Business news 20 May 2024
Company insolvencies up 18%. Personal insolvencies on the rise. Pawnbrokers see increase in loans. Restructuring business reports double-digit revenue growth. And more business news that we thought would interest our members.
James Salmon, Operations Director.
Company insolvencies up 18%
Challenging economic conditions resulted in an 18% rise in company insolvencies during April, with rising debt levels, higher interest rates, and spending cuts being the main contributing factors. The number of insolvencies reached 2,177, up from 1,838 in March, according to data from Companies House. The rate of insolvencies over the past 12 months was 57 per 10,000, higher than the previous year. However, it remains lower than the peak during the 2008-2009 recession. The construction sector was hit the hardest, experiencing 4,273 insolvencies in the year to the end of March. Compulsory liquidations also rose to 300, the highest since January 2019.
Personal insolvencies on the rise
The number of individuals under threat of going bust rose almost 10% in April due to the cost of living squeeze and difficulties meeting debt repayments. The rise in personal insolvencies is in line with a £4.5bn increase in the nation’s credit card debt in the past year, taking it to over £64bn. Debt Relief Orders are becoming a popular alternative to bankruptcy, allowing people to reach agreements with their creditors to pay down debts in a manageable way. Tim Cooper, President of R3, stated that the cost-of-living crisis is still impacting people’s finances, with rising prices and reports of people turning to credit to bridge financial gaps. Despite some optimism about personal finances, concerns about the economy, cost of living, and job security remain.
UK pawnbrokers see 13% increase in loans
Figures obtained by Mazars from the Financial Conduct Authority show the value of loans made by UK pawnbrokers has increased by 13% in the past 12 months, reaching £252m. According to Ed Thomas, director in restructuring services practice at Mazars, people are being pushed towards “lenders of last resort.”
Restructing business FRP Advisory reports double-digit revenue growth
FRP Advisory Group has reported double-digit growth in revenue for its 2024 financial year, with revenue increasing by 23% to £128m. The firm’s restructuring business saw a 22% rise in company administrations across all sectors. FRP Advisory Group remains the most active administration appointment taker in the UK, with a market share of 16%. The firm’s corporate finance team closed 76 transactions in 2024, with an aggregate deal value of £1.4bn. The forensic services team also had a busy year, leading to the hiring of more staff. “The results achieved are testament to the quality of our colleagues and their continued efforts to provide a high-quality service to achieve the best possible results for our clients,” CEO Geoff Rowley said.
A third of small businesses get funding from family
Nearly 30% of small businesses receive financial backing from family members, with three quarters stating that the finance provided was essential. Specialist lender Iwoca’s research shows that 56% of small business owners received £25,000 or less from family members, with 17% receiving £25,000 to £50,000 and 19% receiving more. The main reasons for turning to family for funding were the desire to create a family-owned firm and urgent funding needs. Parents were the most likely to provide funding, followed by partners. In 48% of cases, funding from family members helped improve relationships while for 9% it made it worse.
UK investment growth ranks second among G7 economies
UK investment growth since the financial crisis is second only to the US among G7 economies, according to Deutsche Bank. Despite stagnation after Brexit, investment levels have improved, growing 5.5% in 2023. Factors contributing to the resurgence include the attractiveness of capital investment when labour costs rise due to inflation, re-industrialisation leading to reshoring of operations, and government policies such as the “super-deduction” on capital expenditure.
UK attracts most FDI into financial services in Europe
The UK remains the most attractive destination for foreign direct investment into financial services in Europe, according to EY data. The UK attracted 108 financial services projects in 2023 – an increase from 76 projects in 2022 – and has extended its lead over second-placed France. Separately, UK asset managers say global investors are increasing deal activity around UK companies, with expectations that the trickle of M&A activity we’ve seen so far in 2024 could become a flood in 2025.
Inflation inches closer to 2% target
Inflation is expected to reach the Bank of England’s 2% target this week, increasing the likelihood of a rate cut in June. The Office for National Statistics will release inflation data for April, with analysts predicting a reading of 2.1%, down from 3.2% in March. Experts believe that weaker food and energy price increases could help the rate match the 2% goal. If achieved, this would be the first time since July 2021 and could pave the way for a cut in interest rates in June.
Brexit border arrangements to cost £4.7bn
The UK Government is expected to spend at least £4.7bn on implementing new arrangements to manage the border following Brexit, according to a report by the National Audit Office (NAO). The figure primarily covers the cost of new infrastructure and wider programmes to improve border performance. However, it does not include additional operational expenses such as hiring staff. The NAO warned that the Government’s border strategy lacks a clear timetable, posing a significant risk to the delivery of border-related programmes. The report also highlighted delays in the Single Trade Window digital programme and revised estimates of the annual cost to UK businesses of customs declarations.
Staff employ new tactics in the WFH war
Employees returning to the office are resorting to a new trend called “coffee badging,” where they clock in before leaving shortly after. This practice, similar to peers showing their face for ten minutes at the House of Lords to claim a £300 daily attendance fee, allows employees to be seen by managers before disappearing. A survey found that a third of UK workers who can work flexibly admit to coffee badging with some experts arguing that return-to-office initiatives are futile, as staff have experienced a new level of flexibility and resistance may only increase. But as managers grow increasingly frustrated at falling productivity and poorer team culture coffee badge-ers could soon find their office passes revoked altogether.
Badenoch urges companies to focus on customers, not political activism
UK Business Secretary, Kemi Badenoch, has called on British companies to abandon political activism and instead concentrate on delivering goods and services to customers. Badenoch argued that there is a “creeping politicisation” of businesses and that equality, diversity, and inclusion initiatives often divide rather than unite people. A survey by think-tank Policy Exchange found that 50% of respondents believed businesses were too concerned with taking political positions on contested issues. Additionally, 75% of respondents believed that firms should hire based on merit rather than seeking to create a diverse workforce.
Entrepreneurship needs to be more accessible for the disabled
An independent review has identified the challenges faced by disabled entrepreneurs, including inaccessible support services and poor access to finance. The review, led by Small Business Britain, estimates that addressing these challenges could unlock an additional £230bn in business turnover. It recommends simplifying support services and scrapping annual benefit reassessments for lifelong conditions. The review also calls for trust-based access to disability support. Victoria Jenkins, the founder and chief executive of Unhidden, a fashion brand that caters to the needs of people with disabilities, said: “Disabled entrepreneurs are not asking to be given special treatment. What we want is to be given equal access to opportunities, so we are free simply to be entrepreneurs and to grow our business to the best of our ambition and abilities.”
Markets
Friday, UK indices closed out a strong week modestly lower. the FTSE 100 closed down 0.22% yesterday at 8420.26 and the Euro Stoxx 50 closed down 0.16% at 5064.14. Over in the US the S&P 500 rose 0.12% to 5303.27, but the Nasdaq fell marginally .07% to 16685.97.
This morning the pound is currently worth $1.270 and €1.685. Brent is at $83.7 after oil prices climbed in response to geopolitical uncertainty following the death of the Iranian president in a helicopter crash, Gold is at $2442 in responses to falling US inflation and anticipation of interest rate cuts. The FTSE 100 is up .24% at 8440 and the Eurostoxx 50 is up .17% at 5072 as extended optimism about earnings growth and potential interest-rate cuts take hold.
House Prices
UK House Prices have reached record highs in May, with an average property increasing by around £2,800 in the last month. Homes in May were priced at an average of £375,000 in May, representing a 0.8% uptick compared to April, new data from Rightmove found
Thames Water
Thames Water bondholders have demanded an emergency meeting with the Thames board following rumours of further resignations. Separately the Ontario Pensions fund ‘”Omers’, the largest single shareholder has written off its investment in Thames Water. The 31.7% stake was worth £990m in 2021.
Steelmakers warn ministers that UK faces dumping risk
The UK risks becoming a dumping ground for low-cost imports, Britain’s steelmakers have warned, unless the Government accelerates the introduction of a new carbon border tax.
HSBC
HSBC shares rose despite news that Ping An, an 8% shareholder wants to sell its stake, the thinking is the stake could be sold to a sovereign wealth fund. Ping An has ended its campaign to get HSBC to spin off its Asian business.
Eurozone
Eurozone Inflation was steady in April, holding at 2.4% despite an uptick in Germany, official figures revealed. Consumer price inflation remained at the same level as in March, despite the figure in Germany, the region’s largest economy, lifting from 2.3% to 2.4% month-on-month.
Ryanair
Ryanair reported a profit climb on the back of higher customer figures, helped by Easter this year landing in March, as it eyed further customer growth. The Dublin-based airline company said pretax profit jumped 35% to EUR2.13 billion in the financial year ended March 31 from EUR1.57 billion a year prior. Revenue climbed 25% to EUR13.44 billion from EUR10.78 billion. Ryanair reported 183.7 million customers for the financial year just ended, up 9.0% from 168.6 million.
Tesla
Tesla has won its bid to extend its Berlin factory into a nearby forest despite receiving heavy pushback from environmental activists. Local councillors in Gruenheide voted in favour for the extension of the gigafactory, German reports revealed. Activists have been protesting the pans since February over fears the construction could affect water supplies and cause deforestation
Sainsbury’s
J Sainsbury has penned a five-year deal with Microsoft Corp to incorporate artificial intelligence into its supermarkets. This will aim to improve store operations, aid staff to work more efficiently and create a more effective service, Sainsbury’s said.
London insurance market jobs hit highest level in decade
Headcount in the London insurance market is at its highest level in a decade or more, data from the London Market Group show, with more specialist staff brought in to help meet demand for cover.
The tax system is weighted against families
The tax system in the UK is penalising families and lacks fairness, wrote Johanna Noble in the Sunday Times. Since the introduction of independent taxation in 1990, the tax system has focused on individual incomes, neglecting household or family finances. As a result, families with the same household income can pay vastly different amounts of tax, leading to significantly different levels of disposable income. The provision of child benefit, tax-free childcare, and free childcare hours are also based on individual income, creating inconsistencies and unfairness. The tax system’s impact on widows, single parents, and married couples is particularly acute. In addition, inheritance tax has become a burden for hard-working families due to the frozen threshold. Noble says the tax system needs to be reformed to address these issues and provide fairness for families.
A jump in salary can drop you in a tax trap
Rachel Mortimer in the Times (On Sunday) outlined some of the biggest tax traps which could arise from a salary boost. One of the most punitive marginal tax rates is triggered if your salary goes over £100,000, when more than half of any extra pound you earn goes to the taxman. Jason Hollands from Evelyn Partners said: “This is one of the biggest tax traps and can be a real sting in the tail of a pay increase or bumper bonus.” Hollands said: “For anyone who might end up in the 60% tax zone it may be better to ask your employer if you can forgo some or all of the bonus or salary increase and instead get more employer pension contributions. This will reduce your tax liability while boosting your retirement fund.” Chris Etherington from RSM UK warns: “When someone becomes a higher-rate taxpayer, their savings, rental and dividend income is treated as the top slice of their income and may be subject to a big jump in tax rates as well.”
Triple lock to cost taxpayers an extra £10bn a year by 2034
Annual spending on the state pension will exceed £150bn in real terms within the next decade, according to the Office for Budget Responsibility, with the triple lock representing around £10bn of that by 2034. Based on the latest Office for National Statistics population projections, the triple lock could cost anywhere between an additional £5bn and £40bn per year in today’s terms by 2050, the Institute for Fiscal Studies (IFS) previously said. Carl Emmerson, deputy director at the IFS, said the triple lock generates uncertainty for public finances and risks pushing up the state pension age. “This would particularly hit those with poorer health who struggle to remain in paid work until they reach the state pension age.”
Latest Insolvencies
Appointment of Administrator – F.A.GILL.LIMITED
Appointment of Administrator – RBDM LIMITED
Appointment of Liquidators – J.S. (GB) LLP
Appointment of Liquidators – CARDINAL HOLDING NO.2 LTD
Appointment of Liquidators – GLENN SIMS CONTRACTORS LIMITED
Appointment of Liquidators – CENTRAL & COUNTRY (HORSEHAY) LIMITED
Appointment of Liquidators – HOLT & WOTTON LIMITED
Appointment of Liquidators – CARDINAL HOLDING NO.1 LTD
Appointment of Liquidators – HART SPORT & MEDIA LIMITED
Appointment of Liquidators – CAMBRIDGE MARQUEES & EVENTS LIMITED
Appointment of Liquidators – CLOUDBRED SOLUTIONS LTD
Appointment of Liquidators – HATUMA CONSULTING LIMITED
Appointment of Liquidators – A & B INSTALLATIONS LIMITED
Appointment of Liquidators – LEPPERTON LIMITED
Appointment of Liquidators – JEJE LTD
Appointment of Liquidators – A & L AUDIT SERVICES LIMITED
Appointment of Liquidators – CELESCAN LIMITED
Appointment of Liquidators – DATA ASTRAL LTD
Appointment of Liquidators – PROSAFE RIGS LIMITED
Appointment of Liquidators – HFC SERVICES LIMITED
Appointment of Liquidators – TOWER HILL MERCHANTS LIMITED
Appointment of Liquidators – TANGIBLE SECURITIES HOLDINGS LIMITED
Appointment of Liquidators – FORDE MAY CONSULTING LIMITED
Petitions to wind up (Companies) – BASIL ALEXANDRA LTD.
Appointment of Liquidators – CLOSE DEVELOPMENTS LIMITED
Appointment of Liquidators – LEMON DENTAL CARE LIMITED
Petitions to wind up (Companies) – BRODIE DECORATORS LTD
Appointment of Liquidators – F4G SOFTWARE LIMITED
Petitions to wind up (Companies) – KK SPICE LTD
Petitions to wind up (Companies) – MAK CONTRACTS (NORTH) LTD
Petitions to wind up (Companies) – SJK HOME IMPROVEMENTS LTD
Petitions to wind up (Companies) – HEATFIX SCOTLAND LTD
Petitions to wind up (Companies) – TONY MCLEAN DEVELOPMENTS LTD
Petitions to wind up (Companies) – UK INSPECT LIMITED
Petitions to wind up (Companies) – AESTHETIQUE BEAUTY TRAINING (SCOTLAND) LTD
Appointment of Liquidators – PROF.F.B.V.KEANE LIMITED
Petitions to wind up (Companies) – WIG MASTER LTD
Petitions to wind up (Companies) – LAMBURN COMPANY LIMITED
Appointment of Liquidators – APEX HEALTHCARE CONSULTING LIMITED
Appointment of Liquidators – D C PROPERTY DEVELOPMENT CONSULTANCY LIMITED
Petitions to wind up (Companies) – LANGURRA TRADING LTD
Petitions to wind up (Companies) – SOFT PRICED HARDWARE LIMITED
Appointment of Liquidators – SHELFORD PHEASANTRIES LIMITED
Appointment of Liquidators – BRADECCA RESTAURANTS LIMITED
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 last one was particularly deadly for suppliers fand we are still seeing elevated insolvencies as businesses struggle.
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!
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.