Business news 17 January 2023
James Salmon, Operations Director.
Unemployment & pay figures. Connectivity essential to SMEs. CEO poll reveals UK investment plans. Christmas debt could take years to repay. Soaring costs wipe out lockdown savings. And more business news.
Unemployment & pay figures
The UK Unemployment Rate remained steady in November, according to the latest data from the Office for National Statistics, but average pay adjusted for inflation shrank at one of the fastest rates on record.
The unemployment rate was 3.7% in the UK in the three months from September to November, unchanged from the August to October period, but up from 3.5% in the June to August period. The jobless rate was in line with market consensus.
Wages grew at the fastest rate in more than 20 years, 6.4% – between September and November – but still failed to keep up with inflation so wages fell in real terms by 2.6%.
Connectivity essential to SMEs
A study by BT shows that almost 60% of business owners rely solely on their mobile phones to run their operations. More than half of entrepreneurs have embraced flexible working and use mobiles rather than laptops or desktops.
The poll saw 59% of British business owners identify their mobile phone as the most essential item to running their company. Close to three-quarters (73%) feel they would be unable to operate without reliable broadband and mobile connectivity. Over two-fifths of the firms quizzed said they were online-only.
On reasons for launching their business, around three in ten said making extra money was a key motivation, while 26% said freedom from the traditional 9 to 5 and 22% said being able to work from anywhere.
Chris Sims, managing director of small and medium enterprise at BT, said that connectivity was crucial across British start-ups and scale-ups. “We recognise that reliable and fast connectivity is the backbone of small and medium businesses up and down the UK,” he added.
CEO poll reveals UK investment plans
A survey of corporate leaders by PwC shows that global firms are set to pump billions of pounds into the UK economy, with a jump in the number planning to investment in Britain. The proportion of the 4,410 global chief executives that identified the UK as one of their top investment locations has doubled over the last three years.
A quarter of business leaders want to grow their companies in Britain more than anywhere else – up from 9% in 2020. China and the US led the global growth priority table, with the UK and Germany sharing third spot.
Kevin Ellis, chairman and senior partner at PwC UK, said: “CEOs don’t expand and invest on a whim – they’re choosing the UK as that’s where they expect to see returns.” However, Mr Ellis warned that repeated flip-flopping over tax policy risked eroding executives’ “comfort factor with the UK” and reputation as an easy place to do business.
The poll also saw 39% of CEOs say their businesses will not be economically viable within a decade unless they change course – with the rate among UK chief executives lower, at 22%. It was also shown that just 4% of UK chief executives expect the economy to decline significantly, compared to 12% of global CEOs. Almost half (48%) of UK CEOs are “very or extremely confident” about their prospects over the next 12 months, compared with 42% of global bosses.
Christmas debt could take years to repay
Money borrowed to pay for Christmas could take years to repay, debt advice charity StepChange has warned. Saying it had seen a surge in enquiries immediately after the festive period, StepChange revealed it advised more people on January 3 than on any day last year. Meanwhile, a BBC News poll saw a third of respondents who used credit to help get through Christmas and the holiday season say they were not confident about their ability to repay. More than eight in 10 said they were worried about the rising cost of living, with some losing sleep over it. Office for National Statistics data shows that 8% of people have had a direct debit, bill or standing order they have been unable to pay in the past month, rising to 10% of those aged 16 to 29, and 13% of those aged 30-49.
Soaring costs wipe out lockdown savings
The majority of families have now spent all their pandemic savings as inflation forces people to dip into rainy day funds. The Centre for Economics and Business Research (CEBR) said six in ten households have spent all their savings to “maintain their lifestyle.” Families are being forced to spend savings to stand still as the cost of everything from energy to food climbs rapidly. Average household spending power, which looks at how much families have to spend after taxes and essential bills, has fallen from £243 a week in 2021 to a low of £201 in October 2022, according to CEBR’s Income Tracker. The typical household had to spend an extra £1,500 just to maintain their standard of living in 2022, the think-tank said.
Tax lost as HMRC shifts staff
Billions of pounds in tax has been lost because HMRC moved 2,300 tax compliance staff to work on issues related to Brexit and Covid support schemes. Treasury Minister Victoria Atkins has confirmed that nearly 1,250 compliance officers who would usually investigate tax dodging and non-compliance were redeployed to work on Covid-19 pandemic schemes in 2021/22, while 1,040 were shifted to handle matters relating to the UK’s departure from the EU. Data shows that tax revenue recovered through compliance work came in at £30.8bn in 2021/22, with this down £6bn from 2019/20.
UK worker shortfall due to Brexit curbs estimated at 330,000
Analysis suggests that the UK is facing a shortfall of more than 300,000 workers as the result of ending free movement of labour with the EU.
London outperforms the wider economy
London is outperforming the UK economy, with an index of business output in London compiled by NatWest jumping to 50.2 last month, up from 48.2 the month before. At a UK level, activity contracted for the fifth month in a row. December saw the index slip below 50 – the threshold that separates growth and contraction. Wales was the only other part of the UK to register a rise in business activity. at 52, while Northern Ireland posted the worst contraction, at 41.6.
FTSE nears record high
The FTSE 100 continued its strong start to the year by moving closer to a record high. The index climbed 0.2% to 7,860.08 points, meaning it has seen its earnings climb 4% so far in 2023. The FTSE 250 index climbed 0.65%, passing the 20,000 point mark.
Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, said: “With British consumers flexing their spending muscle over the Christmas period and the country looking more likely to have escaped falling into recession in 2022, the waves of optimism have been lapping over the London market.”
Brexit
The Government is closing in a deal with the EU and European over trading arrangements in Northern Ireland. Having reached an agreement last week on sharing real-time trade data, they are are now looking at an agreement aimed at reducing customs frictions between Great Britain and Northern Ireland. Sterling was marginally lower at US$1.22 and €1.1277 ahead of ongoing Brexit talks between the EU and UK.
Davos
The rich and the powerful are gathering in the Swiss alps or the first winter World Economic Forum in three years, although the 100 billionaires attending to attending won’t have any but none pariah state Russia or Covid-hit China among their number. Most world leaders are staying away, except for Germany’s Olaf Scholz and the heads of the EU and NATO.
Strikes
Rail companies were given permission to make a new offer to unions this week in a bid to end their dispute. Meanwhile teachers have announced they will strike over pay with 90% of those voting in favour, with 7 days of strikes in February and March, which will hit any other workers who are parents.
China
Official figures show China missed its growth target of 5.5% and grew just 3% if the figures are to be believed, given the massive lockdowns it had during the last year. At the same time it was announced that the population has started shrinking, down 850,000 in 2022.
Mild recession could pass by year-end
Samuel Tombs, chief UK economist at Pantheon Macroeconomics, believes the UK will experience a very mild recession that could be over by the end of this year, saying the outlook for the UK economy “has greatly improved.” With a drop in energy costs in recent weeks increasing optimism, Mr Tombs said he expects GDP to “hold steady” in the summer and then rise 0.2% in the winter. This would mean the recession would be over by Q4 and that the economy is set to shrink 0.8% in 2023. Mr Tombs previously forecast a 1.5% contraction.
FCA sees 14% increase in whistleblowing
The Financial Conduct Authority received 291 reports of wrongdoing in Q3 2022, with these containing 734 allegations. The whistleblowing data shows that the reporting of suspected wrongdoing increased 14% in July to September when compared to Q2. The number of allegations reported was up 55% in the same period. While the majority of whistleblowers logging reports provided contact details when doing so, 37% did so anonymously. The majority of reports received related to compliance issues.
Demand climbs as mortgage rates fall
Demand from buyers in the housing market has increased by 55% so far this year compared with the first two weeks of December, with Rightmove flagging the jump as the biggest “New Year bounce” since 2016. The number of buyers enquiring about properties was also 4% higher than during the opening fortnight of 2019. Analysts say lower mortgage rates are contributing to increased confidence. The average two-year fixed deal has dropped to 5.63% from 5.79% at the start of January and a high of 6.65% in October. Asking prices are up by 0.9% this month, with the average property being advertised for £362,438, having increased by £3,301.
Affordability crisis pushing over-50s into early retirement
Latest figures from the Office for National Statistics reveal there are 302,000 more 50 to 64-year-olds that are not in work now than before the pandemic, taking the total to 3.5m. More than half of those who have stopped working during the pandemic are aged 50 to 64. While the reasons over-50s are retiring early vary, this generation is increasingly being called upon to look after grandchildren as parents are unable to afford childcare costs. One in four grandparents are retiring early to help with childcare, according to a survey by childcare app Bubble. One in eight have also dipped into their savings and pension pot to help with childcare fees.
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.
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Unlike other credit management companies, we offer our members a fixed annual subscription regardless of how high the debt value maybe!
No face-to-face meeting required – 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!
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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.