Business news 16 July 2024
Inflation set to stay at 2%. MPC member calls for interest rate cut. Relief rethink could cost family businesses £1.4bn. Markets, insolvencies, digital wallets & more business news that we thought would interest our members.
James Salmon, Operations Director.
Inflation set to stay at 2%
Economists expect inflation to have held at the Bank of England’s target level of 2% or fallen slightly in June, meaning interest rate cuts could be on the way in August. Sanjay Raja of Deutsche Bank expects inflation to remain at 2% in June, matching the forecast from the Bank of England, while Pantheon Macroeconomics expects a fall to 1.9%. While inflation fell to 2% in May, experts believe it is likely to climb later in the year. Pantheon Macroeconomics expects it to hit 2.8% in November, before ending the year at 2.7%, Deutsche Bank believes the rate will climb to 2.6% but Capital Economics predicts inflation could be down to 1.5% by the end 2024. On core inflation, which strips out volatile measures such as food and energy prices, Pantheon Macroeconomics predicts that it will come in at 3.4% for June, with this just lower than the 3.5% predicted by Deutsche Bank.
MPC member calls for interest rate cut
Swati Dhingra, a member of the Bank of England’s rate-setting Monetary Policy Committee, has called for the Bank to cut interest rates to ease the strain on households. Ms Dhingra believes that demand is soft enough to prevent any resurgence in inflation, despite strong wage pressures. She said: “Now is the time to start normalising so we can then finally stop squeezing living standards the way we have been to try and get inflation down.” The Bank of England’s benchmark rate currently stands at 5.25%, while inflation is currently at the Bank’s target rate of 2%.
Relief rethink could cost family businesses £1.4bn
Scrapping inheritance tax relief could cost family businesses £1.4bn per year, Family Business UK (FBUK) has warned. The lobby group says more than 3,000 family businesses would be affected, potentially leading to company liquidations and job losses. FBUK chief executive Neil Davy has written to Chancellor Rachel Reeves and Business Secretary Jonathan Reynolds seeking assurances that Labour will not target business relief. He said the £1.4bn in tax relief “isn’t money which is sitting with individuals in their personal bank accounts. That is money that is sitting in the business being used for investment, growth, employment and long-term certainty.” The existing system allows business owners to claim up to 100% relief on passing on business assets. The Government has been urged to pull back inheritance tax reliefs, including business relief, by the Institute for Fiscal Studies
Markets
Yesterday, the FTSE 100 closed down 0.85% yesterday at 8182.96 and the Euro Stoxx 50 closed down 1.19% at 4983.11 as investors digested weekend developments as European investors considered the effects of another Trump term with its implications for Nato and trade tariffs. Overnight in the US the S&P 500 rose 0.28% to 5631.22 and the NASDAQ rose 0.4% to 18472.57 as the US appears to be on the path to lower interest rates.
Federal Reserve chair Jerome Powell said the US central bank ‘is moving closer’ to cutting interest rates following three months of falling price pressures. The Fed would not wait for prices to return to its 2% target before cutting borrowing costs.
This morning on currencies, the pound is currently worth $1.297 and €1.189. On Commodities, Oil (Brent) is at $84.07 & Gold is at $2436. With stock markets, the FTSE 100 is down again 0.37% at 8152.65 and the Eurostoxx 50 is down 0.6% at 4952.
Royal Mail
Czech billionaire Daniel Kretinsky, the prospective buyer of the Royal Mail – following a £3.6 billion bid has promised he will not walk away from the Universal Service obligation, the requirement to deliver letters throughout the UK six days a week, as long as he is running the service. Shareholders will vote on the offer on 25 September.
Gas
National Grid has said the UK will remain reliant on natural gas for many years to come, with demand expected to rise by 20% by 2030. Under three potential pathways to ‘net zero’ by 2050 the UK will keep burning ‘unabated’ gas for power, without any form of carbon capture until 2036.
Ocado roller coaster
Ocado shares dropped 14% yesterday on project delays liquidity fears but then bounced 19% today after posting a smaller than expected loss of £154 million for the first six months of the year.
Financial services leaders optimistic over new Government
Two thirds (67%) of financial services leaders are more positive about the sector’s future growth under the new government, according to KPMG’s latest UK Financial Services Sentiment survey. KPMG found that 61% of leaders feel more positive specifically about the global competitiveness of UK financial services under the Labour government. When asked about this optimism, 23% of respondents attributed it to the good relations the new government has with industry bodies and regulators, while 22% said the new government has a “clear plan” to grow financial services.
Regulators look into digital wallets
The Payments Systems Regulator and the Financial Conduct Authority are scrutinising the benefits and potential risks of digital wallets as analysis suggests that over half of UK adults may be using services like Apple Pay, Google Pay, and PayPal. As well as looking at the advantages digital wallets offer consumers, the regulators will also explore if there are elements that could hinder payment efficiency. They will also gather evidence on whether the technology carries any substantial issues related to competition, consumer protection, or market integrity. The regulators have launched a call for information from stakeholders which remains open until September 13.
Chancellor told to target IHT to raise funds
Cross-party think tank Demos has suggested that Chancellor Rachel Reeves should consider targeting inheritance tax to fund Labour’s manifesto pledges. The report, which suggests that targeting IHT is “definitely the right place to start” for the Government, has proposed a new system of rates – including a higher rate. It also suggests scrapping tax breaks for family businesses and introducing capital gains tax on death. Demos’ report identifies South Korea as having a fairer inheritance tax system, with it offering an effective rate – the average rate at which inheritances are taxed – at 33% for estates between £6m and £30m in 2022, and 44% for those over £30m. In the UK, those worth between £2m and £7.5m paid 25% in 2021, while those worth over £10m only paid 17%. Demos insists that rather than making specific recommendations, its report offers observations on how the tax system could be reformed.
Court of Appeal overturns taxi VAT ruling
Uber’s rival taxi operators will no longer face a 20% tax charge on their profit margins outside of London. This comes after the Court of Appeal overturned a ruling that private-hire operators must enter into a contract with passengers. The ruling was reversed following a challenge by private hire operators Delta Taxis and platform Veezu. The Court of Appeal’s decision will not impact Uber, who will continue to charge VAT on fares, but taxi firms in England and Wales – outside of London – will not be forced to apply VAT onto their fares.
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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 last one was particularly deadly for suppliers fand we are still seeing elevated insolvencies as businesses struggle.
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.