Business news 19 August 2023
James Salmon, Operations Director.
UK and US bond yields rise on rate fears. Skills-based hiring on the rise, says global study. Energy bills predicted to drop in October. Retail sales fall as wet weather depresses spending. And more business news that we thought would interest our members.
UK and US bond yields rise on rate fears
The cost of UK government borrowing has risen to the highest level since the financial crisis. Recent data showing strong wage growth and sticky core inflation triggered an accelerated sell-off in UK bonds this week as markets bet on the Bank of England raising rates to a peak of 6% and keeping them there until at least next summer. The yield on the benchmark ten-year UK gilt was up seven points on Thursday to hit 4.7%, the highest since 2011, while two-year yields gained 6 points to reach 4.9%. Economists said higher borrowing costs and rising interest rate expectations will cost the Chancellor an extra £12bn a year by 2027, wiping out any fiscal headroom he may have had in the run-up to the election. Yields rose on US treasuries too, after Fed minutes showed rate-setters remained concerned about the threat of inflation.
Skills-based hiring on the rise, says global study
A recent global study has found that 76% of employers are now using skills-based hiring to pinpoint talent, prioritizing skills and ability over education and experience. This shift has led to increased employee retention and greater workplace diversity. The World Economic Forum Future of Jobs 2023 report highlights the need for individuals to retrain or upskill by 2027 to remain employable. Deloitte predicts that soft skill-intensive jobs will account for almost two-thirds of all jobs by 2030. However, a study by Salesforce reveals a disconnect between the skills companies are hiring for and the skills candidates possess, particularly in emerging technologies.
Energy bills predicted to drop in October
Annual energy bills for a typical household are expected to fall at least £150 from October, according to a new forecast. Figures from Cornwall Insight suggest the price cap will drop to £1,925 when announced by regulator Ofgem next week, down from £2,074 for the current period, from July to September. Craig Lowrey, principal consultant at Cornwall Insight said: “While a small decrease in October’s bills is to be welcomed, we once again see energy price forecasts far above pre-crisis levels, underscoring the limitations of the price cap as a tool for supporting households with their energy bills. As many, including energy regulator Ofgem, have acknowledged it is essential that the government explore alternative solutions, such as social tariffs, to ensure stability and affordability for consumers.”
Retail sales fall as wet weather depresses spending
Figures published on Friday by the Office for National Statistics (ONS) show retail sales volumes fell 3.2% in July compared with the same month last year. On a monthly basis, sales also fell 1.2% compared with a 0.6% improvement in June. Although volumes slumped, consumers spent 1.1% more, reflecting the impact of high inflation on household finances. Heather Bovill, deputy director for surveys and economic indicators at the ONS, said: “Retail sales fell sharply in July as poor weather impacted most sectors. It was a particularly bad month for supermarkets as the summer washout combined with the increased cost of living meant sluggish sales for both clothing and food.”
Record revenues will allow for tax cuts
The freeze in tax and national insurance thresholds is set to being in an extra £30bn for the Treasury, according to the Daily Express. The paper says this will give Chancellor Jeremy Hunt the headroom needed to cut taxes. A handful of Tory backbenchers backed the call, as did Conor Holohan, the media campaign manager of the TaxPayers’ Alliance, who said ordinary British workers and pensioners are being “battered by stealth taxes”. He added: “Far from just applying to a wealthier few, higher income tax rates are hitting hard-pressed households during a cost-of-living crisis. The Government should give taxpayers a break and ease the 70-year high tax burden.”
HMRC collects £270m from plastic packaging tax in first year
The UK Government collected over £270m from the plastic packaging tax (PPT) in its first year, exceeding the Treasury’s prediction for 2022/23 by £41m. The tax, introduced in April 2022, imposes a £200 per tonne levy on plastic packaging with less than 30% recycled content. The aim is to incentivise the use of recycled plastic in packaging and promote recycling and collection of plastic waste. According to HMRC, 4,142 businesses have registered for the PPT as of August 8, 2023. The report also reveals that 39% of the total plastic packaging manufactured or imported into the UK in 2022/23 was taxable under the PPT.
Baby boomers face £90bn IHT bill over the next decade
The baby boomer generation will pay as much as £90bn in inheritance tax over the next decade if the rate of increase in families liable for the levy stays as it is. Around 27,000 estates paid the duty in the 2020-21 tax year, with the average bill hitting £214,000, up from 15,000 families in 2009-10. Forecasts from the Office for Budget Responsibility showed this is expected to rise to 47,000 by 2028, while internal data at HMRC suggests that figure could be even higher, at 49,400. Jason Hollands, of the broker BestInvest, said: “The stealth tax effect of frozen allowances, combined with demographics, is set to deliver the Treasury with a tax bonanza. No wonder the Chancellor decided to push the long freeze on the nil rate band out even further.”
Unite: UK is in the grip of a profiteering crisis
Workers’ wages are being squeezed by corporate wreckers pursuing runaway profits, leading to a continuing cost of living crisis. That’s according to Sharon Graham, the general secretary of Unite. Writing in the Guardian, Graham says real wages have fallen by 5.7% since the start of 2022, lower than they were 15 years ago, and workers are taking matters into their own hands through strike action to secure decent pay rises. Unite claims corporate profits, not workers’ wages, are at the heart of the cost of living crisis, with energy companies, supermarkets and banks all raking in massive profits. “The weight of evidence shows that the UK is in the grip of a profiteering crisis,” Graham argues, “and until policymakers stop attacking wages and begin to tackle corporate profiteers, communities will continue to bear the brunt of this crisis.”
Poorest UK families suffer ‘frightening’ collapse in living standards
According to a survey from Buttle UK, the poorest families in Britain have endured a “frightening” collapse in living standards over the past year as a result of soaring energy and food prices, with nearly two-thirds experiencing extreme levels of poverty and deprivation. The annual survey of frontline poverty and social services professionals reported unparalleled concern about the prevalence and consequences of hunger and mental illness in struggling and vulnerable families affected by the rising cost of living. Respondents to the survey reported that more than half of the families they worked with had been unable to afford food, heating, rent, or online access, with just under half going without basic domestic appliances. Nearly two-thirds had used food banks.
Why Gen Z could be the first to lose their state pension
Lauren Almeida in the Telegraph contends that more retirees and fewer workers mean that the state pension system is becoming unsustainable. She says that with increasing costs and a “pay as you go” scheme fuelled by general taxation, the system is at risk due to an aging population. The Conservative’s triple lock policy, which increases state pension payments each year, further exacerbates the issue. Experts warn that the Government must change the system or face a fiscal crisis. The Adam Smith Institute proposes means-testing pensions for higher earners or stopping state pensions for those with assets over £1m to save taxpayer money.
ACCA calls for a smarter UK non-financial reporting regime
The Association of Chartered Certified Accountants (ACCA) is calling for improved non-financial reporting, arguing that the existing framework fails to support more sophisticated decision-making that is not focused solely on financial return. The ACCA’s comments came after a call by the Department for Business and Trade and the Financial Reporting Council for evidence on Smarter regulation non-financial reporting review. Glenn Collins, head of technical and strategic engagement, ACCA UK, says: “Good quality non-financial reporting is essential in demonstrating value drivers beyond financial performance. These include intangibles which are not recognised on balance sheets. Innovative processes, know-how and corporate culture are fundamental to economic success and decarbonising but are not currently represented within a comparable framework.”
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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.
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!
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.