Business news 20 April 2023
James Salmon, Operations Director.
Mortgage overpayments reach record high. Inflation eases but remains above 10%. Half of business leaders say AI is better than their staff. House price growth slows to 5.5%. Trustees urged to assess risk management amid rising insolvencies. And more business news.
Mortgage overpayments reach record high
Households paid a record £6.7bn in mortgage overpayments in the final quarter of 2022, according to data from the Equity Release Council. It is the first time quarterly over-payments topped £6bn since records began in 1999, while homeowners paid £23.3bn in total for the year. Mortgage broker Jamie Lennox said that some households would be overpaying from savings built up at lower interest rates, while others would be cutting back on spending on luxuries to fund their home loans. Despite the surge in mortgage overpayments, total mortgage debt reached a record £1.6tn in December.
Inflation eases but remains above 10%
The consumer prices index (CPI) measure of inflation fell to 10.1% in the year to March from 10.4% in February, according to the Office for National Statistics (ONS), driven by food prices rising at their fastest rate for 45 years. ONS chief economist Grant Fitzner said: “The main drivers of the decline were motor fuel prices and heating oil costs, both of which fell after sharp rises at the same time last year. Clothing, furniture and household goods prices increased, but more slowly than a year ago. However, these were partially offset by the cost of food, which is still climbing steeply, with bread and cereal price inflation at a record high. The overall costs facing business have been largely stable since last summer, although prices remain high.” Economists had predicted a fall to 9.8% and now markets are increasing their bets on another 0.25% rise in Bank Rate at the next meeting.
Half of business leaders say AI is better than their staff
In City AM, a poll of more than 1,000 business decision makers by YouGov has found 44% of C-suite executives think AI could perform tasks to a similar or better quality than humans, illustrating how the technology could trigger a huge shake up in the global workforce. Basic legal work is oft cited as an area that could be hived off to AI. But Lubna Shuja, president of the Law Society, says “solicitors will continue to need soft skills that AI will not be capable of automating.” Meanwhile, economists believe such advanced technology could reverse productivity trends. Yael Selfin, chief economist at KPMG UK, says AI could bring an overall productivity boost of around 1.5%, while around 3% of all tasks could be carried out by AI. She added that one in four jobs are poised to undergo a change in the way they are carried out as a result of machine learning.
House price growth slows to 5.5%
House prices rose by 5.5% in the 12 months to February 2023, according to the Office for National Statistics (ONS), slowing from 6.5% in January 2023. The typical property value was £288,000 in February, an increase of £16,000 from the previous year, but £5,000 below the recent peak recorded in November 2022. The ONS said that annual house price growth in February 2023 was less than half the rate seen in July last year when it was running at 14.4%. On a month-on-month basis, the ONS said average house prices fell in February this year for the third month in a row, while on a seasonally adjusted basis, the average UK house price decreased by 0.3% in February 2023.
Rent growth hits record high
The average rental price paid by tenants in the UK increased by 4.9% in the 12 months to March 2023, according to the Office for National Statistics (ONS), representing the largest annual percentage change since similar records started in January 2016. Barret Kupelian, economist at PwC, said growth amongst newly let properties is even higher at 9% to 10%.
Bye Meta
Meta Platforms is reportedly planning to cut or relocate its London-based Instagram employees to the US. The social Media platforms boss, Adam Mosseri, has been in London since last year but is said to be moving back to the US and with him, most of the team. moved there temporarily last year.
Sterling
For the week so far, the Pound is the strongest major currency, driven by this week’s poor employment and inflation data, which conversely signals that the BoE will have another rate hike in May and possibly more afterwards.
Trustees urged to assess risk management amid rising insolvencies
Defined benefit (DB) pension scheme trustees have been encouraged to review how they are managing their pension risks after data from the ONS showed that company insolvencies increased in March. According to the ONS, total insolvencies were up by 16% compared to March last year, while the number of compulsory liquidations more than doubled, up by 106% year-on-year. Cardano Advisory managing director, Alex Hutton-Mills, described the increase in bankruptcies and debt relief orders as more troubling than company insolvency figures, stating that it has “never been more important” for DB pension sponsors and trustees to review how they are managing their pension risks.
One in three would pay more tax to tackle climate change
The Daily Express report nearly a third of Britons would be willing to pay more tax to help combat climate change, according to a poll by Ipsos to mark Earth Day on Saturday. However, only 27% trust the Government’s strategy for the environment, down from 39% a year ago. The pollster’s Dr Pippa Bailey said: “There is growing acknowledgement of the individual’s responsibility to take action. Against the backdrop of current issues such as inflation, energy, food security and global conflict, our research indicates that providing financial incentives for individuals would set a precedent for instilling positive change. This is supported by the percentage of the population that already appear to be climate conscious and would be willing to direct a percentage of their income tax towards tackling climate change.”
BIS chief urges officials to stop chasing quick fixes for growth
The head of the Bank for International Settlements, Agustín Carstens, has called for governments and central banks to institute structural reforms in order to “generate resilient and sustainable growth”. Decisions taken during the pandemic were the cause of the inflationary crisis, Carstens said, adding that with hindsight, “policy support was too large, too broad and too long-lasting.” Rising public debt combined with years of low interest rates was the “root cause” of recent financial stresses but the priority now was to restore price stability – even if that means keeping rates high for longer and reining in spending.
European Parliament approves world’s first carbon border tax
The European Parliament has approved an agreement with EU member states to establish the world’s first carbon border tax. The Carbon Border Adjustment Mechanism (CBAM) aims to prevent EU industries from being undercut by more-polluting overseas competitors, thus discouraging EU companies from relocating to regions of the world with lax environmental rules. The CBAM, which foresees a levy on imports of steel, cement, aluminium, fertilisers, electricity and hydrogen, will be phased in from 2026 until 2034 at the same speed as the free allowances in the EU Emissions Trading System are being phased out. Importers of such goods would have to pay any price difference between the carbon price paid in the country of production and the price of carbon allowances in the EU Emissions Trading System.
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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.
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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
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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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The Credit Protection Association – Prompting Punctual Payments – Ethical, Effective, Efficient, Economical collections.