Business news 23 June 2023

James Salmon, Operations Director.

Interest rates shock 0.5% rise. Rate rise to put 1.2 million households into insolvency. Bailey blames pay rises. Six in 10 small firms aim to simply stay afloat. And how effective is raising interest rates in bringing down inflation?  Plus more business news that we thought would interest our members.

Interest rates shock 0.5% rise

The Bank of England (BoE) caught markets by surprise, and dug deep into its arsenal yesterday and announced an interest rate hike of 0.5% as Wednesday’s hot UK inflation reading forced its hand. The BoE’s hike took the base rate from 4.50% to 5.00%, against expectations for a .25% move. Some had called for it but not many expected it, and its hard to argue it wasn’t justified.

The Bank’s Governor Andrew Bailey said the 0.5% rise was needed to bring inflation down to target, denying the Bank was attempting to precipitate a recession. “We’re not expecting, we’re not desiring a recession, but we will do what is necessary to bring inflation down to target,” he said. “Many people with mortgages or loans will be understandably worried about what this means for them… but inflation is still too high and we’ve got to deal with it,” he added.

Prime Minister Rishi Sunak admitted that the job of halving inflation – something he promised to do by the end of the year – had become harder but insisted he was fully committed to achieving that goal.

It is the highest rate in 15 years.

The Monetary Policy Committee voted 7-2 in favor of the half percentage point increase, which takes the bank’s base rate to 5%. The move defied market expectations, which had priced in around a 60% chance of a 0.25% hike.

The FTSE100 was lower in response, giving up around 0.9% in late trading. Meanwhile, the mid cap index was down around 1.3%.

Rate rise to put 1.2 million households into insolvency

According to research from the National Institute of Economic and Social Research (NIER), by the end of the year 1.2 million households or 4% of all UK households,  will run out of savings as a result of higher UK interest rates.

NIESR says the higher mortgage repayments will take the total proportion of insolvent households to nearly 30% (7.8 million).

The report also says that the rising repayments in aggregate will wipe out 0.3% of GDP, costing all households with mortgages a total of £12bn per year.

Max Mosley, an economist at NIESR said “The rise in interest rates to 5% will push millions of households with mortgages towards the brink of insolvency. No lender would expect a household to withstand a shock of this magnitude, so the government shouldn’t either. Some investment should be done in forbearance agreements, giving households and lenders the ability to create payment plans that work for each other”

He added that the rate shock awaiting households would be greater than lenders would have accounted for in stress tests.

Elsewhere, Gary Smith, partner at wealth manager Evelyn Partners, says borrowers should expect the repricing of home loans to be more dramatic and protracted after the rate rise.

Bailey blames pay rises for stoking inflation

The Governor of the Bank of England has said the current level of wage increases and high prices set by companies “seeking to rebuild profit margins” were to blame for stoking inflation.

Andrew Bailey’s comments, which came after the Bank increased interest rates to 5%, were criticised by former deputy governor Sir Charlie Bean, who said workers were rationally demanding pay rises to “compensate for the erosion in their living standards.” Acknowledging the 0.5% interest rate rise in a letter to Bailey, the Chancellor Jeremy Hunt warned that public sector pay restraint would be a key part of efforts to control borrowing.

Institute for Fiscal Studies economist Ben Zaranko said spending constraints would make public sector pay rises of above 5% tricky this year.

How effective is raising interest rates in bringing down inflation?

City AM’s Jack Barnett talks to experts about the effectiveness of raising interest rates in bringing down inflation. Thomas Pugh, an economist at RSM, said: “By increasing borrowing costs for consumers, mainly on mortgages, it reduces the amount of disposable income left to spend on other goods and services, lowering demand and reducing firms’ ability to raise prices.”

But Yael Selfin, chief economist at KPMG UK, points out that a higher interest rate environment not only means households are forced to reduce consumption, but more expensive borrowing leads companies to invest less.

Elsewhere, Suren Thiru, economist at the ICAEW, tells the Telegraph the latest rate hike may lead to a needless recession. “Raising interest rates will do little to address current inflation worries given the significant time lag between rate rises and its full impact on the real economy,” he says. “With the majority of rate rises over the past year yet to filter through to borrowers and the broader economy, by continuing to tighten credit conditions, the Bank risks over-correcting for past mistakes and unnecessarily risking recession.”

Six in 10 small firms aim to simply stay afloat

Research by PayPal found that six in 10 small business owners are worried about staying afloat. The Business of Change 2023 report surveyed 500 British SME owners and decision makers, with 43% believing adaptability is critical to success. The report found that having a presence on online marketplaces, selling via social media, reducing systems and streamlining operations, and finding new markets abroad are ways to stay afloat.

The report also found that 54% of SMEs do not have a website, 28% do not have their own social media channels, and 47% do not have a presence on online global marketplaces. Vincent Belloc, managing director of PayPal UK, said the report aimed to encourage SMEs to rethink their potential.

Sunak dismisses calls for tax cuts
Speaking at a town hall event in Kent on Thursday, Rishi Sunak poured cold water on hopes of tax cuts anytime soon, warning that spending more, paying higher wages and cutting taxes may “feel great for a day, for a week, for a month and pretty quickly it would turn out to have been a really bad idea.” The remarks came as the Bank of England sparked renewed fears of a recession by hiking interest rates from 4.5% to 5%. “I want to be honest with you, these things are tough. They require difficult decisions, but that’s what you should get from your Government. That’s what you should get from your Prime Minister, and that’s what I’m going to do,” Mr Sunak added.

Consumer confidence remains resilient

UK consumer confidence strengthened more than anticipated, reaching its strongest level in 17 months despite persistent high inflation and rising interest rates.

The market research firm GfK Ltd. reported a rise of 3 points to minus 24 in June. Analysts had expected a reading of minus 26. The report indicates households are coping with the worst cost-of-living crisis in generations.

Credit fears send bank shares down
UK bank shares fell in morning trading on Thursday amid concern that borrowers would find it harder to repay their debts after the Bank of England again raised interest rates. The Bank’s Monetary Policy Committee voted 7-2 in favour of a 0.5% hike to 5%. Barclays, Standard Chartered, HSBC, NatWest and Lloyds were all down by between 1 and 2%. Karim Haji, EMEA and UK head of financial services at KPMG, said: “To date there hasn’t been a significant increase in credit losses through impairments, and with defaults on the up, pressures on banks will only intensify if the base rate continues to rise.”


Retail Sales also held up better than expected in May, according to the Office for National Statistics. Boosted by sunny weather the ONS said retail sales fell 2.1% annually in May, easing from a downwardly revised fall of 3.4% in April. The market had been expecting a 2.6% fall for May, according to consensus. April’s reading was previously reported as a 3.0% decline.

Councils at risk of financial failure due to auditing backlog, warn MPs

A backlog in auditing accounts across local government has increased the risk of more councils failing financially and undermined accountability for £100bn of annual spending, according to a report by the Public Accounts Committee.

The situation could worsen due to a lack of government action, the report said. Just 12% of local government bodies received auditors’ opinions enabling them to publish their accounts by an extended deadline in 2021-22. More than 400 bodies missed the deadline in 2021-22, pushing the cumulative backlog of unpublished audits for all years to 632. This suggests there will a further deterioration in publishing audited accounts for 2022-23, with the Government and the Financial Reporting Council unable to say when the backlog will be addressed, the committee said.

A new regulator – the Audit, Reporting and Governance Authority – will have oversight of local government auditing as one of its tasks, but the new watchdog is not expected to be in place until 2024 at the earliest.

GCHQ warns law firms over WFH risks
The National Cyber Security Centre, which is the cyber defence arm of GCHQ, warned the UK’s legal sector on Thursday that both remote and hybrid working pose a threat to secure working practices and put sensitive data at risk. NCSC chief Lindy Cameron said the type of data legal firms handle can make them attractive targets to online attackers.

The Telegraph notes research by PwC which found London law firms spend on average just 0.5% of their fee income on cyber security. Law Society president Lubna Shuja said on Thursday: “It is vitally important that solicitors and law firms, whether large or small, are aware of the cyber threats they face and take steps to safeguard their systems.”

RMT announces new strike dates for July
The Rail, Maritime and Transport union (RMT) has announced fresh strikes for next month as disputes over pay, jobs and conditions remain in deadlock. The union’s general secretary, Mick Lynch said: “The Government continues to shackle the companies and will not allow them to put forward a package that can settle this dispute.” The move will deal a blow to fans hoping to attend two of the Ashes Tests and The Open golf tournament.

Amazon & Ocado Inc on Thursday declined to comment on whether a takeover of online grocer and warehouse technology firm Ocado Group was on the cards, Reuters reported on Thursday. The Reuters report follows the Times newspaper reporting that speculation of a possible bid from across the Atlantic lifted Ocado’s stock.

UK tax gap remains at 4.8%
The UK’s tax gap for 2021-22 remains at 4.8%, with HMRC collecting 95.2% of all tax owed, according to a report. Small businesses accounted for 56% of the tax gap, followed by criminals, large businesses, and mid-sized businesses at 11% each. Wealthy individuals accounted for 5%, while other individuals accounted for the remaining 6%. The tax gap is caused by errors, a lack of sufficient care, evasion, and criminal attacks. The total amount of tax owed but not paid is estimated at £35.8bn.

Premier Inn sales surge as tourists flock to budget hotels
Sales at budget hotel chain Premier Inn rose by 18% in the UK as people sought out “value-led” places to stay, the company reported on Thursday. Julie Palmer, partner at Begbies Traynor, said: “In a world where consumers are feeling the pinch more than ever, the no-frills proposition from Premier Inn will look more appealing than ever.”

The latest insolvencies

Petitions to wind up (Companies) – CRIMEDETER LIMITED
Petitions to wind up (Companies) – HEATON CONSULTING LIMITED
Petitions to wind up (Companies) – D&F CONCRETE PUMPING SERVICES LTD
Petitions to wind up (Companies) – THE SOCIAL BAR BRISTOL LIMITED
Petitions to wind up (Companies) – US-STARK-CORPORATION LTD
Petitions to wind up (Companies) – D. HOY BUILDING & RESTORATION LIMITED
Petitions to wind up (Companies) – ST JAMES’S PLACE CONSULTING LTD
Petitions to wind up (Companies) – YATESBURY HOLDINGS LIMITED
Petitions to wind up (Companies) – LIKE FUTURES LTD
Petitions to wind up (Companies) – ELITE BUILDING GROUP LTD
Petitions to wind up (Companies) – GES (HOTWELLS) LIMITED
Petitions to wind up (Companies) – BRIGHTON DEVELOPMENTS LIMITED
Petitions to wind up (Companies) – EMPEXX LTD
Petitions to wind up (Companies) – HDN MANAGEMENT LTD
Petitions to wind up (Companies) – WESTLAND ENVIRONMENTAL LIMITED
Petitions to wind up (Companies) – DIRECT INTERNATIONAL LIMITED
Petitions to wind up (Companies) – KENKER LIMITED
Petitions to wind up (Companies) – ARCH WINDOW COMPANY LTD
Petitions to wind up (Companies) – FORTRESS LOCKSMITHS LIMITED
Petitions to wind up (Companies) – MONOCHROME BUSINESS SOLUTIONS LIMITED
Petitions to wind up (Companies) – MOVING UP PROPERTIES LTD
Petitions to wind up (Companies) – B.A.W. CATERING LIMITED
Petitions to wind up (Companies) – GATEWAY SECURITY SERVICES (UK) LTD
Petitions to wind up (Companies) – ACTON MHA LIMITED
Petitions to wind up (Companies) – ARSUK EURO LIMITED
Appointment of Liquidators – NM CYBER SOLUTIONS LIMITED
Petitions to wind up (Companies) – PS SOHO LIMITED
Appointment of Administrator – CERVEST LIMITED
Appointment of Liquidators – EAST (SO-SHO) LIMITED
Petitions to wind up (Companies) – MORINA&CO LTD
Petitions to wind up (Companies) – WEST BEACH HOTEL LIMITED
Petitions to wind up (Companies) – INVESTMARK GROUP LIMITED
Petitions to wind up (Companies) – MAN JOINERY SERVICES LTD
Petitions to wind up (Companies) – MHA BURLEIGH POOLE (OPCO) LIMITED
Petitions to wind up (Companies) – THE BRICKWORK GROUP LIMITED
Petitions to wind up (Companies) – GA MORRIS & ASSOCIATES LTD.
Petitions to wind up (Companies) – ROOST (WILMSLOW) LIMITED
Appointment of Liquidators – PHOENIX SUBSEA LTD
Appointment of Liquidators – GDB CONSULTING LIMITED
Petitions to wind up (Companies) – CIM ONLINE LIMITED
Appointment of Liquidators – PROTON ENGINEERING LTD.
Petitions to wind up (Companies) – MK AUTOCARE LTD
Petitions to wind up (Companies) – GEMIN-I ANALYTICS LTD
Petitions to wind up (Companies) – PIZZA KENT LIMITED
Petitions to wind up (Companies) – CLAPHAM WASTE CLEARANCE LTD
Appointment of Liquidators – BENLUNA LIMITED
Appointment of Liquidators – GREATGADGETZ LIMITED
Petitions to wind up (Companies) – TIGRIS GLOBAL LTD
Petitions to wind up (Companies) – NORTHERN OFFICE SOLUTIONS LTD
Petitions to wind up (Companies) – JEREMY NOSEDA RACING LIMITED
Appointment of Liquidators – HOWELL MARTIN LIMITED
Appointment of Liquidators – D’IMAGE LIMITED
Petitions to wind up (Companies) – THE WALSHFORD INN LIMITED
Appointment of Administrator – CONNECTMETOALAWYER LIMITED
Petitions to wind up (Companies) – COUNTRY BUMPKINS (INVERNESS) LIMITED

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!

No face-to-face meeting required – just call Peter Uwins, CPA’s National Sales Manager, on 020 8846 0000 (business hours) or email 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 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.