Business news 17 February 2023
James Salmon, Operations Director.
New banking regulations a threat to small business lending . Third of London restaurants fear energy bills . Restaurant insolvencies worsening. Retail sales. And more business news.
New banking regulations a threat to small business lending
The cost of borrowing for small businesses could increase by a third due to the UK’s approach to the latest round of Basel regulations. The Prudential Regulatory Authority is consulting on the changes but has said it intends to depart from international standards by imposing higher collateral limits on secured business lending than unsecured business lending. Additionally, the regulator has not followed the EU in keeping lower capital requirements for small business lending.
Richard Davies, chief executive of Allica Bank, said these two issues will have a “very material effect on small business lending. We estimate the overall impact is 34% higher capital requirements” for lending in the SME sector. Additionally, Karen Bradley, chair of the challenger bank all-party parliamentary group said there was “concern among parliamentarians” about the effects the proposals will have on “challenger banks who lend to SME’s and the ability of the SMEs themselves to raise funds.”
Third of London restaurants fear energy bills
A new study by Uswitch for Business has fund one in three London restaurants are concerned they may be unable to pay their bills if energy prices keep rising. One in four say capacity is down on last year with the average now standing at 54% – 6% lower than the UK average. UKHospitality chief executive Kate Nicholls, said her organisation is calling on the Chancellor to intervene in the Spring Budget to “tackle the outlandish behaviour of energy suppliers hiking prices for the sector”. She added: “Without action from the Government, we will lose hundreds of good businesses due to factors outside their control.”
Restaurant insolvencies worsening
More than 500 restaurants closed in the final quarter of 2022, according to Mazars. This is an 11% rise on the previous three months while the number of restaurants failing in December soared by more than 70% compared to 2021. Mazars partner Rebecca Dacre said: “With many households exiting fixed-rate mortgages and having to sign up to more expensive deals, consumer spending is likely to suffer. This difficult time is set to continue.”
Retail sales
UK Retail Sales rose in January from the month before, according to an estimate released by the Office for National Statistics. Retail sales volumes are estimated to have increased by 0.5% in January from December, reversing a revised fall of 1.2% in December from November. Markets had expected retail sales volumes to fall by 0.3% monthly.
Strikes
Border force staff are starting a four day series of strikes today. Ambulance staff are striking in the West Midlands and Northern Ireland. Nurses have announced a strike from 1st to 3 March. Royal mail staff have voted to continue strike action, UK rail workers are due to start a fresh series of strikes in March and April.
Fraud costs in Scotland up 200% last year
KPMG UK’s latest bi-annual Fraud Barometer exposes a 200% increase in the value of fraud cases in Scotland in 2022. There were 24 cases totalling £17.4m, up from 2021 when 16 cases worth a total £5.9m were heard in court. Annette Barker, head of forensic at KPMG in the UK, said: “The dramatic increase of fraud cases coming to light in Scotland is worrying, particularly with many cases involving rogue employees abusing their positions of trust to steal money from their employers, clients and other partners.”
Osborne urges Hunt to cut business taxes
Former Chancellor George Osborne has suggested that high business taxes are putting companies off investing in Britain and urged current Chancellor Jeremy Hunt to cut them next month to boost the economy. Hunt is set to put corporation tax up by 6% to 25% in his Spring budget. “I reduced business tax because I thought that was a way of bringing investment in. That creates the revenues that allow you to fund your public services,” Osborne said. “That’s the approach I took and would be the approach I would take again.” The comments come as the Conservative Growth Group prepares to hand an alternative budget to Mr Hunt that will include proposals to reduce the tax burden on businesses to boost the economy.
Kwarteng: Trying to lower taxes was right
Former Chancellor Kwasi Kwarteng has defended the “general direction” of his mini-Budget arguing that current plans to hike business taxes were putting new investment into Britain at risk. He cited the decision by AstraZeneca to build a £320m factory in Ireland rather than the UK, with the firm citing Britain’s higher tax regime as a factor. He said: “I’ve always been very clear that I don’t think you get to prosperity by high taxes, I don’t think that’s the route to do it.”
ISSB approves first global company sustainability rules
The International Sustainability Standards Board has approved new rules for businesses disclosing how climate change affects their operations. However, many firms are concerned about having to apply EU disclosure rules, known as ESRS, and the new ISSB rules at the same time. ISSB board members did agree to include use of EU rules in an appendix to the ISSB rules, but ISSB chair Emmanuel Faber said: “I do not consider that having us referencing other standards is something that is going to be there forever.” Marie-Laure Delarue, global vice chair for assurance at EY, said cross-referencing was a “first step towards convergence” in norms, but in practice would be complex for companies to apply.
BoE is about to make the house price slump even worse
Kallum Pickering asserts in the Telegraph that the Bank of England’s continued interest rate hikes are putting the property market in jeopardy. Pickering says policymakers should not put too much weight on wages as a driver of inflation. “If the Bank overdoes its tightening, the economic consequences would be a deeper recession, a sharper housing correction, higher unemployment and inflation that falls well below, instead of sufficiently close to, its 2% target.” With public confidence in the Bank’s strategy already low, Pickering hopes the Bank isn’t forced into another embarrassing U-turn.
Interest rates and currency
Bank of England Chief Economist Huw Pill signaled policy makers are ready to reduce the speed of their interest rate increases, saying there’s a risk of “overtightening” if the pace over the past few months is maintained, pointing to signs the labour market is loosening, a suggestion that upward pressure on inflation from pay rises may be easing. Meanwhile voices in the US said there was evidence from their economy that they would have to go back to 0.5% rises. As a result the Dollar broke out and the pound fell.
Brexit
Prime Minister Rishi Sunak flew to Northern Ireland last night for talks with the region’s parties, as expectation rises that a deal is imminent between Britain and the EU on post-Brexit trading arrangements.
Natwest
NatWest reported pretax operating profit of £5.13 billion in 2022, up from £3.84 billion the previous year. This came as net interest income jumped to £9.84 billion from £7.53 billion, and non-interest income climbed to £3.31 billion from £2.89 billion.
EDF
French energy giant EDF’s UK arm returned to profit in 2022, with the higher energy prices. Underlying profit was £1.12bn, compared with a loss of £21m in 2021. But its UK consumer energy supplier lost more than £200m in the year which it blamed on the cost of buying energy for customers at higher prices than it could charge under the energy price cap.
Segro
Segro swung to a pretax loss of £1.93 billion in 2022 from a profit of £4.06 billion in 2021. This came as the firm booked a realised and unrealised property loss of £1.95 billion in the year, compared to a gain of £3.67 billion the year prior. More positively, revenue rose to £669 million from £546 million, as net rent income increased 19% year-on-year to £522 million from £439 million.
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.
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!
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!
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.