Business news 19 November 2024
Some of the business news that we thought would interest our members.
James Salmon, Operations Director.
Insolvencies set to rise as costs climb
Higher interest rates and higher business costs due to measures set out in the Budget are likely to drive an increase in insolvencies, Begbies Traynor has warned. The firm’s executive chairman, Ric Traynor, said: “Additional headwinds for UK business from increased employment costs and the prospect of higher for longer interest rates are likely to extend the period of elevated insolvency levels.” He added that insolvencies had run “at heightened levels for the last 18 months or so. We see that continuing maybe for another year.” The Budget saw Chancellor Rachel Reeves increase employers’ National Insurance contributions by 1.2% and lower the threshold at which employers must start paying the tax from £9,100 to £5,000. She also announced a 6.7% increase in the minimum wage. Data from the Insolvency Service show that company failures had fallen 7%, to 1,973, in September compared with last year but that the number of insolvencies remained much higher than those seen during the pandemic.
Budget will slow wage growth, bank warns
Analysts at Goldman Sachs have warned that the rise in employers’ National Insurance contributions announced in the Budget will lead to slower wage growth for staff. Saying they expect consumer spending growth to moderate in H2 2025, the analysts say this will come “as real disposable income growth falls back.” The report adds: “This partly reflects slowing real wage growth; we expect private sector pay increases to cool, partly because of the employer NI increase being passed onto consumers.” Goldman also said disposable incomes “will be dented further still” by the continued freeze to income tax thresholds.
Will UK inflation climb back above the BoE’s target?
With official figures due on Wednesday, economists polled by Reuters expect inflation to have risen above the Bank of England’s 2% target to hit 2.2% in October, up from 1.7% in September.
UK economy faces £20bn hit from Trump tariffs
Analysis by the Centre for Economics and Business Research (CEBR) suggests that Donald Trump’s plan to impose tariffs on US imports will cost the UK economy around £20bn by the end of his presidency. With Mr Trump saying that he plans to introduce a 20% levy on most imports to the US, it is calculated that this will hit the UK’s economic output by 0.9%. The US is the UK’s second-biggest trading partner after the EU and Britain sent £188.2bn of exports to the US in the 12 months to the end of June. CEBR economist Sara Pineros said: “Seemingly, the clearest path for the UK to avoid Trump’s tariffs would be to agree to a free trade agreement.”
High energy prices ‘the new normal’
High domestic energy prices are likely to be “the new normal,” according to consultancy Cornwall Insight. Dr Craig Lowrey, principal consultant at Cornwall Insight, told the BBC’s Today programme that prices have been “well above the historic norms,” before warning that there “doesn’t seem to be any sign of a return to pre-energy crisis levels.” Energy regulator Ofgem will announce the next official quarterly price cap later this week and Cornwall Insight expects a 1% increase that will take the typical annual bill to £1,736.
Retailers say NI hike will mean job losses
More than 70 of Britain’s largest retailers, including Tesco, Marks & Spencer, Sainsbury’s, Asda and Next, have written to Chancellor Rachel Reeves to voice concern over the impact of the hike in employer National Insurance contributions. In a letter organised by the British Retail Consortium (BRC), companies including Amazon, Boots, Aldi, Lidl, Ocado, Morrisons, Greggs, Currys, and B&Q warned that the “sheer scale” of new costs could lead to job losses and shop closures, with potential industry costs rising by up to £7bn annually. The signatories warned: “For any retailer, large or small, it will not be possible to absorb such significant cost increases over such a short timescale.” As of next April, employer National Insurance contributions will start at a lower threshold of £5,000 instead of £9,100, while the rate will rise from 13.8% to 15%. The BRC calculates this will cost British retailers £2.33bn a year.
Job openings surged ahead of the Budget
Job openings increased by 4.8% in the lead-up to the Budget, indicating that businesses remain confident despite a general slowdown in hiring. Figures from the Recruitment and Employment Confederation (REC) show a 4.8% jump in new job postings between September and October to 706,480. However, the overall number of active job postings fell by 0.6% between September and October. Neil Carberry, chief executive of the REC, said the data shows “signs of life” in the labour market, adding that the figures “highlight the level of underlying resilience in our jobs market.” The REC noted significant demand in Christmas-related sectors, with delivery drivers and couriers seeing a 79% increase in job postings. The survey also reveals that the sectors most in need of workers are software engineers and programmers, solicitors and lawyers, and chartered accountants. Official figures from the Office for National Statistics detailed a decline of 9,000 payrolled employees in September, with a provisional estimate pointing to 5,000 losses in October.
Consumer confidence falls
Consumer confidence fell from 47.3 in October to 46.9 in November, according to the S&P Global UK Consumer Sentiment Index survey, an index where 50 is the neutral point. Chris Williamson, chief business economist at S&P, said that “ongoing pressure on household finances has resulted in squeezed spending, higher debt and lower savings.”
43% of firms have sustainability targets in place
Research by Grant Thornton shows that 43% of mid-sized businesses in the UK have established sustainability targets, surpassing the global average of 39%. While many firms are still hesitant to take initial steps towards sustainability, nearly two-thirds of these businesses plan to maintain or increase their sustainability investments in the coming year, indicating a growing awareness of the importance of sustainability in business strategy. The report highlights the need for firms to align with customer expectations to mitigate commercial risks.
Starmer defends IHT changes
While farmers and their unions continue to voice concern over the impact of changes to inheritance tax set out in the Budget, Prime Minister Keir Starmer says he is confident that “the vast majority of farms and farmers will not be affected” by the changes. While Mr Starmer acknowledged the concerns of farmers, he insisted: “By the time you’ve taken into account not only the exemption for the farm property itself, but also the exemption for spouse to spouse, then parent to child, it’s £3m before any inheritance tax will be payable.” He added: “Over the £3m, it’s then 20% rather than the usual rate and it’s payable over 10 years.” Defending the IHT rethink, Farming Minister Andrew Sinclair has urged farmers to “look calmly” at the Government’s plans and insisted that “the vast majority will be fine,” while Transport Secretary Louise Haigh described the measures as “fair and proportionate.” Meanwhile, Tom Bradshaw, president of the National Farmers’ Union, has said that farmers in England and Wales feel “betrayed” and “angry” over the changes to IHT rules, adding: “The Government said that this wouldn’t happen.”
Farmers hit out at ‘vindictive’ IHT plans
Farmers are continuing to voice their anger over the Government’s proposed inheritance tax changes, which they describe as “vindictive.” Tom Bradshaw, president of the National Farmers’ Union (NFU), has labelled Labour’s plan to impose a 20% inheritance tax on farms valued over £1m as “horrific.” Thousands of farmers are set to protest in London today amid fears that the tax will force them to sell land, jeopardising their businesses. Environment Secretary Steve Reed has defended the change in IHT, highlighting that the Office for Budget Responsibility supports the Government’s position and claiming that most farmers will not be affected. However, the NFU argues that many smallholdings will be impacted by the change. Mr Bradshaw says that the more farmers consult their accountants, the more concerned they become. He warned that the tax could disproportionately impact those who have not had time to plan for it, saying: “It begins to feel vindictive rather than poorly planned.”
Tax loopholes cost UK £35bn
Britain is among nations losing £389bn annually due to the exploitation of tax havens by large corporations and the wealthy, according to the Tax Justice Network. The report highlights that the UK alone is missing out on £35bn because of these loopholes. Liz Nelson, director of advocacy and research at the Tax Justice Network, said: “Tax is our most powerful tool for choosing the kind of societies we want to live in.” She added: “Our governments chose to use tax as a tool to make the super-rich and their corporations even richer.”
Lula pushes for global wealth tax
Brazil’s President, Luiz Inacio Lula da Silva, says international tax co-operation is necessary to help combat inequality and is calling for a global wealth tax targeting the super-rich.
Tax credit fraud crackdown puts agents in the spotlight
An HMRC inquiry into research and development tax credits has found that claims for business tax incentives were more likely to be non-compliant if they were made with the help of a specialist agent. HMRC says it recognises the “vital role” agents play but said some “provide poor or incorrect advice to customers about what they are entitled to claim.” Overall, the tax office estimates that in 2021/22, more than one in four claims on a version of the scheme for SMEs were down to fraud and error. This had been reduced to about one in seven by the most recent financial year. The review of R&D tax credits also put the cost of fraud and error between 2020 and April 2024 at £4.1bn. Separate research by RSM UK shows that more than a third of technology businesses have submitted an R&D claim which was initially approved but later challenged by HMRC, resulting in companies having to make a repayment.
Latest Insolvencies
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Petitions to wind up (Companies) – AMANI GLOBAL SERVICES LTD
Petitions to wind up (Companies) – NUSTONE PRODUCTS LTD
Appointment of Administrator – BRILLIANT PLANET LIMITED
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Appointment of Administrator – WOTE LIMITED
Appointment of Liquidators – DEVELOPMENTS BY SMC LTD
Petitions to wind up (Companies) – SGL 1 LTD
Petitions to wind up (Companies) – BINGO SKIP LTD
Appointment of Administrator – LUCKY 13 HOLDINGS LTD
Appointment of Administrator – STUDIO 13 ENTERTAINMENT LTD
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Appointment of Liquidators – KELIRIS CONSULTING LTD
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Appointment of Administrator – DUNALASTAIR HOTEL LIMITED
Appointment of Liquidators – HAGLEY MANAGEMENT SERVICES LIMITED
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Petitions to wind up (Companies) – SIMPLE SOLUTIONS INVESTMENTS LIMITED
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.
- Our monitoring service will alert you to any significant changes in the status of those customers.
- 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.
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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.