Business news 19 November 2021

James Salmon, Operations Director.

Insolvency rate set to rise. Inflation and tax hikes will hit the economy. Shipping crisis could drive up global inflation. Britain was unprepared for pandemic. And more business news.

Insolvency rate set to rise
Begbies Traynor is expecting an increase in the number of businesses entering insolvency during the second half of its financial year. It pointed to Insolvency Service data showing that since May 2021 there have been month-on-month increases in insolvency appointments as pandemic-driven support measures have been removed. It added that the increases to date have predominantly been in liquidations – which typically represent insolvencies of smaller companies – where the volume of appointments has returned to pre-pandemic levels. Begbies Traynor added that while the number of administrations – which typically involve larger and more complex instructions – has increased in recent months, they are currently significantly below pre-pandemic levels.

Inflation and tax hikes will hit the economy
City analysts have warned that tax increases, soaring inflation and an end to pandemic-related government support poses a threat to the economy, with the increased cost of living set to limit spending power. Experts at Deutsche Bank say the economy is set to grow just 3.6% next year, with this far lower than the Bank of England’s forecast of 5%, while high inflation and an increase in taxes will cost the UK economy around £13.5bn next year – with this equal to around 0.6% of GDP. Meanwhile, Barclays estimates the economy will expand 6.9% this year and then 4.1% in 2020. It is then set to fall back to pre-pandemic trend of 1.3% in 2023. With Barclays saying the global economy is likely to grow 6% this year, the bank’s head of macro research, Ajay Rajadhyaksha, said inflation has been “much stronger, for far longer” than central banks expected. Elsewhere, Credit Suisse chairman Antonio Horta-Osorio has urged caution over the suggestion from many central banks that soaring inflation is temporary. He said there is a risk that if inflation proves not to be temporary, “it could trigger a much more intense monetary adjustment than would otherwise be necessary.”

UN: Shipping crisis could drive up global inflation
A UN report has warned that the ongoing global shipping crisis could push global inflation rates up 1.5%, hindering the post-pandemic economic recovery. A UN Conference on Trade and Development report details how increased costs in container shipping have become a key issue for small suppliers, saying that if a surge in freight rates does not ease it will lead to far steeper import prices. The report forecasts that global import price levels will go up by 11% on average, while small island states could see increases of up to 24%.

Britain was unprepared for pandemic, says NAO
The National Audit Office (NAO) says the Government was unprepared for a crisis like the coronavirus pandemic, failed to learn from simulation exercises and was distracted by Brexit. The report says the Civil Contingencies Secretariat allocated 56 of its 94 full-time staff to prepare for potential disruptions from a no-deal Brexit, limiting its ability to focus on other risks and contingency planning. Gareth Davies, head of the NAO, said the pandemic “has exposed the UK’s vulnerability to whole-system emergencies.” Commenting on the NAO’s assessment, Labour’s Shadow Cabinet Office Minister Fleur Anderson said the Government has “failed the public”, adding that there is “a glaring system failure in the UK’s emergency planning that the Conservatives did not fix and are not willing to fix.” A Government spokesperson said: “While there were extensive arrangements in place, this is an unprecedented pandemic that has challenged health systems around the world.”

Northern Ireland Protocol

The European Union and the U.K. are set to meet in Brussels today regarding the  week of intensive talks over the Northern Ireland protocol as they attempt to avoid a trade war.


UK Retail Sales rose in October, ending a five-month run of falling or flat-lining sales, according to official figures. The ONS said retail sales volumes rose by 0.8% last month compared to September, following no movement between September and August.

With tax breaks coming, firms may question freeport fairness
The Economist looks at the UK’s freeports plan, a scheme offering generous tax breaks for investors designed to boost deprived areas. Noting that more than 5,000 tax-advantaged zones are dotted around the world, it details how the UK scheme will offer simpler customs procedures as well as relief from stamp duty, employer payroll taxes, business rates and corporation tax. It highlights that ministers have been “haggling” with freeport operators over which sectors will be eligible for tax benefits, saying that as it differs from location to location, in theory it means each designated area can play to its strengths. On the impact of the tax breaks the freeport plan offers, the article cites Lewis Atter of KPMG who notes that they could be worth 15-25% of the cost of constructing a new factory. The piece says that while “discrimination is the object of freeports, as the Government tries to shepherd businesses into busy, efficient clusters”, once it is clear which sectors and companies are eligible and which are not, businesses “may conclude that the whole policy is simply unfair”.

Female CEO representation hits 8%
Women now make up 8% of company chief executives in Britain, up from 5% last year, according to a survey by executive research firm by Heidrick & Struggles. Globally, the proportion of newly appointed female bosses hit 13% in the first half of this year, compared with 6% in H2 2020. Kit Bingham, a partner at Heidrick & Struggles, said that while the overall number of women CEOs “remains far too low, the findings suggest progress has been made and a positive trend towards more progressive and inclusive appointments.” The report, which looked at the biggest 1,095 companies in 24 countries, also found a shift towards internal promotions for the CEO role, with 62% rising from within companies, compared with 53% last year.

UK CEOs make 759% more than their employees
Data from careers board Lensa shows that, on average, UK-based chief executives earn 759% more than their employees – with this the biggest CEO to worker wage gap across all major economies and second only to Greece’s 791% across all nations. On average, CEOs are paid £300,312, whereas the median employee pay is £34,943. UK chief executives are also the top earning corporate bosses in the world, bar those in the US. The average CEO salary in the US is $429,663, while in the UK it stands at $405,219.

Gender pay gap progress reverses
Progress closing the gender pay gap has slowed in the last year, according to analysis by Labour, with the number of women who will never see equality in their pay-packet rising to 10m. The report suggests that the gender pay gap will not close until 2059, seven years later than a forecast made in 2020. If this proves to be accurate, an 18-year-old entering employment this year will not see equal pay until the age of 56. Data shows that the pay gap has widened during the pandemic, with the discrepancy between what men and women earn increasing by 13% between April 2020 and April 2021. Reflecting on the findings, Shadow Women and Equalities Secretary Anneliese Dodds said the Government is “standing by while progress has gone into reverse” and ministers are “failing an entire generation of women.” Labour released the analysis to mark Equal Pay Day – the point at which women effectively begin to work for free until the end of the year due to the gap in salaries. Felicia Willow, CEO of the Fawcett Society, said the “widening gender pay gap paints a worrying picture” and urged ministers to “take bold action”.


Kingfisher upgraded its outlook following a good start to the fourth quarter. Full year adjusted pre-tax profit was expected to be towards the higher end of the previously guided range of £910 million to £950 million, with second half like-for-like sales also forecast to be towards the higher end of the previously guided range for a fall between 7% to 3%.

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