Business news 22 November 2024
Debt interest payments deepen UK’s financial woes. Inflation woes hit hospitality sector. Labour seeks tips from Blackrock on boosting growth. Consumer confidence improves but still negative. Plus markets, insolvencies & more business news that we thought would interest our members.
James Salmon, Operations Director.
Edited for breaking news: UK PMI’s show stagnation
The UK private sector slipped from solid growth to stagnation after the budget as a closely-watched survey showed firms gave a “clear thumbs down” to UK Chancellor Rachel Reeves’ fiscal plans. The Services PMI’s fell from 52 to 50 in October against expectations of 52. The UK Manufacturing PMI’s falls to 48.6 from 49.9 in Oct against surveys pointing to 50. The composite index fell from 51.8 to 49.9 against surveys indicating 51.7.
Debt interest payments deepen UK’s financial woes
UK Government borrowing reached £17.4bn in October, the second highest for the month since records began in 1993. This figure exceeded economists’ expectations of £12.3bn and marked a £1.6bn increase from the previous year. Central government debt interest payments also surged to a record £9.1bn, exacerbating the fiscal challenges for Chancellor Rachel Reeves. Alex Kerr from Capital Economics remarked that the “disappointing” figures highlight the fiscal hurdles ahead, suggesting that tax increases may be necessary to support future spending.
Inflation woes hit hospitality sector
October’s inflation rate of 2.3% has raised alarms within the hospitality sector, which is already grappling with various challenges. Sophie Michael, head of retail and wholesale at BDO, noted that businesses are facing “inflationary pressures as a result of their own supply chain.” UK Hospitality predicts a £3.4bn cost increase due to rising national employer contributions, with chief executive Kate Nicholls warning that this will “impact jobs and push up prices.” The situation is exacerbated by geopolitical tensions and potential tariffs, leading to increased operational costs. Consumer confidence has also dipped, further complicating the landscape for hospitality firms.
Labour seeks tips from Blackrock on boosting growth
The Labour Government met with BlackRock chief executive Larry Fink at Downing Street on Thursday as the Prime Minister sought insights into making the UK more investible.
Consumer confidence improves but still negative
The GfK consumer confidence index increased by three points this month, now standing at minus 18, indicating a slight recovery despite remaining in negative territory. Neil Bellamy, GfK consumer insights director, noted: “There was evidence of nervousness in recent months as consumers contemplated the potentially worrying impact of the UK Budget.” Confidence in personal finances improved to minus one, while expectations for the general economic situation rose to minus 26. Linda Ellett, UK head of consumer, retail and leisure markets at KPMG, highlighted that consumer confidence remains variable, influenced by inflation and interest rates. She stated: “Early indications are positive on the impact the Black Friday and Cyber Monday period could have.” Retailers are hopeful for increased spending as the festive season approaches.
Retail comes in short of expectations
UK Retail Sales Growth fell short of expectations last month, numbers on Friday showed, as non-food sales were hurt by pre-budget uncertainty. According to the Office for National Statistics, UK retail sales volumes rose by 2.4% on-year in October, easing from a 3.2% climb in September and falling short of the FXStreet cited consensus of 3.4%. September’s growth was downwardly revised from an initially reported 3.9% rise. Retail sales fell 0.7% in October from September.
Energy bills to rise
High Energy bills are the new normal. Energy bills for a typical household will rise again in January. A typical household will pay £1,738, or £21 a year more, with bills now over 50% higher than pre-Covid levels.
Labour’s tax raid threatens youth jobs
Pubs play a crucial role in youth employment, the Sun reports, providing jobs for one in ten young people, with over half of bar staff under 25. However, the British Beer and Pub Association (BBPA) warns that the recent rise in National Insurance contributions could significantly impact this sector. The annual cost for employing under-25s is expected to jump from £82m to £153m. BBPA chief Emma McClarkin stated: “Our industry helps younger people build skills, grow in confidence, and fund university education,” urging the Government to reconsider the new employment costs.
John Lewis boss demands business rates reform
Nish Kankiwala, the outgoing boss of John Lewis, has called for a “radical” overhaul of Britain’s business rates system, citing a “two-handed grab” from private enterprise by the Chancellor. He warned that the group, which includes Waitrose, faces “tens of millions” in additional costs due to the recent Budget, which introduced a £25bn National Insurance tax increase and higher business rates. Kankiwala stated: “If they could delay the national insurance… and fundamentally bring forward a radical reshaping of business rates, I think that will make a massive difference.” Retailers are bracing for a £140m rise in business rates in April, with over 80 leading retailers warning that the tax hike could lead to store closures and job losses.
Markets
Yesterday, the FTSE 100 closed up around 0.5% with the ongoing Ukraine conflict pushing oil and gold prices higher. In Europe, Paris was up 0.3%, while Frankfurt added 0.7%. Overnight in the US the S&P 500 rose 0.53% to 5948.71 and the NASDAQ rose 0.03% to 19872.42.
US Unemployment Claims fell last week, Department of Labor figures showed on Thursday. Some 213,000 new initial claims were filed over the course of last week, marking a 6,000 decline on the previous week’s 219,000. Expectations had been for 220,000 initial jobless claims, implying fewer layoffs than anticipated were made and in turn suggesting the US job market remains healthy.
Nvidia beat on both the top and bottom lines in its quarterly results. Revenue came in at $35.08 billion, up 94% year-on-year and exceeding the $33.16 billion forecast by LSEG analysts. Earnings per share was 81 cents adjusted, also above analyst expectations.
This morning on currencies, the pound is currently worth $1.255 and €1.202. On Commodities, Oil (Brent) is at $74.75 & Gold is at $2696. On the stock markets, the FTSE 100 is currently up 0.69% at 8205.5 and the Eurostoxx 50 is up 0.6% at 4785.
The Euro has fallen to its lowest since 2022 ($1.039) as bets on ECB rate cuts surge with markets pricing a 50% chance of a half point rate cut in December with the EU manufacturing PMI’s falling to 45.2 and services to 49.2.
Gensler to step down as SEC chair
The chairman of the US Securities and Exchange Commission, Gary Gensler, is to step down when Donald Trump takes office on January 20. His replacement is expected to begin deregulating, particularly in the area of crypto, with rules already proposed but not finalised by Gensler likely to be discarded. Gensler’s announcement gave Bitcoin a boost with the digital asset trading slightly above $98,000 on Thursday afternoon. Meanwhile, a federal judge in Texas has struck down the SEC’s overhaul of Treasury dealer rules adopted earlier this year, finding that the agency had overstepped its legal authority in issuing the regulations.
Inheritance tax receipts soar again
Inheritance tax (IHT) receipts in the UK have surged to £5bn between April and October this year, marking a £500m increase from the previous year. This rise follows significant changes introduced in the Autumn Budget, including a flat rate of 40% on estates exceeding £325,000 and new rules affecting inherited pension pots from April 2027. Alex Davies, chief executive of Wealth Club, stated that the tax “was already an absolute cash cow” and warned that the recent changes would exacerbate the situation, particularly impacting farmers and business owners. Critics, including Sir James Dyson, have condemned the Budget as “ignorant” and detrimental to family businesses. Rachael Griffin from Quilter noted that the upward trend in IHT receipts highlights the urgency for individuals to reassess their estate planning strategies in light of the new regulations.
Chancellor denies farming exemption claims
The Government has denied claims that farmers aged 80 and over could be exempt from new inheritance tax rules. The Guardian reported that the move could have come after a crisis meeting between Chancellor Rachel Reeves and Sir Keir Starmer, the Prime Minister, following protests in London on Tuesday. But Downing Street has denied an emergency meeting on the issue took place and a source close to the Chancellor said there would be no exemptions.
Royal Mail
International Distributions Services, the parent company of Royal Mail and General Logistics Systems, reported a return to profit for the first-half of its financial year, despite facing significant cost pressures from rising national insurance contributions. The group reported a pretax profit of £4 million for the 26 weeks to September 29, a turnaround from the £194 million loss in the same period last year.
City remains committed to diversity initiatives
The Telegraph reports on how UK financial firms are sticking with DEI initiatives despite being forced to cut costs. This contrasts with US companies, which have been ditching diversity schemes at a rate which is only set to increase under Donald Trump’s administration. Linklaters predicts that Labour’s overhaul of worker’s rights “could spark a renewed wave of enthusiasm for DEI” as new laws will allow unionised staff to take part in diversity programmes during working hours. The paper notes a UK study raising concerns over the effectiveness of DEI initiatives. A report led by diversity campaigner Simon Fanshawe warned that companies are “suffering from a dominant EDI ideology that silences opposing perspectives” with bosses noting “deep divisions and resentment as a result of staff being separated into identity-based groups”.
Woking BC apologises for financial failings
Woking Borough Council has issued an official apology to residents for its past financial mismanagement, which resulted in debts of £2bn. During a meeting discussing the public interest report by auditors Grant Thornton, council leader Ann-Marie Barker acknowledged the community’s anger, stating: “I very much understand resident anger.” The report highlighted “poor” accounting practices and significant mistakes in governance and decision-making. Following its declaration of effective bankruptcy in June 2023, the council has raised council tax and cut services. Government-appointed commissioners are now assessing the situation and determining if further investigations are needed
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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.