Business news 19 February 2025
Insolvencies hit 16-year high. Inflation, Thames Water, Government cuts, tariffs, regulators, interest rates, markets, insolvencies & more business news that we thought would interest our members.
James Salmon, Operations Director.
Insolvencies hit 16-year high
Corporate insolvencies in the UK have reached a 16-year high, with 1,971 businesses going under in January, marking a 10.7% increase from the previous year. Tim Cooper, president of R3, said: “Directors may be choosing to close down their firms after years of challenging trading conditions.” The surge is attributed to rising costs from Rachel Reeves’s £25bn tax raid, which includes higher National Insurance contributions and a 6.7% increase in the National Living Wage, set to take effect in April. The hospitality sector alone saw a drop of 58,000 jobs, contributing to a total loss of over 94,000 jobs in critical retail and service industries. Meanwhile, the number of people going financially insolvent across England and Wales jumped by 12% in January compared with the same month a year earlier, according to Insolvency Service figures.
Inflation rises
UK CPI rose to 3.0% against estimates of between 2.5% and 2.9%. Core CPI came in at 3.7%. Services CPI was 5.0%.
UK Inflation rose sharply to 3% in January, coming in above analyst expectations, according to data released by the Office for National Statistics on Wednesday. Economists polled by Reuters had expected a reading of 2.8% in the twelve months to January. Britain’s consumer price index fell to a lower-than-expected 2.5% in December, with core price growth also slowing further.
Thames Water wins approval to borrow £3bn to avoid collapse
Thames Water has received approval to borrow £3bn to avert imminent collapse, a decision described by Mr Justice Leech as “eye-watering”. The High Court ruling allows the company, which serves 16m households, to secure funding for another year while it seeks new investors. However, the loan comes with a steep 9.75% interest rate, potentially adding £800m in extra payments over its 2.5-year term. Critics, including Liberal Democrat MP Charlie Maynard, argue that this is a “futile, expensive, and extremely short-term bail out” and have vowed to appeal the ruling. Despite the financial lifeline, campaigners warn that Thames Water’s underlying business model is flawed, with Matthew Topham from We Own It stating: “The reason they’re getting bailed out is because they ran out of other people’s money to line their pockets with.”
Cuts needed to fund defense.
Government departments are preparing for budget cuts as high as as 11% as Prime Minister Keir Starmer faces mounting pressure to plow more money into defense. The Treasury has reportedly asked so-called unprotected public services outside of health, education and defense to model two scenarios ahead of a three-year spending review due in June. Those are a) “flat cash” which translates to an inflation-adjusted cut of around 5% and b) a spending reduction that in real terms comes to about 11%. While (b) was originally seen as a worst-case scenario, it now looks more likely for some departments amid hints from Starmer that defense spending has to rise. No final decisions have yet been taken on the scale of the cuts, or indeed the pace of increase of defense expenditure, a Treasury official said.
Chancellor orders audit of UK’s 130 regulators
Rachel Reeves is urging cabinet ministers to conduct a comprehensive audit of Britain’s approximately 130 regulators to assess their effectiveness in promoting economic growth. The Chancellor has expressed a desire to reduce red tape, but the Telegraph points out that Labour has introduced five new regulatory bodies since taking office in July. Shadow Business Secretary Andrew Griffith commented: “Businesses would absolutely welcome far fewer regulators but I’m afraid growing public sector jobs is in Labour’s DNA.”
Kahn calls for a closer relationship with EU
London Mayor Sadiq Khan has called for the UK to seek a closer relationship with the European Union to act as a “counterweight” to the international upheaval presented by US President Donald Trump. At a meeting of ambassadors of the EU’s 27 member states and the bloc’s own envoy, Khan emphasized his support for the UK rejoining the single market and customs union, as well as calling for a youth mobility program he says would benefit young Londoners. “I’m a proud European and of the view that Brexit was a mistake that continues to have a negative impact,” adding “At a moment when we see trade wars and tariffs posing a real threat to international affairs, I’m convinced that we should be looking at what more we can do to strengthen our relationship as a counterweight to these trends.”
Trump Tariffs
Trump has threatened additional tariffs of 25% on automobile pharmaceutical and semiconductor imports. Many of the levies would rise “substantially” over the year, he added
US Sanctions
Secretary of State Marco Rubio told European allies the US will keep sanctions on Russia in place at least until a deal is reached to end the war in Ukraine. Trump said he’ll probably meet Vladimir Putin to discuss a settlement before the end of February.
Trump’s energy chief slams Britain’s ‘sinister’ net zero plans
Chris Wright, the US energy secretary, has labelled Britain’s target of achieving net zero by 2050 as “sinister”, arguing it will impoverish millions and “shrink human freedom.” Speaking at the Arc 2025 conservative conference, he said: “This is impoverishing your own citizens in a delusion that this is somehow going to make the world a better place. It’s not.” Wright contended that the push for renewable energy sources, such as wind and solar, has led to increased energy prices, adversely affecting households. He further criticised the Labour Government’s commitment to a permanent fracking ban, despite the discovery of a significant gas field in the UK, which could provide a decade’s worth of fuel.
OPEC+
Brazil joined OPEC+, an extension of the core oil cartel. Participation in the extended group makes adherence to the cartel’s mandates on production voluntary
Spanning the globe undersea
Meta, the parent company of Facebook and Whatsapp has announced plans to build a 31,000 mile sub-sea cable spanning the globe. The tech titan said Project Waterworth which will connect the US, India, South Africa, Brazil and other regions, will be the world’s longest underwater cable project when completed. It said its new cable project would provide “industry-leading connectivity” to five major continents and help support its AI projects.
BoE likely to cut rates despite surging pay growth
Recent data from the Office for National Statistics (ONS) reveals that UK earnings growth has increased for three consecutive months, with average regular pay rising to 5.9% in the three months leading up to December. The growth surpasses CPI inflation by 3.4%. Despite this, Bank of England Governor Andrew Bailey said the central bank remained on track to cut interest rates again this year. “Pay growth went up, but actually not quite as much as we were expecting,” he said at an event in Brussels. Moreover, the Bank’s own surveys indicate that wage pressures would ease in the coming year.
Markets
The global rally in stocks is pausing, with US and European indexes at all-time highs, overcoming investor concern about tariffs, inflation and geopolitics.
Yesterday, the FTSE 100 closed flat at 8766.73 and the Euro Stoxx 50 closed up 0.25% at 5533.84. Overnight in the US the S&P 500 rose 0.24% to 6129.58 and the NASDAQ rose 0.07% to 20041.26.
This morning on currencies, the pound is currently worth $1.2585 and €1.2075. On Commodities, Oil (Brent) is at $76.30 & Gold is at $2945. On the stock markets, the FTSE 100 is currently down 0.25% at 8745 and the Eurostoxx 50 is down 0.36% at 5513.
Thames Water has secured High Court approval for a £3bn loan package carrying an interest rate of 9.75%
In New York trading, Intel jumped 10% on reports that both TSMC and Broadcom are exploring the acquisition of parts of the company. TSMC was primarily interested in Intel’s factories whilst Broadcom wanted its chip design business.
HSBC announced a share buyback of up to $2 billion as its annual pre-tax profit rose 6.5%, helped by the sale of its banking business in Canada. For the full year, HSBC reported revenue of $65.85 billion, down from $66.1 billion in 2023.While the profit before tax marginally missed LSEG estimates, it was higher than the $31.67 billion consensus estimate compiled by the bank.
BAE Systems reported a rise in annual earnings and hailed a “record order backlog”. In 2024, pretax profit edged up 0.3% to just over £2.33 billion. Pretax profit in 2023 came in at just under £2.33 billion. Revenue rose 14% to £26.31 billion in 2024, from £23.08 billion in 2023. On an underlying basis, revenue was up 14% at GBP28.34 billion, while pretax profit was 6.0% higher at £2.62 billion.
X, Elon Musk’s social media company formerly known as Twitter, is in talks to raise money at the $44 billion valuation he paid in 2022. Despite many downgrading the company after users and advertisers have fled.
Fintech investment in UK hits four-year low
Fintech investment in the UK has reached a four-year low, with KPMG’s bi-annual report revealing a 27% drop to £7.9bn in 2024, down from £10.1bn in 2023. Despite this decline, the UK still attracted more funding than France, Germany, China, India, Brazil, and Canada combined. The report attributes the downturn to geopolitical uncertainty, high inflation, and elevated interest rates. KPMG’s Hannah Dobson noted that while 2024 was challenging, there are “signs of a slow recovery,” although regulatory challenges persist.
HMRC left R&D fraud loophole open
HMRC has been aware of significant fraud and errors in the research and development (R&D) tax credit scheme since 2017, yet failed to act, resulting in a loss of £4.1bn to taxpayers since 2020. An internal report disclosed to the Times revealed that “these threats are not new” and highlighted a “failure of governance” that allowed loopholes to persist. Despite previous assessments indicating “almost certain” fraud, it was only after media scrutiny in October 2022 that HMRC began to take serious measures. The agency has since stated it has “significantly increased the number of people working on R&D compliance”.
DEI roles in decline
Hiring for diversity equity and inclusion (DEI) roles in the UK has plummeted 70% in the last three years, figures show. Data compiled for the Telegraph by Adzuna, the job site, found vacancies for dedicated DEI roles had fallen by a third since last year – dropping from a peak of 677 in February 2022 to 208 in January this year. Despite employers in both the public and private sectors turning away from DEI, the NHS is defying ministers by continuing to hire diversity officers. Nigel Farage, leader of Reform UK, said he was “delighted” at the decline in DEI roles but added that the “madness is still alive and well” in the financial and health industries. He said: “If you look at guidelines published by the Financial Conduct Authority, you’ll see they’re still insisting on all this rubbish.”
Changes to diversity policies raise legal questions
The recent trend of US firms in the UK dismantling diversity policies following Donald Trump’s election has raised concerns, prompting the tech union PROSPECT to seek intervention from the Women and Equalities Committee. The union has urged the committee to ensure that these companies adhere to UK employment law and the expectations of equality. Rachel Curley from PROSPECT said: “The rollback of these policies in US-based firms will have a direct impact on UK staff where the legal framework is substantially different.” Notably, firms like Deloitte have adopted varying approaches for their US and British employees, while Meta has completely eliminated its diversity scheme.
Latest Insolvencies
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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.
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- 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!
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Check our compensation calculator to see how much your business could be owed!
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