Appointment of Liquidators – WINCHESTER STREET PLC
Appointment of Liquidators – SHOTLEY PARK HOLDINGS LTD
Appointment of Liquidators – ST JOSEPH’S IN THE PARK SCHOOL
Petitions to wind up (Companies) – DYER DEVELOPMENTS LTD
Appointment of Liquidators – DOUGLAS INFORMATICS LIMITED
Petitions to wind up (Companies) – NAD CONSTRUCTION LTD
Appointment of Liquidators – HYGIENIC VALVES & FITTINGS LIMITED
Appointment of Liquidators – BKV ACCOUNTING LIMITED
Petitions to wind up (Companies) – TOKYO INDUSTRIES (YORKSHIRE 2) LIMITED
Petitions to wind up (Companies) – NEWCASTLE 41 HIGH STREET LTD
Petitions to wind up (Companies) – JA CONSULTANCY (UK) LTD
Petitions to wind up (Companies) – DESIGN&CONSTRUCT LTD
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.