Business news 18 October 2023
James Salmon, Operations Director.
Inflation, infrastructure, wage growth, Chinese industrial espionage in the UK and more business news that we thought would interest our members.
Breaking – UK Inflation
UK inflation sticks after oil rises as CPI came in at 6.7% (in line with estimates) and RPI came in at 8.9% (against estimates of 9.1%) despite earlier hopes that inflation might fall to 6.5%.
Report calls for more investment in infrastructure
The UK’s infrastructure is in dire need of renewal, according to the National Infrastructure Commission. The commission recommends a cash injection of £30bn a year from the taxpayer and £40bn to £50bn a year from the private sector to improve public transport, home heating, and water networks. The investments would result in savings of at least £1,000 per household annually, higher economic productivity, and a better quality of life.
The commission’s report emphasises the importance of renewable energy sources and proposes the installation of heat pumps and insulation upgrades for households. It also calls for greater investment in public transport and restrictions on car access to alleviate congestion. The report’s recommendations also include compulsory water meters for homes and businesses.
UK wage growth edges lower
Average pay growth rose above inflation for the first time in almost two years, in a sign that the squeeze on living costs may be starting to ease. Average weekly earnings in the three months to August were up 8.1% compared with the same period last year, slowing from 8.5% in the three months to July, the Office for National Statistics said. That was higher than average inflation over the same three months.
The slowing pace of wage growth should reassure the Bank of England that its aggressive monetary tightening cycle is working. The Chancellor Jeremy Hunt said: “It’s good news that inflation is falling and real wages are growing, so people have more money in their pockets. To keep this progress, we must stick to our plan to halve inflation.” However, there continues to be a big gap between public and private sector pay. Wage growth for public sector workers reached 6.8% between June and August, which the ONS said was the biggest increase since comparable records began in 2001. But the average pay rises for private sector employees was 8%. People employed in finance and business services saw the largest rise in annual pay, followed by those in the manufacturing sector.
The figures also revealed the total number of vacancies fell to 988,000 in the three months to September, the lowest in two years and a decline of 43,000. Yael Selfin, UK chief economist at KPMG, said the drop in vacancies suggested that wages would begin to soften as workers would lose bargaining power in an economy where companies were hiring fewer staff.
MI5 chief warns of Chinese spies on LinkedIn
The chief of MI5 has said as many as 20,000 Britons have been targeted by Chinese state actors on LinkedIn in the hope of stealing industrial or technological secrets. Ken McCallum said industrial espionage was happening at “real scale” and 10,000 UK businesses were at risk, particularly in artificial intelligence, quantum computing or synthetic biology. The MI5 director general was speaking during a summit of domestic spy chiefs from the Five Eyes agencies hosted by the FBI in California. Nobody has ever been prosecuted for spying for Beijing in the UK, but McCallum expects the new National Security Act would lead to Chinese agents being tried in British courts.
Oil
Oil prices have spiked following the Israeli attack on a Palestinian hospital killed hundreds of civilians and drove up tensions in the Middle East. Brent is up over 3% over $92. markets are watching foe the conflict to spill over into surrounding nations.
China
China reported third-quarter economic growth which came in stronger than expected at 4.9% in July to September, boosting hopes that the world’s second-largest economy will meet or even exceed Beijing’s target for about 5% this year. Economic activity has shown signs of stabilization in recent data. On Wednesday, September data for retail sales and industrial production also bested median forecasts, with the cumulative fixed asset investment print for the first nine months this year slightly below expectations.
Gas
Qatar has agreed to supply British firm Shell with natural gas for 27 years, the Gulf emirate’s state-owned energy company announced on Wednesday. Since Moscow’s invasion of Ukraine last year, European countries have scrambled to replace lost deliveries of natural gas from Russia. Qatar will supply 3.5 million tonnes of gas a year under the deal, QatarEnergy said, following two agreements with Shell for a share of the Gulf state’s huge North Field gas expansion project.
Volta Trucks files for bankruptcy
The electric HGV company Volta Trucks has filed for bankruptcy following a struggle to secure batteries for its lorries. The Stockholm-headquartered firm carries out most of its business and engineering operations in the UK, with bases in Warwick, Coventry and Reading. Volta Trucks’ s board of directors confirmed on Tuesday that it had filed for bankruptcy in Sweden and that it will shortly file for administration in England. It has around 600 employees in the UK.
Majority of UK food and drink leaders positive
The majority of leaders in the UK food and drink sector feel “positive about the prospects of the industry over the coming year”, according to BDO’s annual Food & Drink Report. The report shows that 70% of respondents are feeling positive about the future of their own business in the next 12 months. The sector overall has seen a big jump in optimism, increasing from 69% in 2022 to 81%. However, the survey also highlights the challenges faced by businesses in the sector, including difficulties in recruiting the right people and the impact of the Ukraine conflict. Mark Hutton, head of manufacturing at BDO, emphasised the need for leaders to stay flexible and think strategically about the future of their businesses in the face of long-term threats.
Luxury London hotels hit by staff shortages
The Savoy and The Dorchester hotels in London have warned that a lack of workers is leaving them unable to meet growing demand from wealthy tourists travelling to the capital. Recent figures from the Official for National Statistics show Britain’s hospitality industry has almost 120,000 unfilled roles, more than any other industry. Kate Nicholls, chief executive at UK Hospitality, said: “For hoteliers in particular, shortages have been felt most acutely in critical roles such as chefs, housekeepers and receptionists.” Although revenues at the Dorchester and the Savoy were up, both posted pre-tax losses of £18.5m and £12m, respectively.
PM to push ahead with plan to end no-fault evictions in England
The UK Prime Minister Rishi Sunak is pushing ahead with a plan to end no-fault evictions in England. The measure was first promised four years ago and continues to face opposition from Tory MPs.
Scams warning for 12m Self-Assessment customers
Self-Assessment customers are urged to be on the lookout for scam texts, emails and phone calls from fraudsters. The warning comes as HM Revenue and Customs (HMRC) received more than 130,000 reports about tax scams in the 12 months to September 2023, of which 58,000 were offering fake tax rebates.
HMRC is coming after your side hustle
New tax rules, set to be introduced on January 1st, could have serious consequences for thousands of people who earn extra income through online selling platforms. The rules require anyone who earns over £1,000 in extra income a year to report it to the taxman.
This includes individuals who sell items on platforms such as eBay, Uber, and Airbnb. Failure to comply with the new rules could result in tax bills and fines. Digital platforms will also be required to report income information directly to HMRC, making it easier for tax authorities to detect and tackle tax evasion.
Robert Salter, a director at Blick Rothenberg, says: “With the new rules coming in next January, now is a natural time to check your tax affairs and make sure you have no historical issues.”
Dawn Register, head of tax dispute resolution at BDO, says that tax authorities have struggled to keep up with digital innovations in the gig economy. Individuals only need to pay tax if they are considered a ‘trader’ by HMRC. Those who occasionally sell items without intending to make a profit may not be classified as traders. However, individuals who regularly buy and sell items online to make a profit may face tax liabilities.
Officials consider tweaking the triple lock calculations
Pensioners could be denied the full £902-a-year boost they are expecting from April as Whitehall officials consider tweaking the figures used to calculate it. Earnings growth figures published yesterday confirmed the state pension should increase by 8.5% next year under the ‘triple lock’ pledge, which guarantees a rise in line with the highest of inflation, wage growth or 2.5%. But officials have warned that the Government is looking at plans to swerve the full increase. They argue the figures are artificially high and ‘distorted’ by one-off public sector bonuses and wage settlements. Steven Cameron, of pensions provider Aegon, said “it would be a brave Government to manipulate the figures before a general election”.
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The Credit Protection Association – Prompting Punctual Payments – Ethical, Effective, Efficient, Economical collections
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The Credit Protection Association – Prompting Punctual Payments – Ethical, Effective, Efficient, Economical collections.
Get compensated for previous late payments
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The Credit Protection Association – Prompting Punctual Payments – Ethical, Effective, Efficient, Economical collections.