Business news 17 December 2024
Business confidence latest, inflation and interest rate predictions, OBR, flexible working, mental health, deregulation, pensions, taxes, retail, property prices, car insurance, markets, insolvencies & more business news that we thought would interest our members.
James Salmon, Operations Director.
Business confidence flat while job cuts accelerate
The latest S&P Global Flash UK Purchasing Managers’ Index (PMI) shows that business confidence was unchanged in December, matching the 13-month low recorded in November. December’s PMI came in at 50.5 on an index where anything under 50 represents contraction. While the report found a marginal increase in business activity, manufacturing output fell and companies reported the sharpest decline in workforce numbers since January 2021, with this attributed to weaker demand, rising employment costs, and squeezed margins. Chris Williamson, chief business economist at S&P Global Market Intelligence, said: “Businesses are reporting a triple whammy of gloomy news as 2024 comes to a close, with economic growth stalled, employment slumping and inflation back on the rise.” Suggesting that businesses “have responded negatively” to the new government’s “downbeat rhetoric and policies,” he warned that “the loss of confidence and increased culling of jobs hints at worse to come as we head into the new year.” Mr Williamson also said the “marked pull-back in hiring” is, in part, a response to the increase in National Insurance contributions. Matt Swannell, chief economic advisor to the EY Item Club, said the PMI “is a relatively poor leading indicator of GDP growth” as it is overly sensitive to sentiment, rather than tangible economic activity.
Unemployment
UK Unemployment was unchanged at 4.3% in the three months to October, said the Office for National Statistics, but pay including bonuses rose to 5.2%. Job vacancies fell again and the number of employees on the payroll fell by 22,000 (0.1%), though employment is still up 160,000. The ONS has admitted there have been issues with the reliability of its numbers, but said its estimate for November is for a 35,000 fall in payroled employees.
Inflation expected to climb further
With official figures due this week, experts expect inflation to have climbed further above the Bank of England’s 2% target. While consumer prices index inflation stood at 2.3% in October, economists say this is likely to have risen to around 2.6% in November. Pantheon Macroeconomics and S&P Global both expect inflation to rise to 2.6%. Deutsche Bank, however, forecasts inflation of 2.48%. RSM economist Thomas Pugh said the firm expects a “steady climb” to 2.6%, “which will continue to around 3% early next year, due to the surge in energy prices, tax rises in the budget including National Insurance contributions, VAT and national minimum wage, and increased government spending.” The Bank of England’s Monetary Policy Report, released in November, predicts that inflation will hit 2.5% by the end of 2024.
Bank set to hold interest rates
Bank of England (BoE) policymakers are expected to keep interest rates on hold amid higher inflation and uncertainty over the impact of the Budget. The Monetary Policy Committee is expected to keep rates at 4.75% when members meet this week, having made cuts in August and November. Analysts at AJ Bell said that while policymakers “may feel that a lot of hefty lifting has been done” as inflation sits close to the Bank’s 2% target, they “cannot rest easy.” Thomas Pugh, an economist at RSM, commented: “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.” Forecasting that rates will be held, Sanjay Raja, chief UK economist at Deutsche Bank, said: “We expect the final BoE decision of the year to be a dull affair.”
Chancellor commissions OBR forecast
Rachel Reeves has asked the Office for Budget Responsibility to produce an economic forecast that will be published on March 26. The Chancellor, who said she intends to respond to the forecast with a parliamentary statement, commented: “This is in line with my commitment to deliver one major fiscal event a year, to give families and businesses the stability and certainty they need and, in turn, to support the Government’s growth mission.”
Flexible workers shift to four days a week
Analysis from Knight Frank shows that three quarters of workers in London’s flexible offices have increased the number of days at their desk and attend the office at least four days a week. The report also shows that this has driven a surge in demand for flexible office space, with three quarters of operators and landlords seeing larger firms leasing more space compared to a year earlier. A number of firms have urged staff to return to the office amid concerns that remote working has driven a drop in productivity. Research from the Centre for Cities shows that only a third of workers think they are more productive at home.
Growing mental health crisis hits global workplaces
Deloitte analysis shows that the financial services sector has been hit by a mental health crisis, with 17% of employees experiencing burnout compared to the 12% average across all sectors.
Markets
Yesterday, the FTSE 100 closed down 0.46% at 8262.05 and the Euro Stoxx 50 closed down 0.42% at 4947.03. This morning on currencies, the pound is currently worth $1.270 and €1.21. On Commodities, Oil (Brent) is at $72.65 & Gold is at $2638. On the stock markets, the FTSE 100 is currently down 0.48% at 8222 and the Eurostoxx 50 is down 0.05% at 4945.
Chancellor warned against City deregulation
A group of 50 economists and policy experts have warned the Chancellor that deregulating the City could threaten financial stability and hinder growth. Rachel Reeves, who has suggested that regulations imposed after the global financial crisis have “gone too far,” has urged the Financial Conduct Authority to support the growth and competitiveness of the sector. However, experts responding to a Treasury call for evidence argue that allowing the financial services sector to expand further risked “undermining the Government’s efforts to grow the economy.” Signatories to the statement, which was co-ordinated by the campaign group Positive Money, pointed to a “wealth of empirical evidence showing that, beyond a certain threshold, financial sector growth harms the wider economy.”
Chancellor criticised over pension review delay
Experts have criticised the decision to pause a review into the adequacy of pensions. Chancellor Rachel Reeves has reportedly shelved plans to reform pension adequacy over concerns that it could force employers to increase contributions to retirement pots. Tom Selby, director of public policy at investment platform AJ Bell, has warned that the “foundations of pensions are shaky,” and argues that “delaying meaningful action to address these problems will leave millions of people at greater risk of an income shortfall when they reach retirement.” He went on to say that there is “widespread agreement that the current minimum levels of auto-enrolment contributions are insufficient to deliver good outcomes in later life for most people.” Catherine Foot, director of Phoenix Insights, said: “Hitting pause on the retirement adequacy review could be hugely detrimental to people’s financial future.”
Badenoch: Flat taxes are ‘very attractive’
Conservative leader Kemi Badenoch has expressed support for flat taxes, where everyone plays the same rate, saying: “This is an idea that I’ve heard many times. It’s very attractive, but if we’re going to get to that sort of scenario, there’s a lot of work we need to do first-hand.” Speaking at an event organised to oppose Labour’s increases to inheritance tax on family farms and businesses, she added that implementing such a system would likely result in a tax rise for basic ratepayers while providing significant cuts for higher earners, should the change be fiscally neutral. Ms Badenoch told the Business Property Relief Summit that the Government’s plans would cost the Treasury money because they would “destroy the businesses that provide that income.” The Tory leader added that there is a need to “make sure we rewire our economy so that we can lighten the burden of tax and of regulation on individuals, and on those businesses that are just starting out in particular.”
Voters accept tax rises
Voters have largely accepted the £40bn tax increases in Chancellor Rachel Reeves’s first Budget as “necessary” for improving public services, despite 57% expecting to be worse off. A survey by the University of Bristol revealed that 48% of respondents supported the tax rises. The survey also highlighted significant political divides, with only 29% of Reform UK voters supporting the increases compared to 65% of Labour voters. While there is some support for specific measures like VAT on school fees, raising inheritance tax on farms was the least popular.
Retail
UK Retail Footfall has tumbled in recent weeks as shops place hopes on a pre-Christmas rush to turn around fortunes. According to Rendle Intelligence and Insights, average footfall across the UK retail sector fell by 3.1% year on year over the course of the past two weeks.
Property price surge predicted
According to a forecast by Nationwide Building Society, homeowners could see their property values increase by over £10,000 on average in 2025. The predicted growth ranges from 2% to 4%, translating to an increase of £5,363 to £10,725 for the average property currently valued at £268,144. Robert Gardner, chief economist at Nationwide, said: “Upcoming changes to stamp duty are likely to generate volatility, as buyers bring forward their purchases to avoid the additional tax.” The forecast follows a significant monthly rise in house prices, with a 3.7% increase over the past year, marking the largest annual rise in two years. Mr Gardner anticipates a strong start to 2025 as buyers rush to beat the stamp duty deadline, which will see thresholds drop from £250,000 to £125,000.
Britvic
The Competition & Markets Authority has approved Carlsberg’s £3.3 billion acquisition of Britvic without requiring an in-depth review. The Danish brewer struck the deal in July to acquire the UK soft drinks manufacturer, aiming to create a beverage “powerhouse” in the British market. The transaction, expected to close on January 16, will see Carlsberg assume Britvic’s bottling agreement with PepsiCo, expanding its existing bottling partnerships into new markets.
BTL lending set to fall 7%, UK Finance predicts
Banking trade body UK Finance has warned that the outlook for the buy-to-let sector will be “challenging” in 2025, citing the impact of extra taxes landlords will face. UK Finance said that while falling mortgage rates in the second half of the year have led to a “modest recovery” in the buy-to-let sector, extra stamp duty on the purchase of additional homes could mean activity shrinks. The trade body predicts a 7% drop in mortgage lending for buy-to-let purchases in 2025 compared with this year. Analysis by the National Residential Landlords Association suggests that 31% of landlords are planning to sell properties they rent out in the next two years, with extra cost pressures talking a toll.
Car insurers set to rebound from record losses
Analysis from EY suggests that UK car insurers are expected to return to profitability in 2024, having been hit by record losses in 2023. The firm estimates that car insurers paid out 93p in claims and expenses for every £1 made in premiums in 2024, compared with £1.13 for every £1 in 2023. Mat Wheatley, UK insurance partner at EY, said: “2022 and 2023 were challenging years for motor insurers, who had to contend with significant losses, and for consumers, who faced sharp premium increases,” but “falling inflation, easing claims costs and stabilising balance sheets mean the sector is expected to return to profitability in the short-term” in 2024. While profitability is set to increase, 2025 is still expected to be loss-making.
Latest Insolvencies
Appointment of Liquidators – RSM GROUP (UK) LIMITED
Appointment of Liquidators – AVILLION LLP
Appointment of Liquidators – AUGUSTA DEVELOPMENTS LIMITED
Appointment of Liquidators – S AND S CARPENTRY AND BUILDING LIMITED
Appointment of Liquidators – ION INVESTMENTS LIMITED
Appointment of Liquidators – EMPLOYER SERVICES MANAGEMENT LIMITED
Appointment of Administrator – SMARTHUB LOGISTICS LTD
Appointment of Liquidators – SANDWELL COMMERCIAL FINANCE NO. 1 PLC.
Appointment of Liquidators – ARRANDCO FINANCIAL MANAGEMENT LIMITED
Appointment of Liquidators – SUN ALLIANCE MORTGAGE COMPANY LIMITED
Petitions to wind up (Companies) – RUSH GROUP HOLDINGS LTD
Appointment of Liquidators – MJ SERVICES (GB) LIMITED
Appointment of Liquidators – F J BROOKS CONSULTING LIMITED
Appointment of Liquidators – JOHN H BURLEY LIMITED
Appointment of Liquidators – CKW HOMES LTD
Appointment of Administrator – LYDNEY PALLETS & CASES LIMITED
Appointment of Liquidators – EMPLOYER SERVICES LIMITED
Appointment of Liquidators – RIGPS PROPERTIES LIMITED
Appointment of Liquidators – NAXOS UK LIMITED
Petitions to wind up (Companies) – STAG HOTEL LIMITED
Winding up Order (Companies) – CEILING SUPPLIERS LTD
Appointment of Liquidators – CAROLYN TURNER HR SERVICES LIMITED
Appointment of Administrator – TILON (HOLDINGS) LTD
Appointment of Liquidators – MICRO FOCUS UK LIMITED
Appointment of Administrator – REMEDI SOLUTIONS LTD
Petitions to wind up (Companies) – BOROUGH (OPERATIONS) LTD
Petitions to wind up (Companies) – SPECIALIST CARS (UK) LTD
Appointment of Liquidators – AMBERSTONE CONSULTING LIMITED
Appointment of Liquidators – NEW ENERGY ONE ACQUISITION CORPORATION PLC
Appointment of Liquidators – J.F. KNIGHT (ROADWORKS) LIMITED
Petitions to wind up (Companies) – CRW HOUSING LTD
Petitions to wind up (Companies) – GYMBUDDY HEALTH & FITNESS LTD
Petitions to wind up (Companies) – LBW BUILDING SERVICES LIMITED
Petitions to wind up (Companies) – PKH PALLETS LIMITED
Appointment of Liquidators – TWEEDED BADGER 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.
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.