Business news 16 December 2024
Jobs, GDP, interest rates, recession, mortgages, housing, consumer confidence, taxes, trade, markets, insolvencies & more business news that we thought would interest our members.
James Salmon, Operations Director.
Reed: Falling vacancies may signal recession
James Reed, the boss of recruitment firm Reed, says a “cooling” economy and decline in job vacancies suggests a recession may be “around the corner.” Mr Reed told the BBC’s Sunday with Laura Kuenssberg that vacancies on the firm’s website had fallen 13% between October and November. He also highlighted that vacancies are 26% lower than a year ago in what he described as a “significant decline.” He warned: “That worries me because when I’ve seen that in the past, it’s been an indication that recession is around the corner.” Mr Reed, who warned that elements of October’s Budget had “spooked” businesses, has urged ministers to rethink the increase in employers’ National Insurance contributions.
Economy shrinks in October
Data from the Office for National Statistics (ONS) shows that the economy shrank by 0.1% in October, with this driven by a fall in production output and uncertainty ahead of the Budget. October’s reading marks the second consecutive decline after a fall in September. RSM economist Thomas Pugh warned: “There is a risk that the UK is slipping back into stagflation territory,” but added: “However, it’s likely that at least some of the weakness in October was driven by a pre-Budget ‘wait and see’ attitude by consumers and businesses and we still expect the economy to reaccelerate into 2025.” KPMG’s chief economist, Yael Selfin, said: “The fourth quarter could see a weaker pace of growth, as businesses come to terms with the higher tax burden announced at the Budget as well as rising geopolitical uncertainties,” adding: “Nevertheless, we expect higher public spending to lift GDP growth next year, with lower interest rates providing some boost to private sector demand.” Barret Kupelian, chief economist at PwC UK, commented: “The outlook for the UK economy next year, relative to the G7, remains brighter.” Chancellor Rachel Reeves said the ONS data was “disappointing,” but added that the Government has “put in place policies to deliver long-term economic growth.”
BoE expected to hold interest rates
The Bank of England (BoE) is expected to maintain the base interest rate at 4.75% during its next policy meeting on December 19. Despite a slight contraction in GDP in October, experts believe the Monetary Policy Committee will continue its cautious approach, with RSM economist Thomas Pugh saying: “Ultimately, that means mortgage holders won’t be getting an early Christmas present from the BoE this year.” He added: “We expect four cuts in 2025, meaning rates will finish the year at around 3.75%, but the risks are weighted towards fewer rate cuts.”
Mortgage rates set to fall below 4%
Mortgage rates are expected to fall below 4% early next year, with experts predicting that five-year fixed rates will fall in early 2025 while two-year rates are likely to follow later in the year. Elliott Culley, director of Switch Mortgage Finance, said: “Provided inflation doesn’t have any abnormal figures we should see a return to rates under 4% around February-time,” while Nick Mendes of brokers John Charcol said: “Mortgage rates are expected to decline in 2025, but the extent and pace of this reduction will depend on several factors.” Aaron Strutt, a broker at Trinity Financial, said: “From speaking to banks it seems they want a more positive start to 2025, which means offering as low a rate as possible,” adding: “We’ve seen before mortgage rates can come down even if the base rate stays the same.” Data from UK Finance shows that an estimated 1.8m fixed-rate mortgages are set to mature in 2025.
House sales surge amid lower mortgage rates
Estate agents have reported a 22% increase in house sales over the past month compared to the same period last year, indicating a market recovery after a prolonged downturn. Despite the seasonal lull before Christmas, data from Rightmove reveals that there are 13% more prospective buyers actively searching for homes. This uptick is attributed to lower mortgage rates, with the average two-year fixed mortgage rate at 5.09%, down from 5.44% last Christmas. Rightmove’s data highlights a particular demand for smaller homes in pricier areas, as sellers aim to complete transactions before upcoming stamp duty changes in April. At the same time, the average asking price for homes in Britain has fallen this month by £6,395, or 1.7%, to £360,197, according to Rightmove.
Landlords shrug off tax fears
Recent data indicates that landlords are becoming a larger share of house-buyers, countering predictions that tax increases announced in the Budget would deter investors. In November, buy-to-let buyers accounted for 10.7% of accepted offers, up from the 2024 average of 10.2%. Despite the Budget raising stamp duty for second homes by 2 percentage points, Aneisha Beveridge, head of research at Hamptons, said: “Early signs suggest that new landlords have shown relative resilience to yet another cost increase.” While buy-to-let purchases are down 40% from 2015 levels, landlords are focusing on affordable areas for better returns. In addition, rents have stabilised, rising 2.6% year-on-year to an average of £1,382.
Buyers risk paying over the odds
Property buyers are being urged to act cautiously to avoid overpaying ahead of the April’s stamp duty increase. The nil-rate threshold will drop from £250,000 to £125,000, and first-time buyer relief will decrease from £425,000 to £300,000. The change is expected to significantly increase tax burdens, with the average stamp duty bill in England projected to rise from £2,979 in 2023 to £7,391 by 2029, according to Hamptons. The impending changes have triggered a surge in buyer activity. While Zoopla has reported a 19% rise in agreed property sales and a 25% increase in buyer demand compared to the same period last year, Rightmove has noted heightened urgency among first-time buyers in expensive regions, seeking to complete purchases before the new thresholds apply. However, experts warn against rushing to secure properties under unfavourable conditions. A first-time buyer purchasing a £500,000 home would pay an extra £6,250 in stamp duty from April, but overpaying by even 2% to beat the deadline could result in £10,000 in additional costs.
Consumer confidence remains low
Consumer confidence remained low in December, with GfK’s Consumer Confidence Index rising just one point to -17. This marks a slowdown on the three-point increase seen in November but is seven points up on a year ago. Meanwhile, expectations for the economy over the next 12 months remained unchanged at -26, with this a point worse than December 2023’s survey. Neil Bellamy, consumer insights director at GfK, said: “Consumer confidence is still far from strong but there is some room for optimism views on personal finances over the next 12 months,” with this “creeping back into positive territory.” He added: “Overall, 2024 has been another year of ups and downs in consumer confidence but much less so compared with recent years.”
Workers brace for higher taxes
Workers in the UK are set to face an additional tax burden of up to £4,000 next year due to changes announced in the Budget. The adjustments include higher capital gains tax (CGT) rates, reduced dividend allowances, and frozen income tax thresholds, which will impact all salary levels. According to Myron Jobson, senior personal finance analyst at Interactive Investor, the Budget announcements “are likely to impact every type of worker.” Higher earners, particularly those making £100,000 and above, will experience the most significant increases, with a projected CGT rise of £3,836. The freeze on the personal allowance until April 2028, combined with wage inflation at 4.8%, is expected to push more workers into higher tax brackets, exacerbating the financial strain.
Higher taxes must be spent wisely
Richard Walker, chairman of frozen food chain Iceland, has urged the Government to utilise the £40bn raised from tax increases wisely, warning that “business is definitely shouldering a big burden” from National Insurance hikes set out in the Budget. Mr Walker said Labour must demonstrate a commitment to being a “probusiness, pro-growth party” and has called for a comprehensive high-street strategy and business rates reform.
Tax hikes needed to meet Nato spending goal
Chancellor Rachel Reeves faces a significant challenge in meeting a proposed new Nato target of 3% of GDP for defence spending, which would require an additional £20bn annually. This could necessitate raising income tax rates by 2p or cutting spending equivalent to the entire Department of Energy budget. Currently, the UK spends £54.2bn on defence, amounting to 2.3% of national wealth. The Royal United Services Institute has indicated that reaching the 3% target could cost taxpayers over £150bn by the end of the decade. As Whitehall sources acknowledge, meeting this target would be “difficult” if set by Nato leaders next year.
Mood among manufacturers has ‘darkened’ as costs climb
Confidence among manufacturers has seen a sharp decline, with the steepest drop in optimism since the pandemic coming as firms prepare for a looming “cost crisis.” A survey by BDO and Make UK shows that 70% of businesses experienced cost increases of up to 20% over the past year, with 8% facing rises of up to 50%. The report warns that the mood among manufacturers has “darkened markedly” since October. Fhaheen Khan, senior economist at Make UK, said the “substantial” increase in National Insurance contributions is “potentially the straw that might break the camel’s back for some.” BDO and Make UK’s growth forecasts for 2024 and 2025 have been revised downwards, with expectations of a contraction of 0.2% this year and growth of 0.7% in 2025. A previous forecast suggested that the manufacturing industry would grow by 0.5% this year and another 0.8% next year.
UK in trade bloc milestone
The UK has become the first European nation to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) trade bloc, with Britain’s participation coming into force yesterday. Nicola Watkinson, international managing director at TheCityUK, said the move marks a “significant milestone for the UK,” while HSBC UK chief executive Ian Stuart said the announcement “signals that the UK is open for business with some of the world’s most exciting growth markets.” Business and Trade Secretary Jonathan Reynolds said joining the CPTPP “is further proof that the UK is a wonderful place to do business,” adding: “Agreements like this boost trade and create opportunities for UK companies abroad.”
Markets
This morning on currencies, the pound is currently worth $1.2660 and €1.2058. On Commodities, Oil (Brent) is at $73.99 & Gold is at $2662 On the stock markets, on Friday in the US the S&P 500 closed flat at 6051.09 and the NASDAQ rose 0.12% to 19926.72. The FTSE 100 is currently down 0.34% at 8273 and the Eurostoxx 50 is down 0.53% at 4941.8. Bitcoin hit $106,000.
Royal Mail
The sale of Royal Mail to the Czech billionaire Daniel Kretinsky’s EP Group has been cleared by the government. The £3.6bn takeover was given the go-ahead after agreeing “legally binding” undertakings. The government will retain a so-called “golden share” that will require it to approve any major changes to Royal Mail’s ownership, HQ location and tax residency.
LSE sees biggest exodus in 15 years
Xavier Rolet, the former head of the London Stock Exchange Group, has warned that the flagship bourse has become “deeply uncompetitive” and there is a risk of more firms seeking better returns overseas. This comes as analysis shows that 88 companies have either delisted or transferred their primary listing away from London’s main market this year, while just 18 firms have joined. This marks the biggest net outflow of firms from the market since the financial crisis in 2009. More than £100bn worth of listed companies have prepared to leave London’s stock market this year, either by agreeing to takeover deals or to delist. Mr Rolet notes that “prominent European blue-chip CEOs” have “raised the possibility of moving to the US to take advantage of lower costs of capital and energy, higher multiples and preferential tariffs.”
PSR set to limit card fees
The Payment Systems Regulator (PSR) is set to launch a consultation on plans to introduce price caps on card fees paid by British merchants when consumers in the European Economic Area make online purchases. This comes after Visa and Mastercard hiked prices post-Brexit. The payments regulator is considering an initial cap of 0.3% on credit card fees and 0.2% for debit card spending. This would restore limits which were in place before the UK left the EU. Post-Brexit, Visa and Mastercard increased interchange fees to 1.5% for credit cards and 1.15% for debit cards. PSR analysis shows that these price hikes are costing British businesses £150m to £200m extra per year. PSR managing director David Geale said: “Due to a lack of competition, Mastercard and Visa were able to raise cross-border interchange fees to an unduly high level.”
4 in 5 unsure over pension pots
Analysis from pension-finding firm Raindrop shows that more than four in five workers do not know where all of their pension pots are. Vivan Shridharani, co-founder of Raindrop, warns lost pension pots are putting savers’ retirements at risk, adding: “Locating all previous pension pots should be the first step savers take to boost their retirement incomes and maximise the value of the pots they’ve already built up.” Data from the Pension Policy Institute shows that an estimated £31.1bn is sitting in missing pension pots.
Latest Insolvencies
Winding up Order (Companies) – TRULY CONTENT LIMITED
Winding up Order (Companies) – ES MANUFACTURING LTD
Petitions to wind up (Companies) – VENTURE INVESTMENTS LTD
Petitions to wind up (Companies) – JOHN LAIDLAW & SON LIMITED
Petitions to wind up (Companies) – GLAMCANDY UK LTD
Appointment of Liquidators – WIND CULLYBACKEY LIMITED
Petitions to wind up (Companies) – DAVIDSON WALKER LTD
Petitions to wind up (Companies) – STO LIMITED
Petitions to wind up (Companies) – C&C GLASS LIMITED
Appointment of Liquidators – BARRIE ROBERTS FINANCIAL ADVISER LIMITED
Appointment of Liquidators – HOMETOWN DEVELOPMENTS LIMITED
Petitions to wind up (Companies) – WEST HAMPSTEAD CLEANING LTD
Petitions to wind up (Companies) – SPV EQ LIMITED
Petitions to wind up (Companies) – LONDINIUM PICCADILLY LTD
Petitions to wind up (Companies) – PALACE OF KNIGHTSBRIDGE LIMITED
Petitions to wind up (Companies) – JRK KITCHEN LTD
Petitions to wind up (Companies) – LS PRIME LTD
Petitions to wind up (Companies) – OAK EMPORIUM LTD
Petitions to wind up (Companies) – WORKS OF GEORGE BUTTERWORTH
Appointment of Liquidators – PEOPLEYTICS LTD
Appointment of Liquidators – JOSEPH SELLERS & SON LIMITED
Appointment of Liquidators – GEOMATIKK UK LIMITED
Petitions to wind up (Companies) – MAJOR PROJECTS GROUP UK LIMITED
Appointment of Liquidators – AMP OPS LTD
Appointment of Liquidators – VECTIS 741 LIMITED
Appointment of Administrator – EVER READYMIX CONCRETE AND SCREED LIMITED
Appointment of Administrator – NEIL COWLING LIMITED
Appointment of Liquidators – APPLERIVER LIMITED
Appointment of Administrator – T20 AF MIDCO LIMITED
Appointment of Liquidators – ATRATO ONSITE ENERGY PLC
Appointment of Liquidators – SAUDI PETROLEUM OVERSEAS, LTD.
Appointment of Liquidators – EAGLE COMMODITIES BROKERS LIMITED
Appointment of Administrator – A J MECHANICAL SERVICES LIMITED
Petitions to wind up (Companies) – REMUS DREADNOUGHT LIMITED
Appointment of Liquidators – DASTAGIR HEALTH CARE LTD
Appointment of Liquidators – KEVIN RIDDLE CASTING LIMITED
Appointment of Administrator – PEOPLELINE LIMITED
Appointment of Liquidators – LOCKMAN PROPERTIES LIMITED
Appointment of Liquidators – MARINO PROPERTIES LIMITED
Appointment of Liquidators – ZOHRUS ENTERPRISE LTD
Appointment of Liquidators – LEAN 121 LIMITED
Appointment of Liquidators – MARSDENS LIMITED
Appointment of Administrator – QUALTECH RESOURCING LIMITED
Appointment of Administrator – SOLENT BUTCHERS & CO LIMITED
Appointment of Liquidators – SILVERBUSH LIMITED
Appointment of Liquidators – NICOLA JACOBS GALLERY LIMITED
Appointment of Liquidators – OPTIMUM YIELD SOLUTIONS LIMITED
Petitions to wind up (Companies) – GAUGHAN HOLDINGS LIMITED
Petitions to wind up (Companies) – COMPASS DEVELOPMENTS LIMITED
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.
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- 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.
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- 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.
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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.
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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!
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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!
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Check our compensation calculator to see how much your business could be owed!
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The Credit Protection Association – Prompting Punctual Payments – Ethical, Effective, Efficient, Economical collections.