Business news 17 November 2023
James Salmon, Operations Director.
Black Friday spending expected to be down on last year. Retail sales fall. Investment in net zero ‘will keep interest rates higher for longer’. Business leaders call for permanent tax break for investment. And more business news that we thought would interest our members.
Black Friday spending expected to be down on last year
PwC anticipates UK shoppers will spend £5.6bn on Black Friday deals this year, down from £7.1bn last year. Interest in the event has waned from 61% of consumers last year to 44% this year, with 16% of consumers saying they will “definitely buy” compared with 24% last year. The proportion who do not intend to buy at all has increased from 39% last year to 56%. A third of Black Friday spending is expected to be in-store or via click and collect. The drop in interest in Black Friday varies by age group, with older age groups reporting less interest in sales and promotions. Families are cutting back on spending, while under-25s blame lack of money. Lisa Hooker, leader of industry for consumer markets at PwC UK, said: “Shoppers are telling us they want to spend less this Black Friday for a number of reasons.”
Retail sales fall
UK Retail Sales fell unexpectedly in October as stretched consumers stayed at home, official data showed on Friday in a new warning sign for the economy. Retail sales volumes dropped 0.3% month-on-month, following a revised 1.1% decline in September that was worse than first estimated, the Office for National Statistics said. Economists polled by Reuters had forecast that sales volumes would rise by 0.3% on the month in October.
Investment in net zero ‘will keep interest rates higher for longer’
Megan Greene, a member of the Bank of England’s Monetary Policy Committee, has warned that spending on the “green transition” was likely to mean interest rates stay higher for longer. The American economist said a renewed focus on defence spending and net zero would require significant investment, helping to reverse a global trend towards higher saving, which has helped to keep average interest rates down. Over the longer term, however, investment in net zero could improve productivity, helping to keep rates down. Greene went on to warn that high wage growth and low productivity will make it harder for the UK compared with other large economies to bring inflation down to the Bank’s 2% target.
Business leaders call for permanent tax break for investment
Business leaders and trade bodies from across the UK have called on the Chancellor to provide a permanent tax break for investment in next week’s Autumn Statement. Almost 100 chief executives and directors of companies including Siemens, Nissan, and AstraZeneca have urged the Government to announce a full expensing regime for companies beyond the current three years. This is supported by research from Make UK and the CBI. The chief executives and industry bodies want the expensing regime to be made permanent to create certainty for businesses who want to invest in the UK. Separately, the chief executives of 37 Chambers, representing more than 35,000 businesses, have also called on the Chancellor to offer solutions to Britain’s investment problem.
Jeremy Hunt explores cutting inheritance tax and business levies
The FT reports that the Chancellor is contemplating a cut to IHT and some business taxes in his Autumn Statement as forecasts from the OBR are expected to give him more headroom for giveaways. However, economists warn that this fiscal headroom could be wiped out by minor changes in the OBR’s outlook. The Telegraph reports that Deutsche Bank expects the Bank of England’s decision to sell-off government bonds to cost taxpayers £15bn extra a year, compared to a scenario where the bonds were left to mature, squeezing Jeremy Hunt’s room to cut taxes. Active sales were crystallising higher losses for the Treasury, says Sanjay Raja, Deutsche Bank’s chief economist. The Times also reports on a range of tax cuts allegedly being considered by Mr Hunt with the headline prediction being a halving of the rate of IHT.
Hunt rejects calls for major changes to pension plan
Jeremy Hunt has rejected calls from his predecessor Sajid Javid to usher in reforms to allow the UK’s biggest pension funds to invest more into start-ups in a bid to boost personal pension pots. A report from think-tank Onward has urged the Chancellor to double pension fund investments in science and tech start-ups. The proposed reforms could attract £20bn of investment and increase average lifetime pension pots by almost £98,000. Mr Javid supports the proposals, claiming under-investment by pension schemes is holding the UK back. However, Treasury sources have said there are no plans to change the Mansion House Compact, which sets the 5% target for large pension funds by 2030.
Startups at war with Hunt over R&D tax
Small business groups have criticised the Chancellor Jeremy Hunt over his plans to scale back research and development (R&D) tax credits for start-ups. The Startup Coalition, formerly known as Coadec, has published a report highlighting “severe failings” in the current regime, claiming that it is “killing” small businesses and driving start-ups overseas. The report states that poor administration is compounding the regime, with 84% of business founders considering moving their startups abroad. The group is urging Hunt to tweak the rules for the “enhanced” tax credit to ensure that more innovative firms can access the more generous scheme.
Class pay gap is costing workers £6,000 a year
Working-class professionals are paid over £6,000 less than more privileged peers in the same occupation, according to a study by the Social Mobility Foundation. Professional workers from working-class backgrounds earn an average salary of £45,437, compared to £51,728 for those from professional-managerial backgrounds. The pay gap is more pronounced in the private sector, where working-class professionals earn £7,575 less. Women from working-class backgrounds face a class pay gap of £7,042 in the same occupation. A survey of young people aged 16-18 found that 72% were put off applying for elite professions due to the class pay gap. Some 89% said they would be more enthusiastic about working for an employer that prioritised social mobility. Alan Milburn, chairman of the Social Mobility Foundation, called for government action to mandate the reporting of socioeconomic background data to address the issue.
FTSE 100 chiefs demand reform to halt stock market decline
The Chancellor has been urged by FTSE 100 chiefs to introduce sweeping reforms to revive investment in the City. Dozens of members of the Capital Markets Industry Taskforce, along with Julia Hoggett, chief executive of the London Stock Exchange, signed a letter raising concerns with Jeremy Hunt over new figures showing £1.9trn has been pulled from UK stock markets by UK pension and insurance companies over the past 23 years. The letter urged the Chancellor to accelerate plans to boost investment by pension funds and raise the annual Isa allowance by £5,000 for savers who want to invest in UK-listed companies. The Capital Markets Industry Taskforce also called for the Financial Reporting Council to be given a clear objective to boost competition to make London markets more attractive for investors. “As a fundamental principle, UK-listed companies should not be subject to restrictions that non-UK companies listed on high-quality exchanges are not subject to unless they can be justified,” its letter said.
Benefit claimants to face mandatory work placements
Benefit claimants who fail to find work for more than 18 months will have to undertake work experience placements, under rules planned for late next year. The Government says that if they refuse they will lose access to their benefits for a period. The move is part of efforts to get people back to work, which will also see an extra £2.5bn spent on career support. The Autumn Statement next Wednesday will include a “Back to Work” plan intended to help people with mental and physical health conditions look for and retain jobs, the Treasury said on Thursday. The Chancellor said “a combination of carrot and stick” would help both businesses and individuals while boosting the economy.
Auditors achieve high standards in checking small business accounts
Britain’s seven largest auditors have been praised for their high standards in checking the accounts of smaller businesses. According to the Institute of Chartered Accountants in England and Wales (ICAEW), a record 95% of non-public interest entity audits conducted by the Big Four and their closest competitors were deemed “good” or “generally acceptable”. However, the performance of smaller auditors fell short, with only 71% of audits meeting ICAEW standards, down from 76% in 2022.
Alibaba
Alibaba shelved plans to spin off its cloud-computing business in an IPO for $11bn. The e-commerce giant blamed the “uncertainties” caused by US export controls on AI chips sold to China.
Oil
The Oil price traded lower on Thursday with Brent falling over 4% to below $78, extending losses from Wednesday as signals of higher supply from the United States met concern over lacklustre energy demand from China.
US Unemployment
US Unemployment Claims increased to a three-month high last week, suggesting that labor market conditions continued to ease, which could help the Federal Reserve’s fight against inflation. The weekly jobless claims report from the Labor Department on Thursday, the most timely data on the economy’s health, also showed unemployment rolls expanding to levels last seen two years ago. The labor market is cooling as higher interest rates curb demand, consistent with slowing economic activity
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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!
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.