Business news 24 April 2024
UK businesses expand at fastest pace in 11 months. Grocery price rises slow. Markets, insolvencies, the regulatory burden, interest rates, tax & more business news that we thought would interest our members.
James Salmon, Operations Director.
UK businesses expand at fastest pace in 11 months
British businesses have recorded their fastest growth in activity in nearly a year, according to the S&P Global UK Composite PMI for the services and manufacturing sectors. The index hit an 11-month high of 54.0 in April, with this up from 52.8 in March.
This was led by rise in the services index, which rose to 54.9 from 53.1. The index for the manufacturing sector fell to 48.7 from 50.3, with the move below 50 pointing to contraction.
Chris Williamson, chief business economist at S&P Global Market Intelligence, said the data suggests the economy grew 0.4% in the three months to April, up from an estimated 0.3% in the three months to March. “Early PMI survey data for April indicate that the UK economy’s recovery from recession last year continued to gain momentum,” he added.
Peliminary PMI data that points to a bigger rebound from last year’s shallow recession than economists had been expecting. However, businesses’ costs also rose at the fastest pace in nearly a year due to rising wages and higher prices for transport and raw materials.
If you are expanding fast, often the boring jobs get left behind. Everyone loves selling and getting in new business, but the credit control afterwards and chasing payments can be a bit of a drag. But here at CPA we love that stuff, so why not let us handle it for you.
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
Grocery price rises slow
Grocery price inflation has slowed to 3.2%, according to retail analyst Kantar, with this down from 4.5% a month ago and the lowest increase since November 2021. The decline in the four weeks to 14 April marked the 14th consecutive monthly slowdown in price growth. The fall in price inflation came as the cost of toilet rolls, butter and milk fell. It was also shown that people spent more on promotions, with deals helping shoppers save a combined £1.3bn over the four weeks.
Markets
The FTSE 100 Index traded over 8070 intra-day yesterday before closing at 8044. Global shares rose as well, driven by a recovery on Wall Street, where investors are focused on earnings reports from U.S. titans, and the yen hit multi-year lows against the dollar and the euro.
Adding to the optimism was a series of surveys of business activity (PMIs) that showed Germany returned to growth in early April after months of contraction, while activity in the broader euro zone expanded at its fastest clip in nearly a year. Investors are less concerned right now about the threat of a major re-escalation of tension in the Middle East and more focused on earnings.
Overnight in the US the S&P 500 rose 1.2% to 5070.55, the Nasdaq rose 1.59% to 15696.64. The pound is currently worth $1.2429 and €1.1629. Brent is at $88.58, Gold is at $2318.88. The FTSE 100 is up .54% at 8088.08 and the Eurostoxx 50 is up 0.39% at 5027.83.
Regulatory burden on businesses rises by £6bn a year under Tories
The regulatory burden placed on businesses has risen by £6bn a year under the Conservative government, according to a new report. Impact assessments attached to over 3,500 pieces of legislation have cost firms a gross £35bn a year, with £39.6bn in one-off costs. The report, The Future of Regulation, found that despite accompanying benefits, the annual net burden rose by £6bn. The Centre for Policy Studies warned that its figures were an underestimate due to “glaring flaws” in the regulatory regime. The report calls for a new regulatory audit office, oversight by a senior minister, and re-examination of regulations after five and 10 years. Former Business Secretary Sir Jacob Rees-Mogg welcomed the report, stating that regulation must be taken as seriously as spending. John Penrose, a former government anti-corruption champion, said: “Treating red tape costs as seriously as taxpayer-funded spending is long overdue.”
BoE economist: Interest rates cuts are getting closer
The Bank of England’s chief economist, Huw Pill, says that while interest rate cuts are “somewhat closer” than they were last month, the recent fall in inflation is not necessarily enough reason for the Bank to start reducing rates. Mr Pill, a member of the Bank’s rate-setting Monetary Policy Committee (MPC), argued that there are “greater risks associated with easing too early should inflation persist rather than easing too late should inflation abate.” He added: “This assessment further supports my relatively cautious approach to starting to reduce bank rate.” Elsewhere, fellow MPC member Jonathan Haskel has said labour market tightness – as measured by the ratio between job vacancies and unemployment – is reducing, but “rather slowly,” adding that it is unclear if it is falling fast enough to keep inflation on target.
PM: UK will spend 2.5% of GDP on defence by 2030
Rishi Sunak has committed to spending 2.5% of GDP on defence by 2030. The Prime Minister’s pledge will boost defence spending by an extra £75bn over the next six years and take the UK defence budget to £87bn a year at the end the decade. At present, around 2.3% of GDP annually is being spent, which equates to around £52bn. Economist Torsten Bell, chief executive of the Resolution Foundation think-tank, said the promise was “a lot easier to announce than deliver,” adding that the “degree of fiscal commitments/fictions being built up for after this election is a real problem.”
Tax code errors are worth £5.8bn
New research from Canada Life reveals that almost one third of UK adults who have checked their tax code were on the wrong one. The study found that 6% of adults were on the wrong tax code in the past year, with average overpayments of £689 per year. This equates to a total of £5.8bn. Many UK adults do not understand their tax code, with almost four in ten admitting they don not know what it means. One in six do not know if they are on the right tax code, while a fifth have never checked their tax code.
Higher government borrowing could hit tax cut plans
Office for National Statistics (ONS) data shows that government borrowing for the last financial year exceeded forecasts, hitting £120.7bn. The ONS estimates that full-year public sector net borrowing was £7.6bn less than in 2022/23, but £6.6bn more than predicted by the UK’s official forecaster, with the Office for Budget Responsibility having forecast borrowing of £114.1bn in the year to the end of March. Overall, the figures show the UK’s overall national debt was £2.69trn in March, an increase on the £2.54trn seen a year ago. The ONS figures also show that the Treasury is pulling in record sums from income taxes – with this up £25bn to £273bn for the latest financial year – and corporation tax, which has exceeded £100bn for the first time.
Jessica Barnaby, the ONS’ deputy director for public sector finances, said that government spending was up by about £58bn over the past year “with increased spending on public services and benefits outstripping large reductions in interest payable and energy support scheme costs.” The higher-than-expected borrowing costs have raised question over whether Jeremy Hunt will be able to cut taxes as the election nears.
While Rob Wood of Pantheon Macroeconomics said he expects the Chancellor to cut taxes again before a general election, “despite borrowing overshooting his forecasts,” Ruth Gregory, deputy chief UK economist at Capital Economics, said: “If the Chancellor was hoping March’s figures would provide more scope for tax cuts at a fiscal event later this year, he will have been disappointed.” Andrew Goodwin, senior economic adviser to the EY Item Club, said: “Unless the Chancellor is prepared to assume even greater spending restraint, it’s unlikely there will be another tax-cutting fiscal event before the election.”
Lloyds
Lloyds saw profits fall 28% down from its 2023 peaks with $450m set aside for Car finance compensation claims. Profits fell in Q1 to £1.6bn compared with £2.3bn in the same quarter in 2023. Lloyds Banking mentioned “elevated severance charges” of £100 million that contributed to an 11% surge in operating costs. A “sector-wide change in the charging approach for the Bank of England levy” contributed to 500 basis points of this 11% increase. In January, Lloyds said it would be cutting up to 1,600 jobs as part of a major branch overhaul. Net interest margins fell to 2.95% from 3.22 in the first quarter of 2023, with statutory profit after tax down from £1.6 billion to £1.2 billion. This lower NIM caused net interest income to fall 10% year on year to £3.18 billion. Lloyds reaffirmed its full-year guidance with expectations including a NIM of greater than 290 basis points and operating costs of about £9.4 billion
Tik Tok
The US Senate approved the measure aimed at banning Tik Tok in the US unless it switched from Chinese ownership. The new law gives ByteDance, the social-media platform’s Chinese owner, nine months to sell the app to a non-Chinese owner. TikTok did not respond to the news.
Tesla
Shares in Tesla rose by over 11% after the US electric-vehicle company said it would accelerate its launch of “more affordable” models, to early 2025. This is set against a back drop of shares falling 40% in 2024 and sales dropping 9% YoY in Q1.
Connectivity blackouts cost London businesses £6bn
A study commissioned by internet provider Vorboss shows that London businesses have lost almost £6bn due to connectivity outages over the past year. The report shows that 60% of businesses in the capital reported one or more losses of service over the last 12 months, with nearly 30% seeing at least three outages. Such outages cost the London economy £5.7bn, while across the UK the cost totalled £17.6bn. For businesses based in London, the average loss was £18,620, with an average of 314 hours lost. Vorboss has urged sector regulator Ofcom to introduce an automatic compensation scheme for fixed business connectivity providers. Tim Creswick, the firm’s chief executive, commented: “As the data in this report shows, the productivity uplift that would come from improved network quality is massive.”
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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!
The Credit Protection Association – Prompting Punctual Payments – Ethical, Effective, Efficient, Economical collections.