Business news 23 July 2024
Sharp increase in firms facing financial distress. Expanding economy to hand Labour an early bonus. New skills body, fraud, tax, markets, insolvencies & more business news that we thought would interest our members.
James Salmon, Operations Director.
Sharp increase in firms facing financial distress
The financial challenges for businesses have significantly increased over the past year. According to Begbies Traynor’s Red Flag Alert, the number of firms experiencing severe financial difficulties rose by nearly 10% in the second quarter, affecting 601,950 businesses. Particularly hard-hit sectors include travel & tourism, with a 20% rise in distress, as well as hotels & accommodation and bars & restaurants, with increases of 16% and 12%, respectively. These issues are not confined to a few sectors; financial distress has grown in 20 out of 22 sectors surveyed.
Given this challenging environment, managing cash flow is more crucial than ever. Julie Palmer, a partner at Begbies Traynor, anticipates that 2024 will be another difficult year for UK businesses, especially those serving consumers directly. Ric Traynor, the executive chair, noted the ongoing economic pressures on businesses.
Are you finding it difficult? Could your cash flow do with a boost? Are late payers holding you back?
To navigate these tough times, using a credit management company like CPA can be a strategic move. We can help ensure timely payments, reduce bad debt, and improve cash flow, providing your business with the stability needed to withstand financial pressures. By leveraging the expertise of credit management professionals, small businesses can focus on growth and operations rather than being bogged down by financial distress.
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.
Expanding economy to hand Labour an early bonus
The UK economy is expected to grow faster than previously anticipated, providing a fiscal windfall for Chancellor, Rachel Reeves. According to forecasts from the EY Item Club, the economy is projected to expand by 1.1% this year, a significant upgrade from the previous estimate of 0.7%. The forecast also predicts a 2% growth rate for next year and 2026, which is among the most optimistic forecasts from City analysts. The consultancy expects inflation to remain close to the Bank of England’s 2% target, coupled with strong pay growth, leading to higher consumer spending. The Bank is also expected to lower interest rates twice this year. “Combining higher public investment with a concerted effort to build on the UK’s recent success in business investment could provide an economic shot in the arm,” said Peter Arnold, Chief Economist at EY UK.
New skills body to reduce reliance on migrant labour
The Government has launched Skills England, a new body aimed at addressing the fragmented and broken skills training landscape in the country. The goal is to reduce firms’ over-reliance on migrant workers and meet the skills needs of the next decade. Skills England will bring together local authorities, businesses, and training providers to achieve this. It will also oversee the new growth and skills levy, which replaces the apprenticeship levy and gives businesses more flexibility in using funds for training. The body will work with the Migration Advisory Committee to reduce reliance on overseas workers. Skills shortages have doubled between 2017 and 2022, making up 36% of job vacancies. The Government’s urgency in tackling the skills shortage has been welcomed by employers, but they also stress the need for a fair and flexible immigration system to access global talent when necessary.
Markets
Stock markets had a positive reaction to US political moves but focus is now turning from US politics to a heavy week for company earnings with tech giants Tesla Inc. and Alphabet Inc. due to report later today. Companies representing 29% of the S&P 500’s market value are due to report this week and investors are waiting to see if the rally in tech stocks that has lifted the benchmark this year has room to continue.
In the UK rumours that Chancellor Rachel Reeves is about to agree pay rises over 5.5% for public sector employees helped consumer stocks.
Yesterday, the FTSE 100 closed up 0.53% at 8198.78 and the Euro Stoxx 50 closed up 1.45% at 4897.44. Overnight in the US the S&P 500 rose 1.08% to 5564.41 and the NASDAQ rose 1.58% to 18007.57.
This morning on currencies, the pound is currently worth $1.291 and €1.188. On Commodities, Oil (Brent) is at $82.6 & Gold is at $2407. With stock markets, the FTSE 100 is flat at 8198 and the Eurostoxx 50 is up 0.67% at 4930.
Wave of criminality means benefits fraud £7.3bn and rising
A report from the Department for Work and Pensions says British society has become increasingly tolerant of criminality, making it harder to reign in benefit fraud. The DWP said benefit fraud cost taxpayers a record £7.3bn last year and will increase by 5% each year hitting £10bn or more by the end of the decade. The DWP said that “a range of evidence indicates that there is a long-term rising trend in fraudulent behaviour towards organisations and a softening of attitudes regarding fraud in wider society.” The report comes as the Chancellor prepares to appoint a commissioner to recoup billions lost to Covid procurement fraud.
Labour’s driving the money-makers away
Top divorce lawyer Ayesha Vardag tells Mail readers about where the super-rich are fleeing as they look to avoid Labour’s tax hikes. One of her multibillionaire clients was weighing up Italy or Monaco from the moment the election was called. Another upped sticks to his second home in Dubai as soon as the election result was clear. Vardag says the departures are a tragedy: “London had it all. It was the capital of the world, with culture, restaurants, great education and the places where people wanted to be seen. Then we decided to squander it all for a bit of cheap electioneering. Now, the people who have been pouring money into the UK for years, are voting with their feet.”
Billionaire trader Alex Gerko loses UK tax appeal
The billionaire founder of British trading firm XTX Markets and the UK’s biggest individual taxpayer, Alex Gerko, has lost a legal appeal with HMRC over taxes on payouts from trading foreign currencies. Profits he and other traders made while working for hedge fund GSA Capital between 2010 and 2015 were allocated to an internal investment unit before they were ultimately distributed to the traders. The fund paid corporation tax when the amounts were first allocated, but HMRC successfully argued that the payouts to traders should additionally be treated as the higher rated income tax. Following the ruling, Gerko said: “I fundamentally disagree with the judgment, which results in massive double taxation and has wider implications for the financial industry.”
Tax raid on investments could trigger a stock market sell-off
Experts have warned that a Labour inheritance tax raid on investments, specifically the abolition of tax relief on Aim shares, could lead to a £3bn sell-off in the stock market. The proposal to abolish Business Property Relief, which provides a 100% exemption on qualifying Aim shares from the 40% inheritance tax, aims to raise an estimated £1.6bn annually for the Treasury. However, experts argue that this move could negatively impact the performance of Aim-focused portfolios and make Aim a less attractive market for companies seeking to list. The Wealth Club’s Nicholas Hyett warns that this could result in the sudden withdrawal of billions of pounds and severely impact valuations. “That would make it more expensive for small UK companies to raise capital, and be a severe blow to small fast-growing companies.” The Institute for Fiscal Studies supports cutting the relief, which currently costs £1.4bn a year.
Hopes for rebound in diminished BTL sector
The number of buy-to-let (BTL) mortgage deals granted in the UK has dropped by half, falling from 25,280 to 12,422. This decline is attributed to rapidly increasing interest rates and stricter affordability tests. The stamp duty surcharge on second properties and the removal of higher-rate income tax relief on mortgage payments for rental properties have also made the landlord role less appealing. As a result, the BTL mortgage market has contracted, with the number of outstanding BTL mortgages falling from 2.04m to 1.98m. Landlords owning just one property make up a third of the BTL market, while 10% of BTL mortgages are held by landlords operating as companies. Despite an increase in rents, rising costs have put a squeeze on landlords’ profits. However, James Tatch, UK Finance’s head of analytics, remains optimistic that the buy-to-let sector will recover sooner than expected, as long as there are no further negative shocks.
Most Carpetright shops to close with loss of almost 1,600 jobs
The majority of Carpetright’s stores will close and almost 1,600 workers will lose their jobs following a rescue deal by rival Tapi. Administrators at PwC said the chain “has fallen victim to challenges facing many retailers, especially those selling big-ticket items.” Tapi was founded by Martin Harris, the son of Carpetright founder Lord Harris of Peckham. The company said it was “desperately sad” that it was unable to save more of the business but “the business has been materially loss-making for a number of years and it has significant debt held by the owner.” Tapi’s decision to offer to buy just 54 stores was also influenced by the prospect of a probe by the Competition and Markets Authority, seeing as Carpetright had a 14.8% share of the flooring market, compared to Tapi’s 10%.
Compass
Catering company Compass Group said “industry trends remain strong” as it reported an increase in revenue and raised growth guidance. In the third quarter ended June 30, organic revenue rose 10%. “As expected, net new business growth accelerated in Q3, whilst pricing moderated in line with inflation. Volumes continued to benefit from the quality of our offer and the value gap compared to the high street,” Compass said.
Mitie
Mitie said revenue grew in its first-quarter, boosted by acquisitions as well as work and pricing. Revenue in the three months to June 30 increased 11% to £1.16 billion from £1.05 billion a year prior. “The good trading momentum from last year has continued into the first quarter of FY25, with double digit revenue growth from our Projects business, including the benefit from the previous year’s acquisitions.
Fullers
Good news for once from pub chain Fuller, Smith & Turner, who said inflation pressure is abating and its margins “are recovering”. The West London pub company said like-for-like sales grew 5.3% in the 16 weeks to July 20. It was the first 16 weeks of its financial year. Fuller’s said trading momentum has continued, “with inflationary pressures easing, our margins are recovering”.
Latest Insolvencies
Petitions to wind up (Companies) – TIME FOR A BARGAIN LIMITED
Petitions to wind up (Companies) – OSOM PAINTING SERVICES LIMITED
Petitions to wind up (Companies) – VALLEY NEWS (GATESHEAD) LTD
Appointment of Liquidators – TY LLANGEWYDD LTD
Appointment of Liquidators – COLIN JONES & ASSOCIATES LIMITED
Appointment of Liquidators – LJB BUSINESS CONSULTANCY LTD
Appointment of Liquidators – RS YACHT SALES LTD
Appointment of Liquidators – W O & P O JOLLY (NORFOLK) LIMITED
Appointment of Administrator – MTAG (HOLDINGS) LIMITED
Appointment of Liquidators – POSHMARK LIMITED
Appointment of Liquidators – MADE TALENT (BRISTOL) LIMITED
Appointment of Administrator – BLENHEIM HOUSE CONSTRUCTION LIMITED
Appointment of Liquidators – LANGUAGES FOR BUSINESSES LIMITED
Appointment of Liquidators – WINGAS UK LIMITED
Appointment of Administrator – MTAG COMPOSITES LIMITED
Appointment of Administrator – ELECTRIC FUTURE GROUP LTD
Appointment of Liquidators – INVESTMENT BANKING SOLUTIONS LTD
Appointment of Administrator – COVENTRY ENGINEERING LTD.
Appointment of Liquidators – AMBER RESOURCING MANCHESTER LIMITED
Appointment of Liquidators – ABLE ACCESS (UK) LTD
Appointment of Liquidators – ASTUTE FINANCIAL CONSULTANCY LIMITED
Appointment of Liquidators – J. S. D. C. LIMITED
Appointment of Liquidators – RAMP & CO LTD.
Appointment of Liquidators – MP2 FINANCIAL LIMITED
Petitions to wind up (Companies) – PUBLIC IMAGES SCOTLAND LIMITED
Petitions to wind up (Companies) – WILLIAM MCCUTCHEON TRANSPORT LTD
Appointment of Liquidators – JG MACCLESFIELD HOLDINGS LTD
Appointment of Liquidators – MEDINA PROJECT SERVICES LTD
Appointment of Liquidators – ACORNRISE LIMITED
Appointment of Liquidators – HOBSONS CA LIMITED
Appointment of Liquidators – CEQ TECHNOLOGY LTD
Petitions to wind up (Companies) – REDCOW DISTRIBUTIONS LIMITED
Appointment of Liquidators – NORTHWEST EIGHT LIMITED
Appointment of Liquidators – K J OWEN PLASTERING LTD
Appointment of Liquidators – WILFORDS OF WELFORD LIMITED
Appointment of Liquidators – COHERENT SYSTEMS LIMITED
Appointment of Administrator – NEWARK GOLF CLUB COMPANY LIMITED(THE)
Appointment of Liquidators – JENKO LIMITED
Appointment of Liquidators – VENTURA SOLUTIONS LIMITED
Appointment of Liquidators – SZAR IT CONSULTING LTD
Appointment of Liquidators – ROYALBLUE SYSTEMS LIMITED
Appointment of Liquidators – QWERTYUIOP LTD
Appointment of Liquidators – SP SHEET METAL LIMITED
Appointment of Liquidators – JOHNSON TREASURY SERVICES LIMITED
Petitions to wind up (Companies) – OOOCARS LIMITED
Petitions to wind up (Companies) – ALLABOUTCARZ LTD
Petitions to wind up (Companies) – IMPACTVEST 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 supported our members through all sorts of difficult trading environments. With high interest rates and a struggling economy and elevated insolvencies, our services can help your business navigate these difficult waters.
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 and be warned of any potential risks.
Unlike other credit management companies, we offer our members a fixed annual subscription regardless of how high the value of their debts maybe!
Rather than to turning to more debt, CPA suggests that business owners tackle the problem at its source. If late payments are a strain on your cash flow, then talk to CPA about how we can help you reduce those late payments.
CPA has been improving business cash flow for over 100 years, by tackling late payers and campaigning against the late payment culture in the UK. CPA’s overdue account recovery service is a polite, efficient service designed to encourage prompter payments while maintaining goodwill. We direct your customers to pay directly to you, not to us and want to support and reinstate your direct relationship with your customer, not take it over, destroying goodwill.
Unlike other credit management companies, our overdue account recovery service is available to our members on a fixed annual subscription so you can pass any overdue accounts to this service and it is included in your subscription!
Our Overdue account recovery service resolves over 80% of accounts referred to us although our collections department is there to escalate the collections process on the remaining few if you require it.
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.