Business news 23 April 2024

Trade deficit widens despite growth in services exports. Interest rate predictions. FTSE 100 new high. Most managers support Labour’s workers’ rights reforms. Growth in starting pay slows & more business news that we thought would interest our members.

James Salmon, Operations Director.

Trade deficit widens despite growth in services exports

Office for National Statistics (ONS) data shows that the UK’s trade balance – how much the UK exports versus how much it imports – has widened from 0.2% of GDP in 2010 to -2.2% in Q4 2023. This comes despite exports from the services sector growing by 3.8% a year between 2010 and 2019. The ONS data also shows a widening trade deficit with the EU, from -1.1% of GDP in 2010 to -4.5% at the end of last year. Weakness in goods exports has been a driving factor in the worsening trade balance with the bloc. The ONS report says: “After narrowing markedly during the pandemic period, the UK’s trade deficit with the EU appears to have resumed its previous pattern of gradual widening seen over the previous decade.”

Interest rates predicted to fall to 4.5%

Interest rates have been predicted to fall to 4.5% this year, with the EY Item Club forecasting a fall of 75 basis points in 2024. EY, which expects the first reduction in rates to come in June, also predicts that the economy will grow by 0.7% in 2024. While this was a downgrade from the 0.9% previously predicted, EY upgraded its forecast for 2025 from 1.8% to 2%. Hywel Ball, chairman of EY UK, said: “Although growth in 2024 is forecast to remain subdued, we still expect this year to mark a turning point for the UK economy and provide a launchpad for a far brighter 2025.” EY economist Peter Arnold said: “The UK may have slipped into a mild technical recession at the end of 2023, but there are still indications that the UK’s extended period of economic stagnation has already started to draw to a close.”

Most managers support Labour’s workers’ rights reforms

More than 70% of managers support Labour’s proposed changes to employment law, including flexible working and family-friendly policies, according to a survey by the Chartered Management Institute (CMI). The survey also revealed that 80% of managers believe workers’ rights should be a top priority in national policies. Labour has pledged to bring in its “new deal for working people” within 100 days of winning power. It includes a ban on zero-hours contracts and “fire and rehire” practices, as well as ensuring workers have rights such as sick pay and parental leave from the first day of employment. Other proposals include the “right to switch off” to protect employees’ work-life balance.

Growth in starting pay slows

Starting pay in London is rising at the slowest pace since during the pandemic, according to the latest London Labour Market Pulse Check. The survey, published by KPMG and the Recruitment and Employment Confederation, shows the lowest rate of growth in starting salaries for 37 months. The report saw a reading of 53.6 for permanent starting salaries and 50.2 for temporary roles, on a scale where a reading of 50 represents stagnation. For hiring, the reading for the number of permanent placements came to 44.5. This marks the 18th consecutive month of decline. Anna Purchas of KPMG said: “The persistent economic uncertainty has meant employers delaying investment decisions, including hiring staff, and we’re seeing this slow down wage growth.”

Markets: FTSE 100 closes at new record

The FTSE 100 enjoyed a very positive day yesterday on a mix of easing tensions, strong financials and ongoing M&A activity. The FTSE 100 closed up 128 points at 8023.87, a new all time end of day high, up 1.62%, compared the Eurostoxx 50 which climbed 0.38%.

The previous end of day high was 8012.53. During the day, the index traded at 8,040, just short of the high 8,047 it reached in February 2023. Susannah Streeter, head of money and markets at broker Hargreaves Lansdown, said: “London’s blue-chip index has had a surge of power as heightened geopolitical tensions have eased, and investors assessed the brighter prospects for the UK economy, with interest rate cuts spied on the horizon.”

Overnight the S&P 500 climbed 0.87% to 5010.60 snapping a six day losing streak. The rebound was lead by tech stocks and the Nasdaq was up 1.11%

The oil price slipped to around $87 a barrel as traders turned their focus to inflation, with tensions in the Middle East having so far left actual supplies unperturbed. In fact this morning, Brent has climbed to $88. Gold dropped more than 2% as investors went back to riskier assets. This morning Gold is at $2304.

The pound buys $1.236 and €1.159.

Attention now moves to today’s PMI announcements.

No UK firms in 50 largest listed companies

There are now no UK companies among the top 50 largest listed companies in the world, as the British economy has struggled to compete with the dominance of American tech firms. Only three UK listed companies have made the list of the top 100 companies in the world, with all losing places in the ranking since last year, data from PwC has revealed. Shell, the largest UK company, sits at 53, three places lower than in March 2023. Meanwhile, Astrazeneca fell to 55, dropping 11 places since last year, while HSBC fell five places to 93. Unilever, which ranked 84 in 2023, fell out of the top 100 this year as its stock price dropped 13%.

AIM loses 70 companies in a year

The number of companies delisting from London’s Alternative Investment Market (AIM) has jumped by 62% year-on-year, with research from UHY Hacker Young showing that 76 companies delisted in the last year. The reasons for delisting included high compliance costs, low share prices, and financial stress or insolvency. Colin Wright, partner and group chair at UHY Hacker Young, said: “The London Stock Exchange has taken a number of steps in recent years to improve the quality of AIM listings, however, it is worth keeping those measures under regular review to see how much value investors really think they provide.” Marcus Stuttard, the head of AIM and UK primary markets at the London Stock Exchange Group, said: “AIM continues to be a pre-eminent global growth market and the most active in Europe. That position is not taken for granted and the comprehensive reform agenda currently under way will build on the existing strengths of the UK’s capital markets including AIM.”

London venture capital funding halves

London venture capital funding fell to its lowest level since 2018 during Q1, with analysis by KPMG showing that just $1.7bn was raised. This is down from $3.7bn in Q4 2023. The study shows that the number of London venture capital deals also fell, from 370 in Q4 2023 to 279 in the opening three months of 2024. Globally, venture capital investment fell slightly to $75.9bn in 7,520 deals throughout the quarter, compared to $83.8bn in 9,458 deals in the last quarter of 2023. European venture funding rose in the quarter to $17.9bn, although the number of deals fell from 2,419 to 1,798. Nicole Lowe, UK head of KPMG’s emerging giants practice, said: “It’s clear that the oversupply of capital and record levels of VC investment that the UK experienced in 2021/22 were a reaction to the pandemic and very much an outlier period.”

Government Borrowing

UK Government Borrowing was higher than forecast in the last financial year, according to official figures. Borrowing reached £120.7bn in the year to March, the Office for National Statistics said. While it is lower than the previous year, it was £6.6bn more than the government’s forecaster predicted.

Royal Mail

Royal Mail owner International Distributions Services has again urged that its requirement to deliver letters six days a week be dropped. Third-largest investor Redwheel had called for such changes over the weekend, following an “opportunistic” takeover attempt by West Ham co-owner Daniel Křetínský. Royal Mail’s universal service obligation, legally requiring the letter service, had left the company undervalued and “vulnerable to corporate predators,” Redwheel said.

Thames

Thames Water has requested Ofwat allow prices to rise 44% over the next 5 years to help it cope with repairing leaks and high levels of pollution in River Thames.

JD Sports

JD Sports are buying US retailer Hibbett for $1.11 billion

IHT exacerbating housing crisis, say building societies

Inheritance tax is making the housing crisis worse, according to building societies, with a report from the Building Society Association (BSA) suggesting that Britain’s property tax system is “ineffective” and incentivising older homeowners to remain in larger homes. Lenders have called on ministers to review inheritance tax, arguing that tax breaks on family homes are encouraging homeowners to remain in larger homes in later life to capitalise on the allowances. They argue that reforms could free up homes and help younger buyers onto the property ladder. Paul Broadhead, head mortgages and housing policy at the BSA, said: “We want the Government to remove as much tax friction as possible at the point of sale, to improve liquidity in the market and free up more stock.” He added that “introducing more liquidity into the market allows families to keep moving up and down the ladder and this – in turn – does free up more first-time buyer homes.” The BSA also made a series of other recommendations, including a regulatory change which would allow lenders to issue more 5% deposit mortgages.

First-time buyers face toughest conditions in 70 years

Those looking to get onto the property ladder are facing the toughest conditions in 70 years, according to the Building Societies Association (BSA). The report says that first-time buyers are increasingly reliant on having two high incomes or receiving parental support, with some would-be homeowners priced out and “stuck” renting. The report calls for more “flexibility” in regulation and suggests that the Government should commission a review of the first-time buyer market. Paul Broadhead, head of mortgage and housing policy at the BSA, said: “Becoming a first-time buyer is possibly the most expensive it has been over at least the last 70 years.”

Latest Insolvencies

Appointment of Liquidator

ASHBURN WEALTH MANAGEMENT LIMITED
HALO PHOTONICS LIMITED
ORL PUB LIMITED
BROOKHOUSE SWINDON (LEASING) LIMITED
APPAREO LIMITED
FABER CONSTRUCTION SERVICES LIMITED
COVAX PROPERTIES LTD
ALMACANTAR EDGWARE CONSTRUCTION LIMITED
48-50 WESTERN ROAD RESIDENTIAL LIMITED
ERITON ENERGY LIMITED
TEATREE ADVISORY LIMITED
BROOKHOUSE SERVICES LIMITED
BROOKHOUSE (YSTALYFERA) LIMITED
MELTON AIR CONDITIONING LIMITED
BROOKHOUSE LEASING LIMITED
BROOKHOUSE (PETERBOROUGH) LIMITED
ANGEL BAR & GRILL LIMITED
RELIANCE ENABLEMENT LIMITED
JOHN WILLIAMS STUDIOS LIMITED

DENBIGHSHIRE EDUCATION FOUNDATION TRUSTEE LIMITED
HILLSIDE GARAGE LIMITED
ERNIE MEW & SONS LIMITED
DAF HOLDINGS LIMITED
NS INFOSYSTEMS LTD
QUALITY HOME SOLUTIONS LIMITED
AG COMMERCIAL CONSULTING LTD
LEE MANNING CONSULTANCY LIMITED
LPS (OXFORD) LIMITED
L. M. ABLE CONSULTING LTD
LIBERA PM CONSULTANCY LIMITED
DIRECT COMMONWEALTH MEAT COMPANY LIMITED
D&C LEGAL CONSULTANTS LTD
OXLEY ACTUARIAL SERVICES LTD

Appointment of Administrator

THIRLMERE DEACON LLP
FEATHERFOOT CUTHBERT HOUSE LIMITED
LOWTON MOTOR COMPANY LIMITED
MOUNT GROUP STUDENT VISTA LTD
WATERFIELD DEVELOPMENTS BLACKBURN LTD.
OLYMPIUS DEVELOPMENTS LIMITED
LOVE NURSING LIMITED

ELITE EMERGENCY MEDICAL SERVICES LTD

Winding Up Petitions

ELM FARM COUNTRY HOUSE LIMITED
CLICK ABOVE LIMITED
J O’HALLORAN CQS (COVENTRY) LIMITED
PURITY LTD
A&K RESTAURANTS LTD
OIL AND GAS OPERATIONS CONSULTING (OGOC) LTD

NEW VIEW WINDOW SYSTEMS LIMITED
PORTKIL SEAVIEW ESTATES LTD.

Winding Up Order Notices

TIMESHARE LEGALS LIMITED
COMPLETE CARE SERVICES (ROSSENDALE) LTD
ICE HAIRDRESSING OXFORD LTD
ALL CONSTRUCTION CONTRACTORS LTD
IBUSINESSCOACH LTD

CONSTRUCTION CUBED LIMITED
MODUS PARTNERSHIPS LIMITED
MP MEDIA LIMITED
JM TRUCKING LIMITED
PEDRO & BROS TRANSPORTERS LTD
WHARFEDALE FACILITIES MANAGEMENT LIMITED
BEST OF LONDON LIMITED
FB COVENTRY STREET LTD
A.S.E. DESIGN AND BUILD LTD
HIRA CASH AND CARRY LTD
A1 SPRINKLERS LIMITED
DGOC LIMITED
OWO AND SONS LTD

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.