business news 16 August 2021
James Salmon, Operations Director.
More SMEs target overseas expansion. WFH unlikely to become a legal right. Job ads dip. Uncertainty over jobs as support winds down.Commercial rent collection continues to recover and more.
More SMEs target overseas expansion
Research by lender Hitachi Capital Business Finance shows that 43% of SMEs are looking to expand internationally, with this marking an increase on the 41% who had overseas growth ambitions before the coronavirus pandemic. Of those looking to expand overseas, 54% said the EU was the target destination, while 46% said North America was a possibility and 23% were considering expanding into Australia. The poll also shows that the proportion looking to expand in the domestic market is down four points to 77%. Joanna Morris, head of insight at Hitachi Capital, said the easing of travel restrictions has seen small businesses start to look for growth opportunities.
WFH unlikely to become a legal right
Working from home is unlikely to become a legal right, with members of the Flexible Working Taskforce – a body advising the Government on flexible working – indicating they would not support such a measure, saying it could be could be counter-productive and causes problems for employees unable to work at home. While not backing the legal right for remote working, the taskforce has called for a rethink of employment law that would see a greater emphasis on the work-life balance. On legislating for home working, Alan Soady of the Federation of Small Businesses said: “Maybe there is scope for a little bit more guidance rather than leaving it completely to the business – but in terms of telling a business where their employees should be based I don’t think that is what is needed.” Jane van Zyl, chief executive of Working Families, suggested that while there is often “one sided flexibility” that is on the side of the employer – such as zero hours contracts – “We would like two-sided flexibility but we don’t believe it could be legislated.”
Job ads dip
Data from the Recruitment and Employment Confederation shows that job vacancies have fallen for the first time in two months, with the number of active job postings down by 2,000 over the last week, the first fall since late June. Despite the dip, there were 1.7m active job adverts in the UK in the first week of August, with 204,000 new job ads posted. Kate Shoesmith, deputy CEO of the REC, said the number of new job adverts “has continued to ramp up” since the remaining restrictions were lifted in July, with employers “desperate to find good staff to help them recover and grow in the coming months.” With shortages of workers “in almost every sector”, Ms Shoesmith noted that employers are increasing salaries in a bid to attract workers.
Uncertainty over jobs as support winds down
Research by the LSE’s Programme on Innovation and Diffusion (POID) has found that one in 16 firms say that they are at risk of closure in the next quarter. The report notes that this period is set to see the Government withdraw critical coronavirus support, such as the furlough scheme. Peter Lambert, one of the authors of the POID research, said the end of the furlough scheme would be “an inflection point”. He suggests “there will probably need to be some continuation of support in specific sectors”, saying a lot of people are going to be “left in the lurch” without targeted support.
Gordon Brown, who founded the Alliance for Full Employment, has warned that “a new jobs crisis point is approaching as furlough ends”, with the former Prime Minister urging ministers to expand the Government’s Kickstart and Restart jobs schemes. Meanwhile, the TUC has called for the creation of a permanent short-time working scheme. With changes being made to the universal credit system that will affect the self-employed, Deven Ghelani, chief executive of Policy in Practice, has urged policymakers to rethink the move, saying: “By removing the pandemic’s protective measures too early, the Government is introducing an autumn of income shocks to families who depend on this support.”
Commercial rent collection continues to recover
The latest figures from Remit Consulting’s REMark Report show that overall, an average of 78.6% of the rent due from commercial tenants was paid within 35 days of the due date at the end of the June quarter. This compares with the same point in the previous three months when 71.8% had been paid by tenants and the 63.3% recorded 12 months previously in August 2020. The retail sector also continued to show an improvement in the amount of rent being paid by tenants as 74.8% had been collected within 35 days of falling due. By comparison, the 35-day figure for the first quarter of the year was 63.3%.
Firms call for tax year reform
Businesses have backed calls for the tax year to fall in line with the calendar year in a move that would simplify the system and bring Britain in line with global peers. A poll of 500 SME leaders by BDO saw 91% say they support moving the date for filing tax documents, saying that while the switch would require careful planning, the inevitable short-term disruption would be worth it to deliver a tax system fit for the 21st century. The survey came after the Office of Tax Simplification revealed it was exploring shifting the end of the tax year from April 5 to either March 31 or December 31.
Paul Falvey, a tax partner at BDO, said: “Changing the tax year to December 31 is supported by businesses of all sizes and will be particularly helpful for those with international connections.” He also suggested that firms feel a rethink of the system could “help them to flourish” following the challenges delivered by the pandemic and Brexit. The BDO poll also saw SMEs say they wanted further tax incentives to encourage them to grow, with 53% calling for the super-deduction policy offering money back on certain
Treasury blocking policies that would deliver a greener economy
Experts have warned that the Treasury is blocking green policies that would help the UK meet net zero emissions targets. With the UK scrapping, reducing or delaying a number of policies amid debate over short term costs, Jamie Peters, director of campaigning impact at Friends of the Earth, said a “rapid transition to a zero carbon future would be far less expensive than delaying the green measures we so urgently need, and that will create significant economic opportunities and new jobs.” Kate Blagojevic, head of climate at Greenpeace UK, points to “strong reports” that Rishi Sunak is “intent on blocking climate spending at exactly the moment we need it most”, saying that the Chancellor’s “fingerprints sit heavily on moves to delay or block crucial investment to cut emissions”. Noting several delayed policies that are not under direct Treasury control, the Guardian says the Treasury “holds the purse strings” and can veto other departments’ plans that require government investment. Ed Matthew, campaign director at think-tank E3G, says the Treasury is “at the root” of stalled projects and policies, suggesting it is “completely obsessed with short-term costs”, adding that this is “bonkers.” Chris Venables, head of politics at the Green Alliance think-tank, believes the Treasury has a “huge institutional resistance to medium term economic benefits” that involve short term costs.
Pharma firms in legal fight
The latest step in a legal battle between two of Britain’s leading pharmaceutical firms has seen GlaxoSmithKline launch a counter-claim against rival AstraZeneca in a High Court case centred on cancer drug Zejula. AstraZeneca licenses the underlying technology to GSK and claims it should receive a greater share of its sales. The firm has accused GSK of breaching the terms of its agreement and has hired KPMG to audit Zejula’s sales.
House prices fall in August
Analysis by Rightmove shows that house prices have fallen for the first time this year, with the UK’s average asking price slipping 0.3% to £337,371 in August. The firm said the decline follows the tapering of the stamp duty holiday and a subsequent fall in demand for bigger homes, with Rightmove’s director of property data Tim Bannister saying: “Average prices have only fallen in the upper-end sector.” “The mass market of properties that cater for first-time buyers and second steppers is still seeing high demand and upwards price pressure, leading to new record high average prices in those sectors,” he added. Rightmove is predicting an “autumn bounce” in prices. The platform noted that demand is up 56% in August compared to the same period in 2019, while the number of sales agreed is up by 9%.
Banks plan shared branches
Britain’s biggest banks are in talks about creating shared branches in regions where services are limited, with sources saying lenders are set to agree a five-year deal to cover the costs of shared sites where customers can pay in or withdraw cash and carry out transactions, no matter who they bank with. The source said the only significant sticking point is how much each bank will pay toward the initiative. The Mail on Sunday says critics have voiced concern that the deal could prompt further closures, saying it could give lenders “the perfect cover to reduce their overall networks”. It is noted that EY and law firm Pinsent Masons have been advising banks in the discussions.
Lobby group plots strategy to boost the City
TheCityUK is working on a strategy to help London win more business and overtake New York as a financial centre, with sources saying the lobby group is drawing up recommendations for ministers designed to boost the competitiveness of the City post-Brexit. TheCityUK, which is reportedly consulting with trade bodies including UK Finance, is expected to outline proposals on issues including trade policy, regulation and investment into the UK. This comes after a report by New Financial said the US “is the world’s top financial centre by a wide margin”, with this based on factors such as the number of companies being floated there. EY analysis shows that firms raised $84bn on US exchanges between the start of 2021 and mid-July, compared with $12.7bn in the UK.
Disney
Walt Disney Inc said the reopening of theme parks and 12 million new subscribers to Disney+ fueled a post-pandemic recovery at the world’s biggest entertainment company, which beat Wall Street expectations in the quarter to 3 July. Disney+ reached a global user base of 116 million in the quarter, ahead of analyst estimates of 115 million, dispelling fears that growth was slowing after the company missed targets in the second quarter
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