Business news 16 February 2024
Recession, retail hybrid working mums, cybersecurity and more business news that we thought would interest our members.
James Salmon, Operations Director.
UK economy slipped into recession in 2023
As reported yesterday, figures from the Office for National Statistics on Thursday showed the UK economy slipped into a technical recession at the end of last year, with GDP falling 0.3% in the final three months of 2023. This followed a 0.1% decline in the third quarter.
The data means Prime Minister Rishi Sunak has failed in one of his key pledges, which was to grow the economy, and the Chancellor will now probably not be able to offer any major pre-election income tax cuts as his fiscal headroom has halved to £12bn.
Grant Fitzner, the ONS’s chief economist, warned that economic inactivity was a major factor holding back growth with the UK the only G7 nation yet to return to pre-pandemic employment levels. The ONS also said Britain is suffering the longest hit to living standards on record with the economy failing to grow since early 2022 after accounting for population growth.
Responding to the figures, Jeremy Hunt said: “There are signs the British economy is turning a corner; forecasters agree that growth will strengthen over the next few years, wages are rising faster than prices, mortgage rates are down and unemployment remains low. Although times are still tough for many families, we must stick to the plan – cutting taxes on work and business to build a stronger economy.” The Chancellor Jeremy Hunt added the UK’s ‘immediate growth prospects lie in the Bank of England’s hands’. The comment suggested the UK government would welcome at least some action on reducing interest rates.
Labour dubs UK’s downturn “Rishi’s recession”
Rachel Reeves, the shadow chancellor, has described Britain’s economic malaise as “Rishi’s recession” as the Labour party attempt to pin the UK’s economic contraction on ministers and bounce back from a torrid week politically. She said the Government had exacerbated global economic shocks and that bringing the country into recession was not necessary to bring down prices. Sir Keir Starmer, the Labour leader, said: “Rishi Sunak has failed to turn the corner on 14 years of Tory economic decline. Britain is hit by a recession and it’s working people who will pay the price.” Meanwhile, unions are angry at reported plans by the Chancellor to further cut public spending. Unite general secretary Sharon Graham said: “It is an outrage that the Chancellor is again looking to use a recession he caused as an excuse to load more austerity on to public services that are already on their knees.”
Retail
UK retail sales in the UK grew significantly in the month of January by 3.4%. This was the largest recovery for such data since April 2021, and double the 1.5% rise predicted by analysts. Volumes in all retail sectors grew in the first month of the year, except clothing, with supermarkets being the biggest contributor to the move.
Hybrid and home working allows more mothers to work
A study has found that as businesses allow more employees to work remotely, the “motherhood gap” between women with and without children narrows. The research suggests that offering more flexibility through hybrid and home working could increase overall employment rates for mothers at a relatively low cost. According to Emma Harrington, an assistant professor at Virginia University, many women struggle to balance their careers and family life, resulting in their potential not being fully harnessed. The study, based on pre-Covid American data, reveals that for every 10% increase in remote work within a sector, the motherhood gap decreases by almost 1%. Before the pandemic, around 86% of childless women with a degree were employed, compared to about 77% of mothers.
Cybersecurity
Veracode’s annual State of Software Security (SoSS) 2024 report revealed a woorrying security issue for SME’s. Security debt (flaws that remain unfixed for longer than a year) exists in 42 percent of applications and 71 percent of organisations. Worryingly, 46 percent of organisations have persistent, high-severity flaws that constitute ‘critical’ security debt, putting businesses at serious risk in terms of impact on confidentiality, integrity, and availability. According to the report, approximately 63 percent of applications have flaws in first-party code, while 70 percent contain flaws in third-party code imported via third-party libraries.
Natwest
NatWest reported better then expected results on Friday morning, along with confirming the permanent appointment of Paul Thwaite as its chief executive. Pre-tax operating profits in the three months to December did fall YoY to £1.3bn, however this beat analysts expectations of fall of £2.4bn. Net interest margin fell by 8 basis points to 2.86%, but again this was above analysts forecasts of 1.97%.But the bank disappointed investors forecasting a fall in revenue this year.
Markets
Overnight all three of US major indices ended in positive territory with the S&P hitting another record high at 5029, its 11th of the year. Europe’s Stoxx 600 index added to its fourth consecutive week of gains, with rallying mining stocks leading the advance in early Friday trading. The FTSE 100 is up 0.7% around 7653 at the time of writing. The pound buys 1.169 Euros and 1.258 dollars. Brent oil steadied overnight near $83 per barrel but fell as the morning advanced to $82 but is still on track to advance for the second week in a row. Bitcoin is at $51,802.
BG’s profits prompts new calls for windfall tax
The boss of British Gas’s parent company, Centrica, has called for the implementation of a “social tariff” to help lower-income households pay less for their gas and electricity. Centrica’s CEO, Chris O’Shea, stressed the need for more protection for vulnerable consumers, stating that a social tariff would be the best solution. British Gas reported a significant increase in profits, reaching £799m in 2023, which has prompted calls for a windfall tax from the Liberal Democrats. The party’s Treasury spokeswoman, Sarah Olney, suggested that the additional tax revenue could be used to support struggling families and pensioners. Unite, a union, called for Centrica to be put into public ownership to prevent households and businesses from being exploited.
Property market crash panic overblown
Kallum Pickering lays out in the Telegraph why he thinks Britain is on the verge of a new house price boom. Despite fears of a 25% plunge in house prices, the UK market has shown resilience, he says, with the Bank of England’s rate hikes failing to crash the market. This is thanks to stronger household balance sheets and a resilient labour market. Additionally, homeowners have been paying down their mortgages, avoiding the negative feedback loop seen during the Global Financial Crisis. While the housing market remains soft, there are signs of recovery, with new buyer enquiries rising and prices starting to rise from their Q3 low. However, the timing and pace of recovery will depend on factors such as further mortgage cost reductions, real income growth, and government policies. In the long term, sustained house price growth is expected due to the chronic demand-supply imbalance.
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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.