Business news 18 June 2024
Small businesses see increase in profits despite decline in revenues. Big banks increase small business lending. Fintech, IMF, markets, insolvencies, house prices, politics & more business news that we thought would interest our members.
James Salmon, Operations Director.
Small businesses see increase in profits despite decline in revenues
Small businesses have seen an increase in profits by 6.5% in the first quarter, despite a decline in revenues. Sage’s small business tracker revealed that companies have been cutting costs to bolster profitability, with many waiting for a more stable economic and political climate before making investments.
Big banks increase small business lending
Big banks’ lending to UK small and medium-sized enterprises (SMEs) has seen its first notable rise in almost two years, with gross SME lending rising 15% in Q1 2024, reaching its highest level since the end of 2022. According to UK Finance, the majority of small business lending now comes from outside the big banks, as SMEs turn to alternative providers. New SME finance approvals among high street banks also jumped 27% in Q1 2024. The data points to small firms’ rising demand for borrowing amid a more positive outlook for the UK economy. SMEs continued to reduce their stock of cash deposits, but still retain a significant savings buffer. SME finance repayments remained stable in Q1. “It is encouraging to see further signs that SME demand for finance is returning,” said David Raw, managing director of commercial finance at UK Finance.
City of London stresses support for SMEs
The City of London Corporation has launched its first ever SME strategy to support local small and medium-sized enterprises (SMEs). The strategy aims to provide support in five key areas: access to finance, access to data, access to space, access to expertise, and access to networks. Chris Hayward, policy chairman at the City of London Corporation, says the organisation recognises the importance of SMEs in driving economic dynamism. The strategy will ensure increased visibility and accessibility of support for small businesses, unlock the City’s networks, and develop targeted support for early growth companies and underrepresented groups.
UK fintech job vacancies surge
London is driving a surge in UK fintech recruitment this year, with a 61% year-on-year jump in job openings between January and April. Fintech is the top performing category within UK financial services for job openings in 2024, and if the current pace of recruitment continues, the number of fintech vacancies will be 37% higher in 2024 than 2023. Technology roles saw a 41% uplift in vacancies, driven by development and engineering. Risk and compliance openings also rose by 87% in London. The UK fintech sector is rebounding after a drop in investment in 2023, with fintech companies raising $1.4bn in funding in the first three months of 2024. The sector is experiencing dynamic shifts in recruitment, driven by technological advancements and regulatory changes, says Victoria Walmsley, a managing director at Morgan McKinley.
IMF calls for excess profits tax to balance effects of AI
A report by the International Monetary Fund (IMF) suggests governments introduce taxes on excess profits and a green levy to make up for AI-related carbon emissions and the impact of the technology on jobs. “Given the large amount of energy consumed by AI servers, taxing the associated carbon emissions is a good way to reflect the external environmental costs in the price of the technology,” the IMF said. The report went on to advise against taxing investment in AI but suggested raising capital income taxes such as corporation tax and personal income taxes on interest, dividends and capital gains. This would support the anticipated increase in welfare spending due to job losses from AI.
Markets
Yesterday, the FTSE 100 closed down 0.06% yesterday at 8142.15 and the Euro Stoxx 50 closed up 0.85% at 4880.42 as French stocks stabilized. Overnight in the US the S&P 500 rose 0.77% to 5473.23 and the Nasdaq rose 0.95% to 17857.02.
This morning the pound is currently worth $1.2685 and €1.1835. Brent is at $84, Gold is at $2309. The FTSE 100 is up 0.37% at 8172 and the Eurostoxx 50 is up 0.45% at 4902 as European stocks follow the lead of US shares which hit new highs yesterday.
The US rally was led by several large tech titans. The S&P 500 has hit 30 fresh all time highs this year.
London reclaims title as Europe’s biggest stock market
London has regained its position as Europe’s largest stock market with companies valued on the main exchange hitting $3.2 trillion, retaking the crown after losing it to Paris two years ago as part of the aftermath of the Liz Truss crisis. French stocks have been hit by the shock election called by President Emmanuel Macron, while London shares are showing signs of life with increased deals and share price boosts. The FTSE 100 has risen 7% in the past year. Stability and the clear likelihood of a Labour victory in the upcoming election have given investors confidence. The French market heavily relies on global luxury brands, which have been under pressure. On the other hand, the UK is gaining favour among overseas investors due to its stable, cash generative companies.
London drags down UK productivity
Figures from the ONS show London’s productivity dropped markedly between 2019 and 2022, with output per hour worked falling 2.7% compared with a 2.5% rise across the UK.
TDK
The Japanese electronics firm, that people of my generation will remember for their cassette tapes, has developed a new ceramic material for solid state batteries that can store significantly more charge than current materials. The new batteries could be used in future generations of small devices such as phones and headsets.
House prices
The average price of a home in the UK dipped by just £21 in June, following a record high in May, according to Rightmove. The typical cost of a residential property in Britain is now £375,110, slightly down from May’s record of £375,131. Despite the possibility of sellers being cautious as the election nears, the number of sales and buyer inquiries has remained steady. Rightmove’s director of property science, Tim Bannister, said: “It’s always difficult to predict how home-movers will react to sudden uncertainty, but the market activity has remained largely steady this time.” He added that while a poll of more than 14,000 people supports the data, “with the vast majority of respondents carrying on with their home-moving plans,” some potential sellers “appear to be watching and waiting rather than taking action,” with this shown by a dip in the number of new sellers coming to market.
Reform UK pledges ‘radical’ tax cuts
Reform UK set out radical tax and spend plans with the launch of its “contract with the people” on Monday, promising to lift the income tax threshold from £12,570 to £20,000, slash government spending, scrap net zero and block the Bank of England from paying interest to commercial banks on money it had supplied through quantitative easing. Nigel Farage, Reform’s leader, said he accepted the plans were dramatic but insisted they had been fully costed. Inheritance tax on estates worth under £2m and stamp duty on homes under £750,000 would also be scrapped and the VAT threshold for small firms would rise to £150,000 from £90,000. The tax cuts would be funded by £150bn in savings. However, Carl Emmerson, deputy director of the Institute for Fiscal Studies, said the “plans cannot be implemented without finding ways to raise money or cut spending.”
Labour accuses Tories of planning unfunded tax cuts
Sir Keir Starmer has accused Chancellor Jeremy Hunt of “admitting” pledges in the Conservative Party manifesto are unfunded. The Tories plan to fund their tax cuts with £12bn savings on welfare, but Labour argues that the money has already been spent citing a newsletter the Chancellor sent to constituents last week stating that the tax cuts in the Conservative manifesto would be funded by savings from “an enormous back to work programme (which I announced in the Autumn Statement last year)”. Sir Keir argues this is an admission that parts of the Conservatives’ plans are already government policy, meaning that they have already been factored into government budgets and spending plans. Shadow Treasury minister Darren Jones states that Jeremy Hunt’s private admission undermines the Conservative manifesto.
Moody’s pulls rating from heavily indebted Cheshire council
Moody’s has removed its credit rating from Labour-led Warrington Borough Council due to its failure to have its accounts signed off by external auditors. The council is £1.8bn in debt and has come under scrutiny for a number of its “uniquely complex” investments. Following Moody’s withdrawal, the authority said it was seeking to secure an alternative rating from another EU-recognised ratings agency.
Party supplies retailer on edge of collapse
Wonder Group, previously known as Amscan, is on the verge of administration as it faces a downturn in consumer spending. The party supplies retailer and distributor is preparing to file a notice of intention to appoint Interpath Advisory to handle the insolvency process. Falling demand in international markets for party and costume products has affected the company. Wonder Group, which employs about 200 people in the UK, may have to sell off some of its assets. The company had set a revenue target of £500m by 2026 after acquiring Party King. Investment firm Endless, which backed the buyout of Wonder Group in 2021, declined to comment on the potential job losses. Smiffys, another player in the sector, is also on the brink of collapse. The firm brought in PwC as administrator last month.
Labour considers 10% tax on Premier League player transfers
Labour has refused to rule out forcing Premier League clubs to pay a 10% tax on every player they sign. Thangam Debbonaire, shadow sport secretary, said the option is on the table as she looks at sweeping changes to the way the game is regulated. These include a levy on transfers from overseas or between top-league clubs, which could see teams pay an extra £2m on a £20m transfer. Ms Debbonaire vowed to prevent a repeat of the collapse of Bury FC in 2019 and make the game fairer. Labour vowed to press ahead with a Governance Bill after Tory efforts to regulate the way clubs are run collapsed when they called a snap election
Latest Insolvencies
Appointment of Liquidators – ROSS INSURANCE GROUP LIMITED
Appointment of Administrator – MAILBOX DM LTD
Appointment of Administrator – HOLLINS HOMES (UTOPIA) LIMITED
Appointment of Administrator – HOLLINS HOMES (GALGATES) LIMITED
Appointment of Liquidators – JA SUPPLY CHAIN LTD
Appointment of Administrator – CHELSEA PERSONNEL LIMITED
Appointment of Liquidators – VELVET STRATEGIES LIMITED
Appointment of Liquidators – FASTNET MARINE INSURANCE SERVICES LIMITED
Appointment of Liquidators – 23 ALBERT STREET LIMITED
Appointment of Liquidators – BABCOCK MARINE & TECHNOLOGY HOLDINGS LIMITED
Appointment of Liquidators – B.W.KEMSLEY & SON LIMITED
Appointment of Liquidators – AROMAIR HOLDINGS LIMITED
Appointment of Liquidators – AIDHY ENGINEERING CONSULTANTS LIMITED
Appointment of Liquidators – SLUMBERSAC TRADING COMPANY LIMITED
Appointment of Liquidators – NIRAMAX GROUP LIMITED
Appointment of Liquidators – MR1 CONSULTING LIMITED
Appointment of Liquidators – NIRAMAX HOLDINGS LIMITED
Petitions to wind up (Companies) – HIGHLAND ROOFLINE LTD.
Petitions to wind up (Companies) – DTI ELECTRICAL AND SECURITY SYSTEMS LTD
Appointment of Liquidators – AFK FINANCIAL SERVICES LIMITED
Appointment of Liquidators – ALEXANDER A WILLIAMSON (EDINBURGH) LIMITED
Appointment of Liquidators – GUARDUM HOLDINGS LIMITED
Appointment of Administrator – SIMPLE REFINING LTD
Appointment of Liquidators – GARTLAND AND MELLINA GROUP (EUROPE) LIMITED
Petitions to wind up (Companies) – FELIX HOLIDAYS GROUP LIMITED
Petitions to wind up (Companies) – CHELMSFORD MANAGEMENT COMPANY LIMITED
Petitions to wind up (Companies) – FELIX TRAVELS AND TOURS LIMITED
Winding up Order (Companies) – FUEL CARDS ON SITE LTD
Appointment of Liquidators – ACCURA CONSULTANCY LIMITED
Petitions to wind up (Companies) – ABERLEY LIMITED
Appointment of Liquidators – DIATEST (U.K.) LIMITED
Petitions to wind up (Companies) – SLC PROPERTY DEVELOPMENTS & CONSULTANCY LTD
Appointment of Liquidators – ELEANOR NEALE LIMITED
Appointment of Liquidators – BIOINDUCTION MEDICAL LIMITED
Appointment of Liquidators – A N AGAR HOLDINGS LIMITED
Appointment of Liquidators – HILLBOND LIMITED
Appointment of Liquidators – HASTON DIRECT ASSOCIATES LIMITED
Appointment of Liquidators – FENCING 63 LIMITED
Appointment of Liquidators – THE MISSING LINQ LTD
Appointment of Liquidators – MARTHA RUBY LTD
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 last one was particularly deadly for suppliers fand we are still seeing elevated insolvencies as businesses struggle.
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!
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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.