Business news 23 May 2023

James Salmon, Operations Director.

Rising insolvencies. Wilko could shut. Soaring crime rates drive US tech execs to UK. UK firms recruiting skilled workers from Africa and Asia. And more business news that we thought would interest our members.

Rising insolvencies mean Begbies Traynor expects double-digit revenue growth
Begbies Traynor, the Aim-listed restructuring adviser, expects to see double-digit revenue growth of 11% to £122m for the year ended April 30. Profit before tax is also expected to increase by 16% to £20.7m. The company has seen good momentum in new appointments to handle company insolvencies and a significant increase in higher value cases. Restructuring firms are likely to see greater activity this year as more companies try to negotiate debt terms at higher interest rates and navigate higher business costs. Ric Traynor, executive chairman, said the company performed strongly in the financial year, with results ahead of market expectations, aided by their increased scale and enhanced reputation in mid-market insolvency. “A better-than-expected trading update from corporate restricting group Begbies Traynor is good news for its shareholders, but typically a negative sign for the state of UK business,” Russ Mould, investment director at AJ Bell, said.

Wilko could shut stores as firm considers CVA
UK discount chain Wilko is considering a major restructuring that could involve the closure of stores and a possible company voluntary arrangement (CVA). CEO Mark Jackson said: “We announced the start of our turnaround programme to drive Wilko forward in January, complete with a new streamlined senior team and a strategic plan to first stabilise the business and then implement a growth strategy. We’re in the early stages of the turnaround and, as is usual, the directors continue to explore all options for Wilko’s long-term future.” The chain reportedly approached advisers at PwC to explore options.

Soaring crime rates drive US tech execs to UK
A report from Coutts bank warns that rising crime rates in Silicon Valley are leading tech entrepreneurs to leave San Francisco in favour of London. Homicides are up 25% so far this year while robberies are up by 15%. San Francisco was recently shocked by the murder of Cash App funder Bob Lee, prompting Twitter boss Elon Musk to describe “violent crime” in San Francisco as “horrific”. Knight Frank concurs that the influx of tech workers from San Francisco was one of the primary reasons for an increase in American property buyers in London. In the year to April 2023, US buyers represented 7.6% of all overseas sales, up from 3.9% in the previous 12-month period, according to the estate agency.

UK firms recruiting skilled workers from Africa and Asia
Figures show that UK firms are recruiting skilled workers from Africa and Asia to plug staff shortages. Since January 2021, the new post-Brexit migration system has made it easier for workers outside of Europe to enter the UK. India, South Africa, and Ghana are among the countries that are having success with the new skilled visa route. Businesses are making use of the new post-Brexit migration system to bring in IT professionals, nurses and accountants. The data suggests that businesses are willing to absorb the cost of sponsorship to secure the talent they need, even though the fees levied by the Home Office are high.

Fiscal drag will equal 10% tax hike for lowest earners
New research by interactive investor has found that fiscal drag will cost British taxpayers the equivalent of a tax increase of about 5% for most earners by 2028, and 10% for low-income earners. Alice Guy, head of pensions and savings at interactive investor, said: “Hidden tax rises will decimate the finances of many families over the next few years. As if the cost of living crisis wasn’t enough, taxpayers are facing a massive tax grab over the next few years as tax thresholds lag behind inflation. Blistering tax rises will hit lowest earners the hardest because more of their income is tax-free.”

AI needn’t mean mass unemployment
Erin Ling, a lecturer in artificial intelligence and the future of work at the University of Surrey, says in a piece for the Guardian that with the right government policies and lifelong learning, we can learn to work alongside AI. “Policymakers should establish tailored initiatives to assist and safeguard people in high-risk industries,” Ling says, with a focus on lifelong learning “essential”. She adds: “We need our leaders to take this moment seriously, act quickly and, importantly, balance this breakthrough’s potential benefits with the immediate human cost. We can manage the revolutionary influence of AI while assuring a positive future that benefits individuals and society as a whole.”

UK fruit exports to EU more than halved since Brexit
Exports of fruit from the UK to the EU have more than halved since Brexit, according to data released by HMRC. The decline has been attributed to the introduction of trade barriers caused by the UK’s departure from the EU, including mandatory health certificates on fresh and chilled food and customs paperwork. HMRC data shows that the barriers, in place since 2021, are already biting on the UK-to-EU side of the Brexit ledger. In the year to 31 March 2021, the UK sold £248.5m worth of fruit to the EU. But sales figures slumped the following year, when they dropped to £119m and have remained at that level since with latest tax data showing sales for the year to March 2023 of £113.8m. Chartered accountancy firm Hazelwoods, which analysed the figures, blamed a number of factors including the risk to farmers who are selling fruit, which may end up rotting if delayed by customs or phytosanitary officials in Calais and other EU ports.

Central bank involvement in rate rigging revealed
An investigation by the BBC’s economics correspondent Andy Verity has revealed that central banks including the UK’s Bank of England, the Banque du France, the European Central Bank, Banca d’Italia, Banco de Espana and the Federal Reserve Bank of New York pressured banks in the wake of the 2008 financial crisis to artificially adjust benchmark interest rates called Libor and Euribor, which track how much it costs banks to borrow money from each other. Nearly 40 traders and brokers were prosecuted by the US Department of Justice and the UK’s Serious Fraud Office for rate rigging between 2015 and 2019, but despite the FBI and the UK financial regulator being aware of the state-led drive to “rig” rates they were never shown this evidence. Banks have been fined $8.8bn for rigging Libor and Euribor. Further suppressed evidence indicates that the UK Government was also involved in pressuring banks to “manipulate” Libor, Verity says. Andrew Tyrie, who chaired the UK Treasury Committee of MPs when it enquired into Libor in 2012, told the BBC that he believed “Parliament appears to have been misled and, if that’s the case, should not let it rest.” Senior Conservative MP David Davis said that in the light of the evidence he’d seen there was “a case to believe that state agencies coerced individuals into perjury that led to false convictions”. The Bank of England called the claims “unsubstantiated” while the Financial Conduct Authority said it had met its disclosure obligations.

HMRC closes VAT registration helpline
HMRC has closed its VAT registration helpline, a subsidiary of the main VAT helpline which was dedicated to helping business owners and accountants with questions about their VAT registration application. An HMRC spokesperson said: “We are speeding up the processing of VAT registration cases by closing this helpline, which mainly deals with callers wanting an update on their registrations. Processing VAT registrations quicker will provide a better service to customers than telling them when we’ll complete their registration.”

US Debt Ceiling

The Republicans and Democrats are still in stalemate after another round of talks on Monday night, allow they called the talks productive.

Fossil fuel companies face financial risk from climate litigation
Climate litigation poses a financial risk to fossil fuel companies, according to a study by LSE’s Grantham Research Institute. The study analysed 108 climate crisis lawsuits against 98 US and European companies between 2005 and 2021, finding that the filing of a new case or a court decision against a company reduced its expected value by an average of 0.41%. The stock market responded most strongly in the days after cases against carbon majors, cutting the relative value of those companies by an average of 0.57% after a case was filed and by 1.5% following an unfavourable judgment. The study’s authors hope their work will encourage lenders, financial regulators and governments to consider the effect of climate litigation when making investment decisions. Legal experts told the Guardian they expect climate litigation to be a recurring theme in annual accounts as companies become subject to stricter disclosure rules.

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.

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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

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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?

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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!

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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.