Business news 22 March 2024
UK pub closures reach 10-year high. Call for closure of loophole exploited by Chinese. UK private sector growth signals recovery. Bank of England, retail, markets, & more business news that we thought would interest our members.
James Salmon, Operations Director.
UK pub closures reach 10-year high
Pub closures have hit a 10-year high in the UK, with almost 770 pub operators going bust in 2023. The number of pubs in the country has decreased from 41,015 a decade ago to 38,175 at the end of last year. Price Bailey, an accountancy firm, attributes the closures to increased energy, labour, and food and drink costs, as well as a decline in pub-goers’ spending. However, the actual number of closures is likely higher as the statistics only cover pub businesses and not individual venues. Matt Howard from Price Bailey warns that many pub businesses are struggling with high levels of debt and that rate hikes are pushing more of them into financial trouble.
in juxtaposition, Wetherspoon reported results for the 26 weeks ended January 28. Revenue in the half-year climbed to £991.0 million from £916.0 million a year earlier. Pretax profit falls to £26.1 million from £57.0 million. Wetherspoon declared no interim dividend, unchanged from a year ago. “Sales continue to improve. In the last 7 weeks, to 17 March 2024, like-for-like sales increased by 5.8%,” said Chair Tim Martin.
Next boss calls for tax loophole exploited by Chinese rivals to be closed
The CEO of Next, Lord Wolfson, has called for a crackdown on a tax loophole used by Chinese fast fashion websites like Shein. These companies avoid customs bills by shipping individual orders directly from China, which allows them to escape tax on parcels worth less than £135. British retailers have criticised this practice, claiming that it allows overseas operators to undercut them. The Retail Sector Council has also called for restrictions on this loophole, stating that it is detrimental to the economy and to retailers that pay full taxation.
UK private sector growth signals economy in recovery
Activity across the UK’s private sector has grown steadily this month, providing further signs that the economy has climbed out the brief recession experienced last year. The S&P Global/CIPS flash UK purchasing managers’ index (PMI) reported a reading of 52.9 in March, down slightly from 53.0 in February. Chris Williamson, S&P Global Market Intelligence’s chief business economist, said it was encouraging to see “more broad-based expansion, with a sustained increase in service sector activity accompanied in March by signs of a tentative return to growth for manufacturing output.” Thomas Pugh, an economist at RSM UK, said: “We expect the economy to gradually pick up steam over the rest of the year as lower inflation, falling interest rates and tax cuts boost consumer spending.”
Bank of England holds rates at 5.25%
The Bank of England left interest rates unchanged at 5.25% on Thursday arguing that, despite figures showing inflation had fallen to 3.4%, it needed to see more progress. “In recent weeks we’ve seen further encouraging signs that inflation is coming down,” Governor Andrew Bailey said. “We’re not yet at the point where we can cut interest rates, but things are moving in the right direction.” Following the announcement, markets priced in three 0.25 percentage point cuts from the BoE this year, which the traders expect to begin by June.
In two months they have gone from guiding to higher rates, to guiding to cuts, with investors looking to June’s announcement.
Markets
Stocks are headed for their best week of year after central bank meetings spurred hopes a pivot in the summer toward looser policy. The MSCI’s global index of shares has climbed more than 2% this week so far, while the S&P 500 was poised for a 2.4% advance, the most since mid December with US indexes hitting fresh new highs!
The FTSE 100 advanced by nearly 2% and came within touching distance of 7900 after the Bank of England kept interest rates on hold at 5.25% (update this morning it broke right through 7900) . Although policy makers kept interest rates on hold, unlike a month ago when two members of the nine-strong rate-setting monetary policy committee (MPC) pushed for an increase, eight members this time voted for a hold. The ninth member of the panel again backed a cut of 0.25 percentage points.
The dollar extended its gains against major peers, rising 0.3% and headed for its best week in two months.
Retail
UK Retail Sales were flat on-month in February, after a lofty boost in January, new data on Friday showed. According to the Office for National Statistics, UK retail sales were flat on-month in February, following a 3.6% boost in January. January’s figure was upwardly revised from 3.4%. February’s retail sales figure was predicted to show a fall of 0.3%, according to FXStreet, so the actual figure beat market consensus.
Government borrowing rose by £8.4bn last month
New figures from the Office for National Statistics show government borrowing rose by £8.4bn last month, more than £3bn lower than the same time last year but £2.4bn higher than economists had predicted. An increase in revenues from income and corporation tax sent receipts up by £7.2bn to £86.4bn, but debt interest spending remains well above the historic average at £6.8bn. Government borrowing so far this year comes in at £106.8bn. Ruth Gregory, deputy chief UK economist at Capital Economics, said: “Borrowing in March will have to come in at just £7.2bn for the OBR’s full-year forecast of £114bn to be met. Given that borrowing last March was £16.9bn, that seems very unlikely.”
Over a million workers on zero-hour contracts
New research shows that a record 1.1m Britons are working on zero-hour contracts, up 136,000 on the previous year. The study by the Work Foundation found that only 6% of employees on zero-hour contracts were in “secure employment with regular income and access to rights” while about three quarters suffered financial insecurity and lacked basic worker protection. Alice Martin, head of research at the foundation, said: “While they may provide ad-hoc flexibility for a small minority of professionals who actively choose this way of working, our analysis suggests that for the vast majority, these contracts represent precarity.” She added: “Other nations have already either banned zero-hour contracts or heavily regulated their use, so we need to catch up and find a better balance between workplace security and flexibility.”
Apple
Apple are being targeted by regulators on both sides of the pond, unnerving investors, with fines and regulations threatening Apple’s position. Across the pond, the US Justice Department and 16 attorneys general are taking action over violations of antitrust laws. And here in Europe, Apple facing investigations in connection with the EU’s Digital Markets Act. The share price slid 4.1% yesterday, erasing about $113 billion in market value and taking their year-to-date loss back to 11%.
Small business leaders lose trust in Tories, poll shows
More than two thirds of British small business leaders believe that the Tories have lost the trust of the business community, according to a new poll by Opinium. The survey also found that 60% of small-scale entrepreneurs think that the last few years of chaotic government have damaged their businesses, and two-thirds of small business leaders believe that Rishi Sunak and the Conservatives are out of ideas. The figures come as senior industry leaders have warned that Labour’s plans to shake up employment rights could lead to more insecure jobs. Labour’s proposed “new deal” would ban zero-hours contracts and allow employees to claim unfair dismissal from day one at work. Business figures argue that this could result in longer probation periods, more fixed-term contracts, and an increase in the use of agency staff. Shadow Business Secretary Jonathan Reynolds has been hosting “roadshows” to improve Labour’s relations with entrepreneurs and has stated that Labour’s plan will give small and medium-sized businesses the support they need to succeed.
Tories oversee largest ever setback to living standards
The Institute of Fiscal Studies (IFS) has warned that the UK’s middle and high income households will have suffered the worst hit to living standards since the 1960s under the Conservatives. Analysis of official data by the IFS showed that incomes of these households were around 1.6% lower in 2022-23 than in 2019-20. By the end of this parliament, they are on course to have experienced the largest decline in living standards since records began in 1961. Incomes for the poorest third of households have suffered a 0.1% fall over the same time, one of the worst on record. The IFS said 2m more people are facing food poverty, bringing the total to 7.3m, and over 4.3m more people cannot afford to heat their home bringing that number to 7.2m. Sam Ray-Chaudhuri, an economist at IFS, and author of the report, said: “With further poor income growth forecast, and an unenviable fiscal position, bringing about a substantial improvement in living standards will be a significant challenge for the next government.”
Women could miss out on compensation over state pension age change
Women born in the 1950s who were affected by a change in the state pension age are owed compensation, a long-awaited official report has said. The Parliamentary and Health Service Ombudsman (PHSO) recommended payouts of between £1,000 and £2,950 a person – although this falls far short of the £10,000-plus that Waspi (Women Against State Pension Inequality) campaigners were calling for. Depending on the numbers affected, the total bill could still end up being in the billions of pounds – more than £10bn if all women born in the 1950s were compensated. However, both Rishi Sunak and Sir Keir Starmer have failed to endorse the report’s recommendations over concerns about the cost to the taxpayer of the compensation bill.
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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.
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.