Business news 21 June 2023
James Salmon, Operations Director.
Inflation higher than forecast. Experts expect rate hike. Hunt rules out government help on mortgages. Lenders look to help stretched borrowers. And more business news that we thought would interest our members.
Inflation higher than forecast
This morning the UK Inflation figres came in with CPI staying at 8.7% in May, the same as April, failing to fall as forecast.
It halts the steady but slow downward fall in CPI since its peak of 11.1% last year.
The Office for National Statistics says rising prices for “air travel, recreational and cultural goods” helped keep inflation high. Falling prices for motor fuel were the largest “downward contribution”. Prices for food and non-alcoholic drinks rose in May – but by less than in May 2022. Core inflation – which strips out energy, food, alcohol, and tobacco – rose by 7.1% in the year to May, the highest level since 1992.
The pace of food prices fell slightly to 18.3% from April’s 19.0% but they remain much higher than a year ago
Chancellor Jeremy Hunt said the government would “not hesitate” in its resolve to support the Bank as it “seeks to squeeze inflation out of our economy”
Other figures show UK debt is now higher than annual GDP for the first time since 1961
Sterling was given a boost in the wake of latest CPI data as it is likely to solidify BoE’s case for a rate hike in tomorrow’s meeting. However, how long this tightening phase will continue remains uncertain. Notably, the Pound’s buying momentum is presently restrained.
Experts expect rate hike
The Bank of England is expected to raise interest rates to 4.75%, up from 4.5%, in a bid to reduce inflation.
While the Bank of England is expected to raise rates by 0.25 percentage points as officials look to bring down inflation, some experts argue that it may have to rise by as much as 0.5 percentage points, taking the base rate to 5%.
Sir Charlie Bean, a former deputy governor of the Bank, says it would be “amazing” if rates did not go up at least 0.25 percentage points, and possibly 0.5 percentage points, while economist Andrew Sentance, who formerly sat on the Bank’s rate-setting panel, said higher-than-expected wage growth and GDP figures mean that he would opt for a 0.5 points increase. Sir John Gieve, the former deputy governor of the Bank is in favour of the 0.5 points, suggesting that “the case for a further rise in rates is clear.” However, Charles Goodhart, another former member of the rate-setting committee, said he expects a 0.5 point rise but feels that 0.25 points would be sufficient.
Grocery inflation slows to 16.5%
The pace of grocery price rises has eased to its lowest monthly rate this year, dropping to 16.5% from 17.2% last month and March’s record of 17.5%. The latest Lloyds Bank UK Sector Tracker found that food and manufacturing production costs fell in May for the first time in seven years, driving optimism that food price inflation may be starting to ease.
Hunt rules out government help on mortgages
Chancellor Jeremy Hunt has ruled out introducing major financial support to mortgage holders (the return of MIRAS – ‘mortgage interest relief at source’ a measure introduced in the 1980s, that allowed for the tax deductibility of mortgage interest) saying offering relief schemes for home loans would “make inflation worse, not better.” With homeowners facing soaring mortgage costs due to higher interest rates, the Government says it is “spending record amounts” helping people and already has “specific tools” to provide support. While Mr Hunt has ruled out mortgage relief schemes, he said he intends to meet mortgage lenders to ask what help they can give to households struggling with bills. Meanwhile, the Liberal Democrats have also called for mortgage relief and a mortgage protection fund. In response, Treasury Minister Andrew Griffith took a similar stance to the Chancellor, saying such policies would delay bringing down inflation.
Lenders look to help stretched borrowers
Lenders insist they are doing their “best to help” customers affected by climbing mortgage rates, with UK Finance saying: “Lenders stand ready to help anyone struggling with their mortgage payments.” Recent research by HSBC shows that only 3% of people are aware that they can contact their bank or building society to discuss their financial worries without it impacting their credit score. Alongside existing support, HSBC says it is continuing to look at ways it can help customers, while Nationwide has launched a “health checklist” which allows its members to see the options that may be available. NatWest said it understands that some mortgage customers “might be concerned” and noted that it offers “an extensive range of support measures.” A Santander spokesperson said: “We are committed to helping our customers through more challenging times.” Ele Clark, senior editor at Which? Money, said concerned borrowers should talk to their lender about what support is available, adding that they can “rest assured” that discussing options with a lender will not affect their credit rating.
Pricey pints
JD Wetherspoon CEO Tim Martin has warned that UK pubgoers will have to fork out £8 for a pint and criticised the UK government and politicians as being too led by private polling.
FCA monitors banks amid profiteering concerns
With banks warned against profiteering during the mortgage crisis, the Financial Conduct Authority (FCA) is understood to be monitoring the market ahead of the launch of its Consumer Duty, which will require banks to treat customers fairly. Concerns have been raised after banks were quick to pass on successive increases in the Bank Rate to mortgage borrowers but have not been as swift in upping rates for savers. With interest rate rises seeing Barclays, NatWest, Lloyds and Santander report large increases in their “net interest income” – the difference between what they charge borrowers and pay savers – MP Danny Kruger, a member of the Treasury Select Committee, has called on the FCA to take action. He said: “Something is clearly going wrong when banks are profiting from increasing interest rates but savers aren’t benefiting from them.” FCA chief executive Nikhil Rathi said the watchdog has “challenged” some of the worst offenders. Meanwhile, the Treasury Select Committee has written to the heads of Britain’s biggest banks to raise concerns as part of an investigation into savings rates.
Hackers claim not to have firms’ data
Cyber criminals believed to be behind an attack that saw hackers breach payroll provider Zellis claim not to have data belonging to organisations thought to be victims. While firms including the BBC, British Airways and Boots have told staff that sensitive payroll data was stolen, hacking group Clop, in an email to the BBC, insist they “don’t have that data.” BBC News says this raises the possibility that another hacking gang has the stolen data or that Clop is lying. While Clop has been posting company profiles of victims since June 14, none include the larger and more well-known UK firms thought to have had data stolen.
Firms leave underpaid staff £5m out of pocket
The Department for Business and Trade has named 202 companies that short-changed staff between 2017 and 2019. The report says that in total, around 63,000 workers were left nearly £5m out of pocket due to a “clear breach” of national minimum wage law. It was found that WH Smith underpaid 17,607 of its workers by a total of £1.02m, with a requirement to provide their own uniforms pushing staff salaries below the national minimum wage. Lloyds Pharmacy underpaid 7,916 of its staff by a total of £903,307, while M&S failed to pay £578,391 to 5,363 workers. Argos was found to have underpaid 10,399 workers by a total of £480,094, with owner Sainsbury’s citing a “payroll error.” Kevin Hollinrake, the Minister for Enterprise, Markets and Small Business, said: “Paying the legal minimum wage is non-negotiable and all firms, whatever their size, should know better than to short-change hard-working staff.”
Roberts: BoE ‘has a lot to learn’
The head of the Bank of England’s oversight board says it has a lot to learn from the recent surge in inflation. The Bank has faced criticism for failing to keep inflation down, having seen it soar to a high of 11.1% before dipping back to 8.7% – still well ahead of the 2% target. Rate-setters have increased interest rates from 0.1% to 4.5% since December 2021 as they look to bring prices down. David Roberts, chairman of the Bank’s Court of Directors, said: “We think there are lessons to learn. We need to stand back and ask ourselves what can we learn?” He told the Economic Affairs Committee in the House of Lords that he had instigated a review of the forecasting process which had been “readily agreed to” by Bank governor Andrew Bailey and other policymakers. He added: “We’ll have lots more shocks that we need to prepare for.”
Ministers urged to show caution over global corporation tax plans
MPs have cautioned the Government against “blindly” implementing an international agreement to enforce a minimum corporation tax rate of 15%. Prime Minister Rishi Sunak signed Britain up to the pledge brokered by Organisation for Economic Co-operation and Development (OECD) when he was Chancellor.
Former Home Secretary Priti Patel has previously called for greater scrutiny to examine the “complexities” of the policy. Arguing that outside of the EU, Britain has the ability to make its own tax laws, she said: “Why are we now going to surrender powers to the will of the OECD?” She added: “We don’t want to undermine our ability to be a low-tax global beacon of free trade.” Former Conservative leader Sir Iain Duncan Smith also says there are issues to consider, arguing that America is “almost certainly not going to implement” the 15% rate, meaning “the single largest trading nation in the world will not play a part on this.” Treasury Minister Victoria Atkins has argued that the global tax agreement protects against large multi-national groups and companies using “aggressive tax planning and shifting their UK profits overseas.” She added: “We retain the sovereignty to set our corporation tax rate.”
insolvencies
Please find below a summary of all recent insolvency notices
Petitions to wind up (Companies) – REPAIR PLANS UK LIMITED
Petitions to wind up (Companies) – BINATONE TELECOM PLC
Appointment of Administrator – TAILORED FIRE & SECURITY (LEEDS) LTD.
Appointment of Administrator – HEYLAND & WHITTLE LIMITED
Appointment of Administrator – CRANLEY CLINIC LIMITED
Appointment of Liquidators – MARINE MANAGEMENT GROUP (U.K.) LIMITED
Appointment of Liquidators – STUART CUNNINGHAM CONSULTING LTD
Appointment of Liquidators – JOHN STEPHENS LIMITED
Appointment of Liquidators – FORTITUDE PARTNERS LIMITED
Appointment of Liquidators – COMMERCIAL PROPSHAFT SERVICES LIMITED
Appointment of Liquidators – ICON SECURITY LIMITED
Appointment of Liquidators – ALMENARA LIMITED
Appointment of Liquidators – MPB SALES LIMITED
Appointment of Liquidators – BENELL CARE SERVICES LTD.
Appointment of Liquidators – BONHILL FINANCE LIMITED
Appointment of Liquidators – CHICHESTER ROAD PARK HILL LIMITED
Appointment of Liquidators – J LU ENTERPRISES LIMITED
Appointment of Liquidators – FRIENDLY TESTING LIMITED
Appointment of Liquidators – LAST WORD MEDIA (UK) LIMITED
Appointment of Liquidators – BLACKBIRD INVESTMENTS ONE LIMITED
Appointment of Liquidators – MARINE SHIELD LIMITED
Appointment of Liquidators – B&P HOMES LIMITED
Appointment of Liquidators – PEBECH HOLDINGS LIMITED
Appointment of Liquidators – BLACKBIRD INVESTMENTS TWO LIMITED
Appointment of Liquidators – SONPRIKAT LIMITED
Appointment of Liquidators – FORTIVUS LTD
Appointment of Liquidators – ROBINSON SEABROOK LIMITED
Appointment of Liquidators – CARA JOAN LIMITED
Appointment of Liquidators – JKB POWER LIMITED
Appointment of Liquidators – SJP STRATEGIC CONSULTANCY LTD
Appointment of Liquidators – LAB G LIMITED
Appointment of Liquidators – EPSILON TECHNOLOGIES LIMITED
Appointment of Liquidators – DESIGN-SPECTRUM LTD
Appointment of Liquidators – A. L. J. PLANT HIRE LIMITED
Appointment of Liquidators – SYSTODATA LIMITED
Appointment of Liquidators – DELPHINE HOLDINGS LIMITED
Appointment of Liquidators – DELPHINE HOLDINGS NO.2 LIMITED
Appointment of Liquidators – WHITELYE CONSULTING LTD
Appointment of Administrator – ACORN COUNTRY CAPITAL LTD
Petitions to wind up (Companies) – ASR ELECTROPLATING LTD
Appointment of Liquidators – GLENFALL HOUSE LTD
Appointment of Liquidators – CEBILE ADVISORS LIMITED
Appointment of Liquidators – RAYMOND JAMES FINANCIAL HOLDINGS UK LIMITED
Appointment of Liquidators – CEBILE CAPITAL LLP
Appointment of Liquidators – MIKE PRENTICE CONSULTING LTD
Petitions to wind up (Companies) – SIMPLE SIGNS & GRAPHICS LIMITED
Petitions to wind up (Companies) – J & A ANDERSON ROOFING SERVICES (SCOTLAND) LIMITED
Petitions to wind up (Companies) – CALEDONIAN PLANT LIMITED
Appointment of Liquidators – PBAS (WALES) LIMITED
Petitions to wind up (Companies) – PROPERTY LETTING & DEVELOPMENT LIMITED
Petitions to wind up (Companies) – GARDINERS COACHES LIMITED
Petitions to wind up (Companies) – Q FITNESS (NW) LTD
Petitions to wind up (Companies) – PRIME CARE SOLUTIONS (KINGSTON) LIMITED
Appointment of Administrator – UK HAIRDRESSERS 2190 LIMITED
Appointment of Liquidators – JANE BARR WALKER LIMITED
Appointment of Administrator – UK HAIRDRESSERS 2910 LIMITED
Appointment of Administrator – MAN’S CATERING 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 one will be particularly deadly for suppliers for some time to come.
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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
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The Credit Protection Association – Prompting Punctual Payments – Ethical, Effective, Efficient, Economical collections.