Business news 23 October 2023
James Salmon, Operations Director.
Hunt urged to tackle sickness and later payers. Shoppers tighten belts amid ongoing price rises. SMEs fear winter supply chain disruption. And more business news that we thought would interest our members.
Hunt urged to tackle later payers
The Federation of Small Businesses is calling on the Chancellor to pressure large companies to pay smaller suppliers on time, with the body’s chairman Martin McTague describing late payments as “pernicious” for his members.
He also called for an extension on the 75% discount on business rates for retail, hospitality and leisure businesses and to end the “simple flaw” in the tax system that prevents the self-employed deducting training costs from their tax bills.
Meanwhile, the British Chambers of Commerce has urged Jeremy Hunt to help firms reduce sickness rates by making occupational health services no longer a taxable benefit.
Shevaun Haviland, the BCC’s director general, also called for reforms to the planning system to speed up decision-making and open up investment.
Shoppers tighten belts amid ongoing price rises
Shoppers in the UK have reduced their spending on non-essential items, leading to a 0.9% decline in retail sales volumes last month. The Office for National Statistics attributes this decline to the continuing cost of living pressures and unseasonably warm weather. The fall in retail spending, along with an unexpected drop in household confidence, raises concerns about the health of the economy. Experts suggest that the retail sector may have slipped back into recession, with the lingering cost of living issues and higher interest rates impacting activity. However, retail spending is expected to rebound in the last quarter of the year as consumers benefit from falling inflation and strong wage growth. Jacqui Baker, head of retail at RSM, said that consumers may be waiting for sales such as the Black Friday event next month.
Hard-up Brits increasingly turning to pawnbrokers to make ends meet
The Observer reports on the increasing use of pawn brokers by families struggling with the cost of living crisis. Figures from the Financial Conduct Authority show there has been a 25% increase over the last year in the number of new loans from pawnbrokers. Nathan Finch of Pickwick Pawnbrokers has seen a 30% rise in loans in the past year, with a rise in medium-to-high earners pawning designer goods, such as Rolex watches and diamond jewellery.
Brits cut back on holidays as cost-of-living crisis bites
A poll for the Mail has found that the cost-of-living crunch has led nearly half of Brits to downgrade or cancel their holiday plans for this winter. Of the 44% who are not planning on going away over the next three months, nearly half blamed a lack of cash. Of those who are still taking a break, 59% said they had altered their arrangements as a result of the economic situation. The survey comes as the Government’s spending watchdog warns that Brits are enduring one of the worst slides in living standards in decades, as incomes are eroded by high inflation and rising taxes.
SMEs fear winter supply chain disruption
Supply chain disruption is the top concern for medium-sized businesses ahead of winter, according to a survey by consultancy BDO. Nearly a quarter of respondents fear that supply chain issues, including suppliers folding and stock shortages, could endanger revenue targets this year. Rising costs are also a major worry, with over half of the businesses concerned that materials or access to labour markets may become unaffordable. Richard Austin, a partner at BDO, said: “As the engine of the UK economy, mid-sized businesses need the right tools to help them, not only weather the months ahead, but also to deliver their plans for growth.” BDO also said that that two fifths of SME leaders were considering passing on higher energy costs to consumers while 24% feared that their customers would trim their consumption over Christmas.
Lloyd’s of London warns insurers climate-related pain is still to come
Lloyd’s of London is predicting a further rise in insurance costs because climate change data has yet to feed into future loss forecasts. The marketplace called for urgent investment in risk modelling.
UK infrastructure has deteriorated in last 10 years, manufacturers warn
A report by RSM and Make UK reveals that two-thirds of the UK’s manufacturers believe the Government should prioritise investment in infrastructure as a means to drive economic growth.
UK workers not convinced remote working is better for their next job
A recent survey conducted by hiring platform Indeed reveals that only 15% of UK workers believe that more remote working would make their next job better. The survey, which polled over 5,000 employees, also found that nearly 20% of remote workers did not consider their work to be “good,” and only 60% said they were proud of their job. Despite this, flexible working remains a key element of job satisfaction, with 65% of Britons willing to accept a lower salary for more flexibility. The survey also highlighted that a four-day working week and better work-life balance were the most likely factors for UK workers to take a pay cut. The findings suggest that employers who offer flexible working policies may be better able to attract and retain workers. “Flexibility at work is evolving beyond where an employee logs on, and our research shows that policies like flexible hours or a four-day work week are becoming increasingly important to workers,” said Danny Stacy, UK head of talent intelligence at Indeed.
Wage growth remains a concern – Bailey
Bank of England Governor Andrew Bailey said on Friday that policy makers can’t let up yet in their fight against inflation despite a fall in retail price growth. Mr Bailey told the Belfast Telegraph on Friday that wage growth was still too high and remains well above anything that’s consistent with bringing inflation down to the target – official figures show total pay climbed 8.5% in the three months to September, compared with the same period a year ago. However, Bailey said he expected overall inflation to be driven lower this month due to energy costs being lower than this time last year. His comments came amid warnings that the retail sector was in the grip of a recession after sales volumes fell 0.9% in the month to September, far more than analysts’ expectations of a 0.2% drop.
Trade skills shortage ‘will cost UK £98bn’ by 2030
A survey by Kingfisher and the economics consultancy Cebr indicates that a shortage of tradespeople could cost the UK economy an average of £12bn a year by 2030. The retailer, which owns Screwfix and B&Q, said net zero targets are increasing demand but young people are not given the incentives to join the trades. Thierry Garnier, chief executive of Kingfisher, said: “Trade careers are high-quality, skilled jobs with significant earnings potential and they should be valued just as highly as career options which require a university degree.”
Government borrowing fell in September
Government borrowing in September came in lower than expected hitting £14.3bn, £1.6bn less than a year earlier and lower than the £20.5bn forecast by the Office for Budget Responsibility and the £18.3bn expected by economists. However, the figure was the sixth highest in September since records began in 1993. The Treasury’s debt servicing costs were reduced by a fall in the retail price index and tax receipts were strong after more workers were dragged into higher tax brackets because of high inflation. The Office for National Statistics said tax receipts totalled £77.3bn, almost £2bn higher than the OBR had expected in its March forecast. The ONS said government debt was nearly £2.6trn in September, more than 2% higher than last year, while the debt ratio had fallen slightly to 97.8% of GDP – but this is considered a “highly provisional estimate” that will likely be revised. The fall in borrowing elicited calls from Tory MPs for tax cuts in the Autumn Statement, but the pleas were immediately shot down by the Chancellor, Jeremy Hun, who said borrowing costs remained unsustainable.
Fuller’s boss warns of ten-fold rise in pub closures
Simon Emeny, the chief executive of Fuller’s, has warned that pub and restaurant closures will increase tenfold without business rates relief. The soaring cost of food, energy and wages sent more pubs to the wall in the first half of this year than during the whole of 2022. With inflation standing at 6.7%, gross business rates bills in England will rise by as much as £2bn next April without action from the Government. Emeny said: “The number of pub closures and restaurant closures that have happened so far this year will be multiplied tenfold, if the Government doesn’t extend the business rates relief for small businesses.”
Rising costs and inflation hit UK curry houses
The cost of running Indian restaurants in the UK has been hit by a “perfect storm” of factors, including the pandemic, Russia’s invasion of Ukraine, and the cost of living crisis. Rising energy costs and staffing expenses, coupled with reduced disposable income, have affected the financial health of curry houses. The Asian Catering Federation reports that one in four Indian restaurants have closed since 2019. But it isn’t just curry houses that are feeling the pain. Research from Price Bailey found that six restaurants have closed down a day in 2023 so far – up from four a day in the year 2021-2022.
Brits expected to spend £1bn on Halloween
Young Brits are more excited than ever to celebrate Halloween this year, with projected spending on the spooky season in the UK expected to reach £1bn. This surge in Halloween spending is driven by Gen Z, who are embracing the holiday and splurging on costumes, candy, and decorations. According to a survey by Censuswide, Halloween spending in the UK has more than doubled in the last 10 years, with Brits spending only £230m in 2013. The results contrast with a recent survey by professional services firm PwC which found that young shoppers are recoiling under the weight of the cost of living , crisis with some even vowing to cut back this Christmas.
Barclays, Lloyds and NatWest set to reveal Q3 earnings
Barclays, Lloyds Banking Group, and NatWest Group are set to reveal their third-quarter earnings and outlook for the year. Investors will be watching closely for signs of how customers are coping with rising interest rates and increased borrowing costs. Barclays is expected to report a pre-tax profit of £1.8bn, down from last year, and may set aside around £570m for credit impairment charges. Lloyds Banking Group, the UK’s largest mortgage lender, is predicted to report a pre-tax profit of £1.8bn, up from last year, and reveal an impairment charge of around £662m. NatWest Group is expected to report a pre-tax profit of £1.4bn, up from last year. The earnings results will provide insight into the impact of rising interest rates on customers and the overall credit quality of the banks. Peter Rothwell, the UK head of banking for KPMG, said the lag between interest rates going up and borrowers feeling the pain of higher costs could mean the large banks are beginning to see the true impact on their customers. He told the PA news agency: “At the moment, consumers and businesses are proving to be very resilient in the face of increasing pressure. But realistically, how long can that continue to last?”
HS2 bosses accused of fraud in costs cover-up
Whistleblowers from HS2 Ltd have accused the company of deliberately covering up cost overruns to ensure politicians would keep spending billions of pounds of public money on the project. The former employees were all sacked after raising their concerns and now HS2’s internal fraud unit is investigating allegations. “This was a fraud against the British people,” said Lieutenant Colonel Andrew Bruce, one of the whistleblowers. Stephen Cresswell, a former HS2 senior cost analyst, explained how HS2 would hold back real information on costs until the Department for Transport had given approval to start work. Executives would then go back to the department after work had started and say more cash was needed. Another whistleblower, Doug Thornton commissioned a report from Deloitte on property costs which pointed to a massive undervaluation of the properties that would need to be purchased. He was prevented from reporting the discrepancies with previous figures to the board and sacked. Assistants to his successor say they were ordered to shred the report.
British Steel could axe 2,000 jobs in push for green blast furnaces
City sources have revealed that the Chinese owners of British Steel have begun talking to restructuring consultants about overhauling the steelmaker’s operations. Jingye Group are considering a radical cost-cutting programme that could lead to as many as 2,000 workers losing their jobs. It is thought the cuts are part of plans to move to from blast furnaces to electric arc furnace technology – a move that could unlock more than £1bn of new funding by Jingye.
Energy boss: Tax households that refuse to remove gas boilers
Emma Fletcher, a senior executive at Octopus Energy, suggests that households could face extra taxes if they refuse to remove their gas boilers. The UK Government aims to have the majority of homes switch to heat pumps by 2035 to achieve net zero home heating by 2050. However, heat pump installations are currently lagging behind the target. Fletcher proposes a “carrot and stick” approach, with households in higher tax bands potentially facing a charge of £5 a month by 2035.
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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!