Business news 23 February 2024
PMI data suggests the recession is already over. UK factories inflation, talent luring pay rises fall, markets, digital training, MTD extended, insolvencies & more business news that we thought would interest our members.
James Salmon, Operations Director.
PMI data suggests the recession is already over
Economists say the recession may already be over and predict that inflation could soon fall to 0%. This came as data revealed that the private sector has grown at the fastest rate in nine months. The S&P Global Flash PMI hit 53.3 in February on an index where a reading above 50 represents expansion.
February’s reading was up from the 52.9 recorded in January and is the highest since May.
For the service industry, February saw a reading of 54.3 and while the manufacturing sector saw output continue to decline, the score of 47.3 is an improvement on January’s reading.
With the overall PMI in positive territory for four consecutive months, economists say GDP is almost certain to increase in Q1, marking a reversal on the downturn recorded in the second half of 2023.
Chris Williamson, chief business economist at S&P Global Market Intelligence, commented: “The survey data points to the economy growing at a quarterly rate of 0.2%-0.3% in the first quarter of 2024, allaying fears that last year’s downturn will have spilled over into 2024 and suggesting that the UK’s recession is already over.”
Michael Brown, a market analyst at Pepperstone, said the PMI figures “further serve to dispel some of the doom and gloom that has surrounded the UK economic narrative of late, particularly after Q4 GDP data confirmed the onset of technical recession at the tail end of 2023.” Reflecting on the data, Alex Kerr, UK economist at Capital Economics, suggested that inflation may soon hit 0%.
UK factories see highest selling price inflation since July
British manufacturers raised prices by the most since July 2023 in February, according to figures from the Confederation of British Industry (CBI). Expectations for average selling price inflation rose to +17 this month, up from +9 in January. Meanwhile, the CBI’s monthly order book balance increased to -20 in February from -30 in January, with these below the long-run average of -13. The survey’s measure of output expectations for the next three months dropped to +4 in February from +7 in January. CBI deputy chief economist Anna Leach said: “UK manufacturing conditions remain challenging, with lower output volumes widely reported across the sector this month. But there were also some hopeful signs.”
Digital training programme to boost businesses
A new Government-funded programme to boost small business growth will give entrepreneurs free access to digital training and tools until 2025. The London E-Business Support Programme, created by Business for London, will offer one-on-one digital training sessions to over 1,000 SMEs in the capital. Despina Johnson, chief executive of Business for London, said bespoke advice and guidance from experts in their fields will help owners to make “vital changes to maximise their potential and transform their businesses for the digital age – enabling them to grow and thrive.” Howard Dawber, the Deputy Mayor for Business, said embracing technology will help businesses navigate the “cumulative effects” of Brexit, the pandemic, and the cost-of-living crisis.
Companies no longer offer big pay rises to lure talent
People changing jobs are experiencing smaller pay increases, with companies no longer offering big pay rises to attract talent. Hays, one of Britain’s largest recruiters, said that while pay increases of 20% for job changes were “commonplace” two years ago, a rate of around 5% is now more likely. The firm said a global slowdown in hiring has been deepened by this trend, as workers are less willing to move without a significant pay rise. James Hilton, Hays’s finance director, said: “In the great resignation, employers were screaming out for talent and were prepared to pay accordingly,” adding: “We’re now at much more normal levels of pay increases for changing jobs.” Dirk Hahn, Hays’s chief executive, added that many workers were “happy just having a job” amid reductions at some firms.
Consumer Confidence
UK consumer confidence fell in February, indicating reluctance to spend despite economic recovery signs. GfK’s key indicator dipped 2 points to minus 21, breaking a three-month uptrend. Economists anticipated minus 18 on average. Small business owners should brace for cautious consumer spending amid ongoing uncertainties.
Energy bills
According to Ofgem, average energy bills are set to fall to the lowest level in two years in April, fallinging 12% to £1,690. The cut should help bring down inflation below 2%. However, the last two years energy bills leave a huge wake, with a massive three million households currently in debt to their energy supplier. And household bills remain more than a quarter higher than before Russia invaded Ukraine.
Nvidia drives the Markets
The three major US indexes all closed at records highs, as the Nvidia results drove market exuberance to new levels. After beating predicted results, the AI enabling chipmaker’s shares surged by 16%, adding $277bn to its market value, the biggest single day increase ever.
The NASDAQ closed up 2.96% at 16041.62, the S&P closed up 2.11% at 5087.03 and the Dow Jones closed up 1.18% at 39,069.11. At the time of writing the UK FTSE 100 market is flat at 7685 and the Euro Stoxx 5o is up a modest 0.1% as Europe pays the price for not having a meaningful tech sector.
The pound is at 1.17 euros and 1.267 Dollars. Brent oil is down 1% at $82.7. Gold is at $2022.
HMRC extends MTD to landlords and sole traders
As of 2027, HMRC will extend its Making Tax Digital (MTD) programme to landlords and sole traders with income over £30,000. The tax office announced plans for MTD in 2016 but has faced numerous delays over the years. There are now concerns that the extension of MTD for the self-employed will only exacerbate delays. Since 2019, MTD for VAT has been mandatory for all VAT-registered businesses above the £85,000 threshold and those that have voluntarily registered. HMRC is also in the process of moving all self-assessment returns online. MTD for Income Tax Self Assessment (ITSA) is set to replace the current system, so landlords and the self-employed will need to submit statements quarterly too. HMRC has now confirmed that all businesses and landlords earning over £50,000 will have to join MTD for ITSA from April 2026. This threshold will then fall to £30,000 the following April. HMRC expects that around 780,000 people with business or property income over £50,000 will join MTD for ITSA from April 2026, with a further 970,000 joining from April 2027. Analysis shows that landlords and business owners will have to pay £196m a year in order to comply with HMRC’s digital tax drive. Richard Wild of the Chartered Institute of Taxation said the latest figures are “evidence of a growing recognition by HMRC that the ongoing financial costs of MTD to business are much higher than they originally estimated, and those now in scope should expect to incur ongoing costs rather than generating efficiency savings.”
First-time buyers paying below market average
Zoopla analysis shows that first-time buyers are purchasing homes below the market average, with an average price of £244,100. This is £20,300 (8%) below the local market average. Due to elevated mortgage rates, first-time buyers who entered the property ladder in the fourth quarter of 2023 are paying an average of £213 more per month compared to those who bought their first home in the fourth quarter of 2022. The average monthly mortgage payment for first-time buyers in 2023 is around £990, while it was around £777 for those who bought a year earlier. Izabella Lubowiecka, senior property researcher at Zoopla, said: “First-time buyers are in a stronger position in the current buyer’s market so we encourage them to be resourceful and assess all the options available to them.”
Britons could have just £10.71 a day in retirement
People in the UK have been increasing their pension contributions, but this may not be enough to provide a comfortable retirement income. New figures from True Potential show that the average Briton has put aside £228 into their pensions in the past three months, resulting in a monthly income of just £326, or £10.71 a day. Experts suggest that the current auto-enrolment rules, which require 8% of a person’s salary to go towards their pension, should be increased to at least 12% for a secure retirement. Additionally, it is projected that the amount needed for a comfortable retirement will more than double in 40 years. Figures from Interactive Investor show that currently, a person needs £490,000 saved up for a comfortable retirement but this could more than double to £1,081,939 in 40 years.
Latest Insolvencies
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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.