Business news 18 July 2023
James Salmon, Operations Director.
Rate rises could take 25% off property prices. Food price inflation. Brexit, New business Council, HMRC sees record tax take. And more business news that we thought would interest our members.
Rate rises could take 25% off property prices
A report from the Resolution Foundation think-tank suggests that higher interest rates could see house prices fall by as much a 25% over the next five years, taking the average price from £287,000 today to around £215,000. The report argues that higher interest rates could reduce the house-price-to-earnings ratio from its 2022 peak of 8.9 times a household’s income to 5.6 times. While housing market expert Neal Hudson said a fall of 25% was a “possibility given current rates,” Lucian Cooke of estate agents Savills said a fall of 25% seemed a “bit heavy” as he does not expect lots of forced sales. Suggesting that a fall of 10% was more likely, he said: “Our view is that the pressure on prices will come from reduced buying power of those who remain in the market. So the effect will be a combination of lower prices and lower transactions.” Property commentator Henry Pryor expects that prices “will be back where they are today” in five years’ time. “They will dip in the meantime, falling by up to 10% from their peak at the end of last year, but will bounce back,” he said.
Food price inflation
Market research firm Kantar reported that food price inflation has slowed for the fourth month in a row although it is still “incredibly high” at 14.9% down from 16.5% in June. Food inflation is one of the biggest factors in the UK’s overall stubornly high rate of inflation, which is predicted to have fallen to 8.2% in June, from 8.7% in May, in figures due tomorrow.
Separately, British food and drink manufacturers cut their prices in June for the first time in more than three years, a Lloyds survey showed. That’s as input costs fell for the second consecutive month.
Food price inflation warning as Russia exits grain deal
British Retail Consortium (BRC) economist Harvir Dhillon has warned that soaring food costs may not fall as quickly as markets had hoped due to Russia’s decision to withdraw from a deal that enabled the safe export of grain from Ukraine through the Black Sea. The move means inflation on some products “might not fall as quickly over the coming months as consumers and retailers had hoped,” Mr Dhillon said, adding: “This additional cost pressure will come at a difficult time for retailers, who are already battling other headwinds.” Kate Nicholls, chief of UK Hospitality, commented: “With food input inflation remaining above 20%, as it has done for months, any further increases in food prices would compound the pressures hospitality businesses are facing.”
Brexit
A new You guv poll shows for the first time that a majority of Britons would vote to rejoin the EU with 51% in favour and only 32% would still vote leave. 63% thought Brexit had been a failure. 70% thought the Government had handled it badly. 18% of those who had voted leave, said they would now vote remain. 57% said the country had been wrong to vote for Brexit with only 32% saying it was the right decision.
New Business Council
PM Rishi Sunak is attempting to rebuild bridges between the Tories and big business with a new Business council made up of the CEOs of major UK businesses. Downing Street said the council will aim to boost investment, innovation, and access to skills and talent.
HMRC sees record tax take
The tax office reported its highest ever revenue last year, with the record tax take driven by high inflation and the freezing of several tax thresholds. HMRC reported incomings of £814bn in 2022/23, an increase of 11.3% compared to the year before. Despite this, the tax gap – the difference between the amount of tax owed and what was actually paid – remained at 4.8%. A HMRC spokesperson said: “We collected a record amount in 2022/23, which accounted for more than 95% of all tax due. The vast majority pay their tax in full and on time and this is used to pay for the public services we all rely on.” Meanwhile, analysis by the National Audit Office highlighted a high level of fraud in research and development reliefs, noting that these schemes are “complex” and “proved attractive to those seeking to abuse them.” HMRC’s estimate of error and fraud for the schemes in 2022/23 was £1.1bn – or 13.3% of expenditure on them. This was more than double the estimate of £469m, or 4.9%, for 2021/22. The tax office has revised its estimate for error and fraud losses on R&D tax incentives for SMEs between 2020 and 2021 from 5.5% to 24.4%. This represents one of the worst loss rates across any Government spending programme, including emergency pandemic schemes.
Visa rules eased for building and fishing industries
The Home Office has confirmed that visa rules are being eased for overseas builders, carpenters, roofers and plasterers – as well as people working in the fishing industry and connected “elementary agriculture occupations.” These trades have been added to the Shortage Occupation List, which temporarily eases restrictions when employers are struggling to fill vacancies. People on the shortage occupation list, which is reviewed every six months and assessed by the Migration Advisory Committee, can apply for a skilled worker visa. Those working in a shortage occupation pay lower visa fees and can be paid 80% of the job’s usual rate and still qualify for a visa.
FCA to clamp down on social media promotions
The Financial Conduct Authority (FCA) is to target those using social media to promote financial products or services, amid concern over firms selling crypto schemes and financial products via misleading adverts. The City watchdog is set to issue guidance to “modernise the information firms should use when promoting financial products or services online.” This comes as the FCA looks to clamp down on the way products are promoted. Crypto firms will be banned from using incentives such as ‘refer a friend’ bonuses to customers, while buy-now pay-later bosses have been told they face prosecution if they fail to adhere to financial promotion rules.
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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.
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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.