Business news 24 March 2023
James Salmon, Operations Director.
Bank of England raises interest rates to 4.25% . SMEs lose 4m trading days to strikes in six months. Retail, Zero hour employee rights, recovery of covid grants, Londons financial centre crown and more business news.
Bank of England raises interest rates to 4.25%
The Bank of England raised its benchmark lending rate as expected by a quarter point to 4.25%, the highest rate since 2008, and signaled that the door is open to further rises if inflation persists. Policy makers voted 7-2 for the rate rise. The news followed Wednesday’s news of an unexpected increase in the rate of inflation last month. The BOE said the outlook for the economy is slightly improved and is no longer predicting a technical recession.
The move comes despite the turmoil in the banking sector, triggered by tighter monetary policy, and follows the US Federal Reserve and European Central Bank in prioritising bringing inflation down instead of easing the strain on the global banking system. The rate rise comes after an increase in the CPI to 10.4% in February, against expectations of a fall to 9.9%.
Andrew Bailey, Governor of the Bank of England, said policymakers need to see more evidence of inflation falling before pausing the increases. The BoE added that it considered UK banks “resilient” and “well placed to continue supporting the economy in a wide range of economic scenarios, including in a period of higher interest rates.” Looking ahead, Yael Selfin, chief economist at KPMG UK, says “recent tensions in the banking system and the lingering risk of a recession should keep a lid on interest rates” in the near term.
Markets in London finished Thursday’s session in the red with the FTSE 100 down circa 70 points to finish just below 7500. Elsewhere in Europe French and German shares finished flat. meanwhile, overnight US markets ended higher in what was a turbulent trading session as traders bet that the Federal Reserve may be nearing the end of its rate hiking cycle. Overnight, the DOW rose 0.23%, the S&P 500 rose 0.30% and the NASDAQ rose 1.01%.
SMEs lose 4m trading days to strikes in six months
A study by small business lender iwoca reveals a third of SMEs said industrial action was having a negative impact on their business with around four million days of trading said to be lost over the last six months. Colin Goldstein, commercial director at iwoca said: “If you’re one of the UK’s 5.5m small businesses, you now have to contend with lost trading days due to strikes as well as rising cost of doing business, including spiralling energy costs and inflation – all resulting in an incredibly tough trading environment.”
Retail in February
UK Retail Sales continued to increase in February, pushing them back above their pre-pandemic level, figures from the Office for National Statistics showed. Retail sales volumes are estimated to have increased 1.2% in February from the previous month, following a rise of 0.9% in January. This came in far higher than market expectations, according to FXStreet. Markets had expected a 0.2% monthly rise in February.
Zero-hours contract staff to receive predictable working rights
A Government-backed private member’s bill will award employees, agency staff and casual workers on short or zero-hours contracts the right to request predictable working hours. Under the Workers (Predictable Terms and Conditions) Bill, after 26 weeks of service – either as an employee or a casual or agency worker – staff can make the request for a more predictable pattern of hours. Employers will also have to notify the applicant of their decision within a month, rather than three months, as is the case for flexible working. Wei-Men Ho, legal director in employment for the consumer sector at law firm Eversheds Sutherland, said that including casual and agency staff means the change “will have a broader impact”, adding: “It will impact start-ups and ecommerce businesses, as well as retail, hospitality and leisure — the types of companies that have peaks and troughs and have to call on both agency workers and employees at short notice.”
UK has recovered just 1% of £1.1bn lost on Covid grants, says watchdog
The National Audit Office has revealed that only £11.4m of the £1.1bn estimated to have been lost to fraud and error through the UK’s COVID-19 business grant schemes has been recovered. The NAO report comes soon after the Public Accounts Committee described efforts by HMRC to reclaim funds wrongly provided under the furlough scheme as woeful. Of an estimated £2.3bn paid to bosses who claimed cash for employees who continued to work, in breach of the rules, only 0.03% had been recovered. A spokesman for the Department for Business and Trade, said: “No amount of error and fraud is acceptable, and we are continuing to work hard to recover these funds where possible.”
London retains Europe’s financial centre crown
Z/Yen’s 33rd Global Financial Centres Index has ranked London the second best financial centre in the world behind New York, with the distance between them increasing since the US capital overtook the City in 2018. The Square Mile beat Paris, which came 14th, Amsterdam (16th) and Frankfurt (17th) to keep pole position in Europe, countering claims Brexit would harm the London’s competitiveness on the global stage. In terms of future prospects, London was again ranked best in Europe and came in fifth globally.
Poor economic performance stems from shareholder-focused corporate governance
Mathew Lawrence, the founder and director of Common Wealth, says in the Times that a rewrites of Britain’s corporate governance rules would improve investment and reduce inequality. He says the modernisation of company law and expansion of participation rights has happened before and can be changed again, “redistributing decision-making power and reimagining company purpose to account for all key stakeholders.” Lawrence cites research from his own organisation which argues that “weak participation rights and a shareholder-focused model of corporate governance are associated with poor economic performance across key metrics.” Strong participation rights lead to more dynamic and inclusive economies, Lawrence asserts, but “unless we rewrite the rules of the company, stagnation and inequality will be our lot.”
Brexit
The UK and European Union will sign off on their new “Windsor framework” Brexit deal for Northern Ireland today, despite ongoing opposition to the agreement from the DUP.
Accenture
Accenture has announced a cut of 19,000 positions from its global workforce over the next 18 months.
Energy producers condemned
The government condemned tactics in the energy market from companies who stop energy production on days of limited supply, only to negotiate higher prices to keep energy plants continue running, a tactic thought to have generated half a billion in extra charges to consumers. Although the practice isn’t illegal, Ofgem is looking to change the rules to block this market manipulation and the excessive charges.
Hindenburg Research & Block
After causing international waves after it released a report calling out Indian conglomerate Adani Group, Hindenburg Reasearch have struck again releasing a report claiming payments company Block is misleading investors and announced it was shorting the stock. The report alleges the company is ignoring fraud going through its system and that the company was publishing inflated metrics.
Apple
Apple will be spending $1billion a year producing films for the cinema as it looks to raise its profile in Hollywood.
Wickes
Wickes reported a lower annual profit that was in line with market consensus, as costs increased while revenue was marginally higher. The home improvement retailer said pretax profit fell 38% to £40.3 million in 2022 from £65.4 million in 2021. Adjusted pretax profit declined 11% to £75.4 from £85.0 million, and this was in line with the £72 million to £76 million market consensus that the company at the end of January had said it expected to achieve.
JD Wetherspoon
JD Wetherspoon swung to a pretax profit in the six months that ended 29 January, as it noted that supply and delivery issues have “largely disappeared, for now”. The pub chain reported profit before tax and separately disclosed items of £4.6 million, swinging from a loss of £26.1 million in the equivalent period the previous year. Pretax profit after separately disclosed items was £57.0 million, swinging from a loss of £13.0 million.
Tech Nation optimistic despite current funding shortage
A report from start-up quango Tech Nation found that the creation of tech unicorns – firms worth more than $1bn – slowed to 4% in 2022 in the UK, down from a 41% growth rate the previous year. An increase in the cost of borrowing due to rising interest rates held venture capital back. Tech Nation is due to be wound down this month after the Government pulled its funding. Its chief Gerard Grech said: “The last decade of UK tech has been an incredible success story. One in which the UK is now third in the world for tech investment, after the US and China. But there is much more we can do and value to be unlocked if we create the right conditions for future growth over the coming years, as this report shows.” Grech added that he was “optimistic about the next decade and the UK’s ambition to become a science and technology powerhouse.”
Amigo Loans to be wound down
Sub-prime lender Amigo Loans is to be liquidated after months of trying to come up with a rescue plan ended in failure. Amigo said it would stop lending with immediate effect and will be placed into an orderly wind-down, with all surplus assets transferred to the creditors of its compensation scheme. Those owed compensation will receive an estimated 17p in the pound, according to PwC, which is supervising the process. The Financial Conduct Authority publicly censured Amigo earlier this year over failures in assessing borrower and guarantor circumstances, which “led to a high risk of consumer harm,” but spared the firm a £72.9m fine on the grounds it would prevent the firm from paying out compensation to customers.
FCA appoints two new chief enforcers
The chief executive of the Financial Conduct Authority, Nikhil Rathi, has announced the appointment of two new chief enforcers at the watchdog as it ramps up efforts to become a “more assertive” regulator. Therese Chambers, who has worked at the watchdog for over 20 years, and National Crime Agency executive Steve Smart have been appointed to jointly head up its Enforcement and Markets Oversight division. They will be responsible for ”reducing the growth in financial crime, ensuring consumer outcomes meet the higher standards of the new Consumer Duty [and] stepping in where firms restrict competition”, the regulator said in a statement. Matthew Nunan, former FCA wholesale enforcement chief and now a partner at law firm Gibson Dunn, commented: “Therese Chambers is a fantastic appointment – very well regarded within the FCA and externally, with a huge amount of experience and expertise both as a lawyer and as a regulator.” Steve Smart “brings very specific criminal and intelligence experience to the role, something that the FCA has not had in place before,” Nunan adds.
Sir Keir Starmer releases tax returns
Labour leader Sir Keir Starmer has released his tax returns for the last two years, a day after the prime minister, Rishi Sunak, released three years of his. Over the two years, Sir Keir earned a total of almost £275,000, just under £22,000 of which came from book royalties in 2020/21. He also gained just under £100,000 when his sister sold a property that he had helped her buy for her family to live in. In total, he paid £118,580 in income tax and capital gains tax on these earnings. He also announced on Thursday that he would give up the tax-exempt status he enjoys on contributions to his pension from his time as Director of Public Prosecutions. Sir Keir had been accused of hypocrisy for taking advantage of the special status of the DPP pension while also promising to tax others who contribute more than £1m to their pension pot over a lifetime. Experts have called for both men to publish their actual tax returns, rather than summaries. Dan Neidle, founder of Tax Policy Associates and formerly a tax lawyer at Clifford Chance, suggested on Twitter that Sir Keir had paid too much tax on the sale of his sister’s house. He said: “I don’t want to be judgmental or anything. But on the face of it, either this summary is wrong, or Starmer’s accountants are idiots.”
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 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.