Business news 17 January 2025
GDP, climate, employment policy, commercial property, UK infrastructure investment, December retail figures, the contactless limit, markets, insolvencies & more business news that we thought would interest our members.
James Salmon, Operations Director.
UK economy grew just 0.1% in November
The UK economy experienced a modest growth of 0.1% in November, falling short of the anticipated 0.2% increase, as reported by the Office for National Statistics (ONS). Liz McKeown, director of economic statistics at the ONS, said: “The economy continues to be broadly flat, having grown slightly in November following two small falls in the previous months.” The services sector contributed to this growth, while industrial production saw a decline of 0.4%. Despite the slight recovery, the economy has only expanded in two of the last six months, raising concerns about the Government’s economic strategy under Chancellor Rachel Reeves. Business confidence has also waned, particularly after the recent national insurance hike, leading to a challenging outlook for the UK economy.
Climate crisis could halve growth, actuaries claim
The Institute and Faculty of Actuaries (IFoA) has released a report warning that global economic growth could decline by 50% between 2070 and 2090 due to the severe impacts of climate change. Sandy Trust, the lead author, said: “There is no realistic plan in place to avoid this scenario.” The report, titled Planetary Solvency – finding our balance with nature, criticises current economic theories that overlook the risks posed by nature degradation. It highlights that without urgent action to decarbonise and restore ecosystems, the world faces catastrophic consequences, including potential state failures and mass migration.
REC: Labour’s policies are “a hindrance” to hiring
Recent data from the Recruitment and Employment Confederation (REC) reveals that the number of job vacancies in the UK has returned to pre-pandemic levels, with 1.44m active postings in December. This marks a 5.5% decrease from November and a nearly 17% drop in new job postings. The latest figures from the Office for National Statistics (ONS) indicate that vacancies have decreased for 29 consecutive quarters, marking the longest contraction since 2000. Neil Carberry, chief executive of the REC, said: “The UK has just experienced its longest jobs market contraction since 2000.” He added that Labour’s policies feel “more of a hindrance than a help” but he remains hopeful for a recovery by 2025.
Savills predicts strong commercial property market
According to Savills, the commercial property market is expected to thrive this year, driven by factors such as cheaper financing, the sustainability agenda, and a return to office work. Despite ongoing challenges, the firm stated that “most markets are in recovery.” However, geopolitical uncertainties and high interest rates have led to a “somewhat shallower than expected” turnaround. Savills anticipates that the demand for sustainable buildings will continue to rise, with half of London offices potentially becoming “unlettable” by 2027 due to stricter environmental standards. The vacancy rate for central London offices has decreased to 8.8%, the lowest in over three years, indicating a positive trend in office space uptake.
People’s Pension to plough billions into UK infrastructure
The People’s Pension, a leading independent master trust in the UK, is set to enhance its investment strategy by allocating £4bn to private markets by 2030. This initiative, which will focus on sectors such as infrastructure and real estate, aims to benefit over 6.8m pension savers while potentially boosting the UK economy. The move has been welcomed by the Chancellor, who stressed the importance of growing the economy and improving living standards across the UK.
MPC member calls for an immediate interest rate cut
Alan Taylor, a member of the Bank of England’s monetary policy committee (MPC), has advocated for an immediate interest rate cut, stating that the UK is “in the last half mile on inflation.” Despite a slight decrease in the consumer prices index (CPI) inflation to 2.5% in December, it remains above the Bank’s target of 2%. During the MPC’s December meeting, rates were held at 4.75%, although Taylor, along with two other members, previously voted for a 0.25 percentage point reduction. In a speech at the University of Leeds, he stressed the need for a pre-emptive cut to mitigate potential cashflow challenges for businesses and households, asserting: “It’s time to get interest rates back towards normal to sustain a soft landing.”
Tax raid to make a pint more expensive
Simon Dodd, chief executive of Young’s, has warned that Rachel Reeves’s tax raid on employers will lead to increased prices for consumers, namely the cost of a pint. Young’s plans to raise prices by 3% to 3.5%, which translates to an additional 20p on the average pint price of £6.30 in London. Dodd said: “We’ll mitigate as much as we can of the NI contribution… But there will be some price passed on to the consumer.”
FCA considers raising contactless limit
The Financial Conduct Authority (FCA) is contemplating an increase to the £100 contactless payment limit as part of its response to Labour’s calls to eliminate barriers to economic growth. City sources indicate that the FCA’s discussions are still in the early stages, and it remains uncertain whether a formal proposal will emerge. The news comes after the Chancellor and Business Secretary met a number of regulators who were told that “economic growth is the absolute top priority for the Government, as part of the Plan for Change to put more money in people’s pockets.” Regulators are also understood to be looking at allowing banks and other lenders greater flexibility to allow “responsible risk-taking” from borrowers, according to the Times.
Retail sales decline
UK Retail Sales declined on-month in December and significantly missed the consensus estimates, figures from the Office for National Statistics showed. Retail sales volumes decreased 0.3% month-on-month in December, worsening from 0.1% growth in November and falling far short of the FXStreet-cited market consensus of 0.4% growth. On an annual basis, retail sales grew 3.6% in December. This missed the FXStreet consensus of 4.2%, but represented an acceleration from no change in the year to November.
Markets
Yesterday, UK markets had a second day of strong gains on the back of rising prospects of rates cuts, with the FTSE 100 closed up 1.09% at 8391.90 and the Euro Stoxx 50 closed up 1.48% at 5106.93.
The latest UK GDP figures showed sluggish growth of just 0.1% for November 2024. Forecasts from French bank BNP Paribas were equally subdued with the French bank forecasting the UK economy to grow at just 1.1% down from previous forecasts of 1.4%. Sluggish growth forecasts coupled with the softer inflation figure has seemingly increased the chance of a hard landing for the UK economy leading Bank of England rate setter Bank Alan Taylor to indicate that UK interest rates may need to be cut five or six times this year to prevent a hard landing for the UK economy.
Overnight in the US the S&P 500 fell 0.21% to 5937.34 and the NASDAQ fell 0.89% to 19388.29 as the rally petered out.
This morning on currencies, the pound is currently worth $1.221 and €1.1845. On Commodities, Oil (Brent) is at $81.61 & Gold is at $2706. On the stock markets, the FTSE 100 is currently up 1.19% at 8492 and the Eurostoxx 50 is up 0.78% at 5147.
US Retail Sales slowed slightly at the tail-end of 2024, but sufficed for economists to lift their fourth quarter growth forecasts. According to the Department of Commerce, in seasonally adjusted terms retail sales volumes expanded at a month-on-month pace of 0.4% in December to reach $729.2bn (consensus; 0.6%). The prior month’s estimate meanwhile was revised higher by a tenth of a percentage point to reveal a rate of expansion of 0.8%.
China’s Economy expanded by 5% year on year in 2024, with an upswing in the final quarter of the year. The country’s fourth-quarter GDP beat expectations with a 5.4% growth. China’s retail sales in December jumped 3.7% from a year earlier, exceeding Reuters’ forecast of 3.5%. Industrial output expanded 6.2% from a year earlier, versus expectations of 5.4%.
Rio Tinto & Glencore
Rio Tinto and Glencore have reportedly held early stage talks about a potential merger to create a mining titan to rival longstanding industry giant BHP Group. Rio Tinto is the world’s second-biggest miner, with a market value of about $103 billion.
BP job cuts
BP has said it will cut 4,700 jobs across its global workforce and 3,000 contractor roles as part of a cost-saving drive. The company did not disclose how many people were affected per country, but the reductions amount to just over 5% of its 90,000 worldwide employees. BP has about 14,000 UK workers. Around 6,000 of those are based in petrol and service stations and will not be affected by the cuts. Chief Executive Murray Auchincloss announced the redundancies in an email to staff, seen by the PA news agency, Thursday.
Deliveroo
Deliveroo reported revenue and transaction value growth in the fourth quarter of 2024, helping the firm achieve the upper end of its adjusted earnings guidance for the year. The London-based food delivery company said revenue in the fourth quarter rose 6% year-on-year in constant currency to £545 million from £523 million. Gross transaction value increased by 7% to £1.97 billion from £1.86 billion, while orders grew by 3% during the quarter.
HMRC’s digital services fail taxpayers
HMRC’s digital services are failing to meet the needs of taxpayers, particularly those with complex issues, according to Robert Salter, a director at Blick Rothenberg. The shift to online services has led to significant problems, with Salter stating that the agency’s chatbots connect only 49% of the time, and the resolution rate is a mere 21%. The ‘Making Tax Digital’ initiative, launched in 2016, has gone £1bn over budget with little improvement in service quality. A joint report by the Institute of Chartered Accountants in England and Wales and the Chartered Institute of Taxation highlighted these inadequacies. Salter asserted that “traditional communication methods must be maintained and improved” to assist those with complex tax affairs.
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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.
Under your annual subscription you will have access to our main services:
- 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.
- Our monitoring service will alert you to any significant changes in the status of those customers.
- 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.
All of the above services and other complimentary services such address verification, are included in your subscription!
And for the small minority of debts not resolved through our Overdue account recovery service, you can refer the debt to our collections department to escalate the late payment collections process.
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.
Unlike other credit management companies, we offer our members a fixed annual subscription regardless of how high the value of their debts maybe!
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!
If you have a particular business customer who is late paying and causing you sleepless nights, why not offer it to CPA’s collection department 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.