Business news 21 January 2025
Firms upbeat but trade wars a concern. Business rates, unemployment, WFH, Tax hikes, growth means risk, the UK’s investment appeal, Thames Water, Council insolvency, price rises, pension insolvency, markets, insolvencies & more business news that we thought would interest our members.
James Salmon, Operations Director.
Firms upbeat but trade wars a concern
Despite concerns over tariffs and trade wars, the majority of British business leaders remain optimistic about growth. A report by Capgemini reveals that 63% of UK business leaders plan to increase investment this year, with 60% optimistic about growth potential for 2025. However, 70% express worries about trade tariffs, prompting nearly 80% to de-risk their supply chains. Many businesses are investing in emerging markets to reduce reliance on China, with a focus on sustainability and technology, particularly in climate technologies and Gen AI.
Unemployment
The UK Unemployment Rate rose to 4.4% in the three months to November from 4.3%, though this was forecast by economists. Average weekly pay growth in the same period rose to 5.6% from 5.2%, though the market had expected a larger increased of 5.7%. Earnings growth excluding bonuses was also 5.6%, also up from 5.2% and was as the market expected.
Car loan intervention
Chancellor Rachel Reeves launched a bid to shield car loan providers from multi billion-pound payouts in a landmark mis-selling case, after the Treasury warned it could damage Britain’s reputation as a place to do business. The Treasury has taken the unusual step of seeking permission to intervene in a forthcoming Supreme Court case, amid concerns that banks and other lenders could face a compensation bill costing tens of billions of pounds.
Business rates set to soar
Property bills for retail, hospitality, and leisure sectors are set to more than double due to upcoming business rates reforms, warns Colliers. The Government’s reduction of business rates relief from 75% to 40% starting in April will lead to significant increases in bills. John Webber, head of business rates at Colliers, said: “The Labour Government’s business rates policies will soon put even further pressure on the high street.” For instance, retailers’ average bills will jump from £3,751 to £9,003, while restaurants will see an increase from £5,563 to £13,351. The Treasury claims that the change will still protect one in three business properties from paying business rates.
WFH as “not proper working” – Lord Rose
The trend of working from home has surged, with the number of remote workers more than doubling from 4.7m in December 2019 to 9.9m by March 2022. Lord Rose, former boss of Marks & Spencer and Asda, asserts that the practice is creating a generation “not doing proper work”. The Tory peer told the BBC’s Panorama: “We have regressed in this country in terms of working practices, productivity and in terms of the country’s wellbeing, I think, by 20 years in the last four.” Major employers like Amazon and JP Morgan are now enforcing in-office attendance, while the UK Government is introducing changes to employment law to enhance workers’ rights to flexible working.
Tax hikes threaten labour market health
The Government’s recent tax hikes are seen as a “major threat” to the labour market, according to Andrew Goodwin, chief UK economist at Oxford Economics. The increase in employers’ national insurance by £25bn and a 6.7% rise in the minimum wage could lead to significant job losses, particularly in sectors with low-paid employees. Goodwin warned that these changes might push up unemployment in 2025. However, Rob Wood from Pantheon Macroeconomics argued that the impact of the payroll-tax hike had been overblown pointing out that hiring intentions improved in December.
Going for growth means taking risks
Ashley Alder, chair of the Financial Conduct Authority (FCA), writes in City AM on the importance of regulation as a catalyst for growth in the financial services sector. He states: “The question we must ask is what is our collective tolerance for failure?” The FCA aims to enhance capital investment and liquidity while reducing regulatory burdens to foster business growth. Recent reforms, including changes to prospectus rules and public offer regimes, are designed to make the UK more attractive for listings. However, Alder acknowledges the inherent risks, such as potential increases in fraud from removing the £100 contactless payment limit. The FCA seeks a collaborative approach with government and parliament to support its growth mission, balancing risk and consumer protection.
UK leaps ahead in investment appeal
The UK has emerged as the second most attractive country for investment, surpassing Germany, China, and India, according to PwC’s annual CEO survey. This shift is seen as a “vote of confidence in the UK,” with 14% of global CEOs believing the UK will attract significant international investment, trailing only the US at 30%. Optimism among UK chief executives has increased, with 61% expecting economic growth in the next year, up from 39% in 2023. Despite concerns over rising debt and recent sluggish growth figures, over half of UK CEOs plan to expand their workforces. Marco Amitrano, senior partner at PwC UK, stressed the importance of maintaining a consistent government approach to business and investment, stating: “The UK’s relative stability at a time of instability should not be underestimated.” The survey included responses from 4,701 CEOs across 109 countries from October 1 to November 8, 2024.
Thames Water faces creditor showdown
Thames Water, the largest water utility in England, is facing a financial crisis with £16bn in debt and a looming cash shortfall by late March. The High Court has heard competing restructuring proposals from two creditor groups. The “A plan,” backed by major investment firms like BlackRock, offers a £3bn loan at a 9.75% interest rate but includes a controversial “June release condition” (JRC) that could give Class A creditors excessive control over future funding. Tony Singla KC, representing Class B creditors, argued that the JRC “holds the company to ransom” and could lead to special administration if conditions are unmet. In contrast, the Class B proposal promises similar funding with better terms, including an 8% interest rate and no JRC. The court is set to reconvene in February to further discuss these plans, as Thames Water seeks to stabilise its finances amid public scrutiny over pollution and rising bills.
Councils face bankruptcy over pay claims
Local councils across the UK are facing potential bankruptcy due to a surge in sex discrimination claims, particularly following a significant equal pay claim against Birmingham City Council, estimated at £760m. Rhea Wolfson, head of GMB’s internal and industrial relations, said: “We hope that the Birmingham case will inspire a wave of councils to take these claims seriously and settle.” The GMB union anticipates settlements with up to six additional councils this year, as evidence of sex discrimination emerges in various local authorities. Birmingham City Council’s financial struggles, exacerbated by a Section 114 notice in 2023, reflect a broader crisis affecting many councils, which are grappling with severe budget constraints.
High street faces price hikes ahead
A survey by the British Retail Consortium has revealed that 70% of CFOs from 52 major retailers are either “pessimistic” or “very pessimistic” about the upcoming year. In response to increased costs being imposed by the Government, notably those in employers’ National Insurance contributions, 67% of retailers plan to raise prices, while many will reduce staff hours and headcount. Helen Dickinson, Chief Executive at the BRC, said: “Retailers have worked hard to shield their customers from higher costs, but with slow market growth and margins already stretched thin, it is inevitable that consumers will bear some of the burden.”
Markets
Yesterday, the FTSE 100 closed up 0.18% at 8520.54 and the Euro Stoxx 50 closed up 0.31% at 5164.44. The US was closed for Martin Luther King day.
This morning on currencies, the pound is currently worth $1.229 and €1.183. On Commodities, Oil (Brent) is at $79.05 & Gold is at $2736. On the stock markets, the FTSE 100 is currently up 0.3% at 8545 and the Eurostoxx 50 is flat at 5162.
Hospitality industry faces £1bn tax blow
The hospitality industry is facing an additional £1bn in costs due to changes in employer national insurance contributions, affecting 774,000 workers from April. UKHospitality, representing numerous businesses, has urged the Government to reconsider these tax changes introduced in Rachel Reeves’s budget. Chief Executive Kate Nicholls said: “The change to employer NICs is one of the most regressive tax changes ever,” highlighting the potential for job losses and increased prices. The industry, which currently employs 1.2m staff, is already grappling with £2.4bn in other costs. Business leaders warn that the cumulative effect of these changes could lead to significant job cuts and hinder investment.
State pension system “within touching distance of fiscal insolvency”
The state pension system in the UK faces a critical challenge due to an ageing population and a declining workforce. According to Maxwell Marlowe from the Adam Smith Institute, the system is “within touching distance of fiscal insolvency.” The cost of state pensions is projected to rise from £125bn to £150bn annually within a decade, exacerbated by a shrinking ratio of workers to pensioners. Immigration has been a temporary solution, contributing £3.3bn to the Treasury, but without it, the pension system could become unaffordable as early as 2030. Sir Steve Webb, a former pensions minister, stresses the need for economic migration to maintain a sustainable working-age population. The current funding model, described as a “Ponzi scheme,” relies on today’s workers to support current pensioners, raising concerns about long-term viability.
Savers face unexpected tax shock
New analysis from Shawbrook reveals that nearly 6.1m accounts are set to breach the personal savings allowance due to frozen thresholds, an increase of 800,000 in just one year. Adam Thrower, head of savings at Shawbrook, warned that “many savers could encounter an unexpected pitfall that eats into their hard-earned interest.” The personal savings allowance, which allows savers to earn up to £1,000 in interest tax-free, is under threat as income tax thresholds remain frozen until 2028. This situation could push 2.5m people into the higher tax bracket by 2025-26, reducing their savings allowance significantly.
BoE could set up ‘concierge service’
The Bank of England is considering establishing a “concierge service” aimed at assisting foreign financial services companies looking to enter the UK market. Sam Woods, head of the Bank’s Prudential Regulation Authority (PRA), indicated in a letter to the Prime Minister that they are exploring a proposal similar to Singapore’s one-stop-shop model for overseas firms. While the PRA aims to support growth, Woods reminded that its primary goal remains the safety and soundness of banks and insurers. “Financial instability can lead to severe disruptions to the ability of households and businesses to make transactions, manage risks, and access credit, amplifying economic shocks and hindering growth,” Woods wrote. Separately, the Chancellor told the FT she welcomed proposals from the Financial Conduct Authority to loosen mortgage rules and was “absolutely open to looking at ideas that can boost home ownership”.
Reach flags £5m pension error
Reach, the publisher of the Daily Mirror and Daily Star, has flagged an additional £5m in costs due to a “historical error” related to the funding of its West Ferry Printers Pension Scheme. This error was uncovered during due diligence for a buy-out, which Reach inherited after acquiring Express Newspapers in 2018. Despite this setback, Reach’s shares surged by 24.2% to 89.4p as the company raised its full-year profit guidance, expecting to deliver results ahead of market expectations. The firm anticipates an adjusted operating profit of £97.8m for the year, a significant increase from £46.1m in 2023. Reach also secured a £145m revolving credit facility, maturing in December 2028, with an option for a one-year extension.
Latest Insolvencies
Appointment of Liquidators – PRAKASH JHA LIMITED
Appointment of Liquidators – DUNDIGGING LIMITED
Appointment of Liquidators – MARQUEST CONSULTING LTD
Appointment of Administrator – DOVETAIL GROUP (UK) LTD
Appointment of Liquidators – CHRIS OATES TAX CONSULTANCY LIMITED
Appointment of Liquidators – ROGER MOSS LTD
Appointment of Liquidators – FLYING FISH CONSULTING LIMITED
Appointment of Liquidators – CUCHULAIN FILM PARTNERSHIP LIMITED
Appointment of Liquidators – MCCANN TRANSPORT LIMITED
Appointment of Liquidators – LIGHT SEARCH LIMITED
Appointment of Liquidators – MMA FINANCIAL CONSULTING LIMITED
Appointment of Liquidators – JOHN HEALE LIMITED
Petitions to wind up (Companies) – CAMTECH SSL LIMITED
Petitions to wind up (Companies) – ELEGANCE BROW AND BEAUTY LTD
Petitions to wind up (Companies) – EB CONSTRUCTION GROUP LTD
Petitions to wind up (Companies) – DJKB LIMITED
Petitions to wind up (Companies) – HAWK WORKS PROPERTY LTD
Petitions to wind up (Companies) – GLENDALE ALARMS & SECURITY SYSTEMS LIMITED
Appointment of Liquidators – SWANZY ENGINEERING LIMITED
Winding up Order (Companies) – GMAP GROUP LTD
Winding up Order (Companies) – OUT & OUT ORIGINAL LTD
Winding up Order (Companies) – AXIOM CE LIMITED
Appointment of Administrator – REAL VR LIMITED
Appointment of Administrator – STEEL DYNAMICS LTD
Petitions to wind up (Companies) – ELDONIAN COMMUNITY TRUST LIMITED
Petitions to wind up (Companies) – ONYX GROUNDWORKS & LANDSCAPING LTD
Petitions to wind up (Companies) – CHACHA CHAI FOOD COURT LTD
Petitions to wind up (Companies) – EVOLVE DECORATING LTD
Petitions to wind up (Companies) – STOICA PLUMBING SERVICES LTD
Appointment of Liquidators – CLEARVIEW INDUSTRIES LIMITED
Appointment of Liquidators – INFRACAPITAL (IT PPP) HOLDINGS LIMITED
Appointment of Liquidators – R & A BUSINESS SOLUTIONS LIMITED
Appointment of Liquidators – ZAMMCO LTD
Appointment of Liquidators – PBL4 LIMITED
Appointment of Liquidators – OUT-HOUSE IN-HOUSE MARKETING LIMITED
Appointment of Liquidators – LEWIS CONSULTANTS LIMITED
Appointment of Liquidators – LEIDEN LIMITED
Appointment of Administrator – HWS 3 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.
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.