Business news 23 February 2023
James Salmon, Operations Director.
Forecasters suggest UK inflation could fall below 2% this year. UK tech firm numbers double in two years . Energy-intensive UK companies set to receive state support. Energy costs front of mind for retailers. Energy costs front of mind for retailers. And more business news.
Forecasters suggest UK inflation could fall below 2% this year
Economists are forecasting a sharp fall in inflation by the end of the year. The Bank of England previously estimated that inflation could fall to 4% in the fourth quarter of the year, but investment bank Citi said the consumer prices index (CPI) was likely to fall to 2.3% in November, while the fund manager Investec said it could slide to 1.6% by December. The predictions assume an easing in pricing pressures, particularly in energy, and a squeeze from higher lending rates on households. Martin Beck, chief economic adviser to the EY Item Club, said although such expectations are not implausible, they are put at risk by wage growth and further escalation in the war in Ukraine, which could push energy costs up again. A more rapid than expected rebound in Chinese demand for gas and other commodities could also push up prices, he added. The CPI stood at 10.1% last month.
UK tech firm numbers double in two years
Companies House data show the number of newly-created UK tech firms is up by a fifth. Some 46,474 new tech companies were created in Britain in 2022, up from 38,240 in 2021. The east midlands saw the strongest growth with a 38% increase on last year, followed by the east of England, which was up a quarter. London had a 21% increase, 1% down on the national average. The north and south west saw a 29% and 28% increase, respectively, while Yorkshire was up 30%. Ben Bilsland, a partner and analyst at audit, tax and consulting firm RSM UK, said: “This crop of early-stage businesses will need support to scale. Access to funding will be crucial and the UK government will need to ensure that UK tech is an attractive place for both domestic and overseas investment.”
Energy-intensive UK companies set to receive state support
Kemi Badenoch, the business secretary, is set to announce a new package of support for over 300 energy-intensive companies. The measures will aim to reduce the disparity in the prices for electricity for UK industry compared with EU competitors. The move follows the announcement by British Steel that it will close its coking ovens in Scunthorpe leading to the loss of 260 jobs. The company’s Chinese owner Jingye Group, which bought the firm in 2020, did not have a time frame but it is thought the closure could come before the end of the year. British Steel’s accounts for 2021 are almost two months overdue, according to Companies House, and its auditor, Mazars, resigned last year after British Steel refused to pay its proposed fee.
Energy costs front of mind for retailers
A survey by FRP Advisory of 250 retailers with at least 100 staff found 22% were not confident they would be solvent by the end of next year. Some 60% cited rising energy costs as the biggest cost pressure in the months ahead. Phil Reynolds, at FRP, said: “Inflation is pushing up operating costs and dampening consumer confidence, with the looming recession likely to ensure that conditions remain challenging for some time to come.”
UK public services need more cash to arrest further decline, says damning report
An annual review by the Institute for Government has determined that public services will require significant injections of cash if they are to be saved from further decline before the next election.
Cost of living crisis forces Brits to abandon saving
More than four in 10 people expect to save no money at all over the next year, according to figures from the Office for National Statistics (ONS). For some, living costs have risen too sharply for them to fund spending through their monthly income or by reducing savings. The ONS said: “More than a fifth of adults in Great Britain (22%, equal to around 11.5m people) reported borrowing more money or using more credit because of the increased cost of living.” The ONS added that 45% of people who have borrowed more compared to last year have been suffering higher anxiety levels.
Eco jobs growth ahead
Nearly 700,000 people are forecast to be directly working in green jobs in England by 2030, the Times’ Emma Taggart reports, rising to almost 1.2m by 2050. Anshuman Bapna, founder of Terra, a platform for climate jobs, says business demand for workers in the green sector was continuing to grow at a fast pace, with vacancies in the climate industry growing by 20% each year worldwide. Growth for green jobs in professional services is also expected to increase rapidly. PwC says it will hire more than 100,000 environmental, social and governance (ESG) consultants over the next five years to advise companies on sustainable practices.
HMRC reminds VAT registered businesses to file their VAT returns
HM Revenue and Customs (HMRC) is reminding Value Added Tax (VAT) registered businesses to file their VAT returns and pay on time, ahead of new penalties being applied. The new penalties will be fairer and more proportionate for businesses who submit their VAT returns or pay their VAT late, HMRC says. The first monthly returns and payments affected by the penalties are due by 7 March 2023. Paul Riley, director of Tax Administration, HMRC, said: “Our aim is to help customers get things right before monetary penalties are applied; a points-based system for late VAT returns will not punish the occasional error. We are contacting 2.5m VAT registered businesses about the changes and will continue to support customers to help them manage their tax affairs and payments.”
Plans for UK foreign influence register face review after outcry
The UK Government’s proposed Foreign Influence Registration Scheme is under review after the EU and the US warned it could harm investment. Although the scheme is similar to legislation in the US and Australia, businesses say it would lead to a “lot of extra and unwelcome red tape” while EU diplomats say the rules are “outrageous” and would restrict normal dialogue with the government on issues ranging from business to cultural programmes. The scheme has been introduced to the UK Parliament via an amendment to the National Security Bill and will increase the transparency of political influencing activity being carried out for a foreign power or entity, the Government said in October.
BT joins growing opposition to corporation tax increase
The Chancellor has been warned by the telecoms giant BT that a proposed increase in the corporation tax rate in April from 19% to 25% would be catastrophic for investment. Jeremy Hunt will send Britain in a “drastically anti-investment direction” if he goes ahead with the plan, Simon Lowth, BT’s chief financial officer, said. He joins Ineos boss Sir James Dyson and Tony Danker, director-general of the Confederation of British Industry, in criticising the policy. Meanwhile, analysis by the Centre for Economics and Business Research (CEBR) suggests that the increase in corporation tax will hit the economy by around £45bn over the next decade as growth and productivity slows and a recent recovery in business investment goes into reverse. Douglas McWilliams, the CEBR’s deputy chairman, said: “A lot of business investment is now in software and new systems, so a lot of the potential new investments are very heavily tech based. And if you don’t make these investments, the tech sector won’t expand and that has an impact on productivity, because tech is one of the most productive sectors in the country.”
Thousands of people entitled to £6,000 cash back due to DWP error
Hundreds of thousands of women could be entitled to £6,000 cash back after being underpaid their state pension. An error by the Department for Work and Pensions (DWP) means many married women and widows may have been underpaid. Those who should check include married women, widows and divorcees who reached state pension age before April 2016, as well as women over the age of 80 on a low pension, regardless of their marital status.
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The Credit Protection Association – Prompting Punctual Payments – Ethical, Effective, Efficient, Economical collections.