Business news 16 March 2022

James Salmon, Operations Director.

Insolvencies and bankruptcies increase, year-on-year. Retail and construction insolvencies soar. Unemployment falls and wages climb. Boosting productivity will help earnings growth.  And more business news.

Insolvencies and bankruptcies increase, year-on-year
Insolvency Service figures show 1,515 company insolvencies were registered in England and Wales in February. This was more than double the 685 registered in February 2021 and 13% higher than the pre-lockdown total of 1,346 in February 2020. The report also reveals a year-on-year increase in the number of people in England and Wales taking out a debt relief order (DRO). The data shows that 2,242 DROs were recorded in February, with this 61% higher than in February 2021 but 6% lower than in February 2020. The eligibility criteria for DROs – a formal type of personal insolvency aimed at people with lower amounts of unmanageable debt – was broadened last year, with the total debt level at which people can apply increased from £20,000 to £30,000. The report also notes that there were, on average, 6,384 individual voluntary arrangements registered per month in the three months to the end February 2022, while 588 bankruptcies were registered, with this 36% lower than February 2021 and 62% lower than February 2020. Christina Fitzgerald, vice president of insolvency and restructuring trade body R3, said: “It’s clear that the economic issues of the last two years are starting to take their toll on people’s financial health.” She added: “Consumer spending has declined and consumer confidence is low as people worry about the economy and their own financial position, with inflation now a real problem for firms and individuals alike.”

Retail and construction insolvencies soar
Research from Mazars shows that increasing material costs have led to a steep rise in insolvencies in the retail and construction industries. During 2021/22, there was a 21% year-on-year rise in insolvencies among retailers, with just under 1,000 companies falling into insolvency, while in the construction industry, a 45% increase in insolvencies saw 2,775 bankruptcies. Rebecca Dacre, a partner at Mazars, has warned the problem is set to get worse as inflation and interest rates are expected to climb. She warns that costs have “become a very significant problem over the last two years,” warning that the war in Ukraine “has only worsened” the situation.

Unemployment falls and wages climb
Office for National Statistics (ONS) figures show that the unemployment rate fell 0.2 percentage points between November and January to 3.9%. Meanwhile, the number of UK workers on payrolls rose by 275,000 between January and February, hitting a record 29.7m, while vacancies also climbed to a new high of 1.3m on the back of a 105,000 quarter-on-quarter increase. While growth in average total pay including bonuses was 4.8% in the quarter to January, regular pay increases were lower at 3.8%. Analysis shows that as the increase in regular pay did not keep up with inflation, wages fell by 1% in real terms – the steepest decline since July 2014. ONS chief economist Grant Fitzner said: “The labour market continues to recover from the effects of the pandemic, with the number of unemployed people falling below its pre-pandemic level for the first time and another strong rise in employees on payroll in February. However, the number of people out of work and not looking for a job rose again, meaning total employment remained well below its pre-pandemic level.” Chancellor Rishi Sunak commented: “I am confident that our labour market is in a good position to deal with the current global challenges, with payrolled employee numbers above pre-pandemic levels in every nation and region and redundancies at record lows.” Martin Beck, senior economic advisor to the EY Item Club, said lower unemployment and soaring vacancies were “warning signs” of a tight labour market, while Yael Selfin, chief economist at KPMG, commented: “Staff shortages could be a sign of a lasting problem … We are starting to see the limits to which vacancies can be filled by those re-entering the labour market.”

Boosting productivity will help earnings growth
A report by the Institute for Fiscal Studies and the London School of Economics has warned that there are limits on how much the minimum wage can do in regard to boosting earnings growth. The study suggests labour market policy needs to target increased productivity in an effort to generate high-paying jobs and reverse weak growth in living standards. Highlighting that the minimum wage and tax credits have protected the poorest workers’ earnings from years of economic underperformance through “brute force,” the report says targeted support for entrepreneurs and the self-employed would help boost wage growth.

HMRC in scam warning
HMRC has urged people to be on guard amid concerns that self-assessment taxpayers could be the target of scams, with more than 570,000 having been reported in the past year. The tax office said customers are at increased risk of falling victim at this time of year, with the self-assessment filing deadline having recently passed, noting that fraudsters may target taxpayers with emails, texts and calls offering a refund or making demands for unpaid tax. In the 12 months to January, nearly 220,000 scams reported to HMRC offered bogus tax rebates. Myrtle Lloyd, HMRC’s director general for customer services, said: “If someone contacts you saying they’re from HMRC, wanting you to transfer money or give personal information, be on your guard.”

Investors increase cash reserves amid recession fears
Bank of America analysis shows that investors are increasing cash reserves in anticipation of a sustained slump in equity markets. A poll of leading global fund managers shows that they are currently more concerned about the outlook for global growth than at any time since the financial crisis. The majority of investors managing around $1trn in assets are expecting an equity bear market this year and are slashing their exposure in response. European fund managers have cut growth expectations, with 69% saying they expected the European economy to weaken over the coming year – the biggest proportion since 2011. A separate report on retail investor outlook from Hargreaves Lansdown shows that confidence across global sectors had fallen in the past month, with confidence in Europe seeing the steepest fall at 36%, while confidence in the UK has slipped 22%. Susannah Streeter, a senior investment and markets analyst at the firm, said: “There has been a severe jolt to investor confidence since the invasion of Ukraine, as sanctions have been slapped on Russia, and commodity prices roared

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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.