Business news 24 May 2022

James Salmon, Operations Director.

Going global is next step for SMEs. Business rates hurting traditional retailers. Workers look to switch jobs for higher pay. Two-children families face cost rises of £400 a month. North Sea’s biggest oil and gas producer warns against UK windfall tax.  And more business news.

Going global is next step for SMEs.

While Scottish SMEs are broadly confident about the year to come, with some 91% expecting to be trading still in a year’s time – which is above elsewhere in the UK – the number of businesses that expect to secure investment in order to grow is surprisingly low according to data from ACCA, says Andrew Walker, Partner and Head of Corporate Growth at Morton Fraser.

He goes on to explain that after rapidly developing online services during the pandemic, SMEs are now well placed to expand internationally. Walker concludes: “With economies including Scotland’s recovering quickly post-pandemic, it’s not just securing funding that is essential. Branching out and successfully growing globally where possible will be an important – and likely natural – next step for SMEs.”

Business rates hurting traditional retailers
Research by real estate advisory firm Altus Group has revealed that traditional retailers now pay 755% more in business rates than digital competitors. Analysis found that for every £100 earned by large retailers in Great Britain, excluding non-store sales and fuel, £2.91 of that was due to local councils in business rates. However, for large online-only retailers, for every £100 in sales, their total business rates amounted to just 34p. It comes after the Government closed a consultation into the possible introduction of a tax on e-commerce as a potential measure to fund a reduction in business rates. Sainsbury’s urged the Government to launch the new tax, accusing the current business rates system of “destroying high streets up and down the country”. However, Marks & Spencer said an additional tax on retailers would mean they will “cut their cloth accordingly”. Estimates suggest a revenue-based sales tax of 1% on the online sale of goods to UK customers above an allowance of £2m for smaller firms could raise about £1bn a year.

Workers look to switch jobs for higher pay
A PwC survey of about 2,000 UK workers and a further 50,000 from across the world reveals that nearly 18% of British workers expect to switch to a new job in the coming year with 72% of these doing so to seek higher pay. More than a quarter, or 27%, plan to ask for more money next year. Those in the technology sector are most likely to ask for a rise and those in the public sector least likely. Kevin Ellis, chairman and senior partner at PwC UK, said: “Highly skilled workers are in hot demand and employers can’t be complacent. Employees will vote with their feet if their expectations on company culture, reward, flexibility and learning are not being largely met.”

Two-children families face cost rises of £400 a month
Families could be experiencing a faster rise in prices than officials estimate with research by Loughborough University finding that the cost of basic goods and services needed by the average two-child household in the UK has risen by £400 a month. This equates to an annual rate of 13%, compared with the 9% rate of inflation found in official statistics – itself a 40-year high. Matt Padley, an associate director at Loughborough’s Centre for Research in Social Policy, said it was the largest increase in the cost of the minimum basket of goods and services since at least 2008 when the calculation was first made.

Bailey rejects criticism of BoE’s handling of inflation
Andrew Bailey defended the Bank of England’s handling of inflation at a conference in Vienna, rejecting claims the Bank’s decision to print billions of pounds during the pandemic and slash interest rates to record lows had served to fuel the rapid rise in inflation. Bailey denied the Bank’s Monetary Policy Committee let demand get out of hand, stoking inflation. “The facts simply do not support this,” he said. The fault lay with an unprecedented succession of global shocks and the “very tight” labour market, Bailey contended. Looking forward, Bailey said the BoE was still trying to judge how far inflation would fall on its own, with price rises eating in to household income, forcing consumers to rein in spending. “We have to be careful, and we have to take these decisions meeting by meeting, which is why I don’t want to overuse forward guidance,” he said, noting that the BoE faced the twin risks of “high inflation on one side and the risk of a recession on the other”.

Interest on government borrowing set to hit £100bn
Figures released today are expected to show the Treasury borrowed £20bn in April taking total government borrowing to £2.3trn. Analyst estimates put the interest payments on government debt at about £7.5bn, taking the total for the year to April to £71.5bn. Capital Economics thinks debt interest will hit £100bn next year, far more than the £83bn OBR forecast. Capital says: “With the Chancellor constrained by both the public finances and a desire not to make inflationary pressures worse, any further fiscal loosening may be targeted and small.”

UPDATE: UK Government Borrowing in April fell from a year earlier but still remains higher than pre-pandemic levels. Borrowing was £18.6bn, down £5.6bn from a year earlier. However, it was the fourth-highest April borrowing since monthly records began, and was £7.9bn higher than in April 2019, before the pandemic.

Online sales tax could hurt travel businesses
The UK Government’s proposed online sales tax could have a significant impact on travel businesses, according to RSM. The firm’s head of travel and tourism, Ian Bell, said a lack of understanding over how this will work out in practice could put the travel sector at a disadvantage. “If services are included within the scope, then online travel agents and some tour operators may find themselves liable for a new tax in the years ahead,” Bell explained. “Businesses will need sufficient warning of the introduction of any new taxes given that seasonal commitments and pricing are often set many months ahead.”

North Sea’s biggest oil and gas producer warns against UK windfall tax

As political pressure mounts on the UK Government for a one-off tax on energy producers, over 30 have written an open letter calling for an end to speculation about such a tax. Signatories warn: “A one-off windfall tax on energy producers will not sustainably help consumers and will only further reduce investor confidence in the UK, the ripple effect of which we will feel for many years to come.”

The FT reports that Harbour Energy, the biggest producer of oil and gas in UK waters, has warned a windfall tax on the industry’s profits would result in fewer projects being approved just when ministers want to maximise domestic energy production. Meanwhile, in response to the threat of a windfall tax, Italian oil major Eni has announced its intention to spend at least €2.5bn in the UK over the next four years.

Yesterday, the Chief Secretary to the Treasury, Simon Clarke, refused to rule out a windfall tax if energy firms didn’t direct their huge profits “in a way in which is productive for the real economy.” Separately, electricity generators have now caught the eye of Treasury officials who, according to the FT, are drawing up plans for a possible windfall tax on more than £10bn of excess profits the sector has made. “North Sea oil and gas producers are only half the picture,” said one government insider. “The other half is that high gas prices have led to some pretty substantial windfall profits for all electricity generation.”

Oxfam calls for highly progressive taxation to reduce inequality

Oxfam has warned that hundreds of millions of people could be pushed into desperate poverty because of skyrocketing inflation as the charity called for a new wealth tax on the rich. The fortunes of food and energy billionaires have grown by $453bn over the past two years owing to soaring energy and commodity prices during the pandemic and the war in Ukraine, a report by Oxfam revealed.

Gabriela Bucher, executive director of Oxfam International, told media at the World Economic Forum meeting: “Billionaires are arriving in Davos to celebrate an incredible surge in their fortunes. The pandemic and now the steep increases in food and energy prices have, simply put, been a bonanza for them. Meanwhile, decades of progress on extreme poverty are now in reverse and millions of people are facing impossible rises in the cost of simply staying alive.” The report from Oxfam stated: “The single most urgent and structural action that governments must take now is to implement highly progressive taxation measures that in turn must be used to invest in powerful and proven measures that reduce inequality, such as universal social protection and universal healthcare.”

Oxfam’s tax plan is three-fold: a one-off tax on billionaires’ so-called “pandemic windfalls”; permanent wealth taxes to “rein in extreme wealth and monopoly power”; and an end to “crisis profiteering” with the introduction of a temporary 90% windfall tax on all big companies.

Commenting on a possible windfall tax on UK energy firms, Kate Andrews says in the Telegraph that such taxes would harm the credibility of the Conservatives and “lend further legitimacy to activists who want to go after other corporate sectors.” Andrews cites Oxfam’s call for an “excess profits” tax of 90% on “big corporations across all industries” and posits that “the best way to argue against dangerous, socialist tax grabs is to not do one yourself.”

Record house prices up £7,400 in single month
The average property price has climbed to a record high for the fourth consecutive month – jumping by £7,400 in May, according to Rightmove. The property portal said the average price tag for a home is now £367,501, up from £360,101 in April. Average asking prices soared by £55,551 in the past two years, compared with a £6,218 increase in the two years before the pandemic, it added. The number of buyers contacting estate agents is down 14% on the stamp duty holiday-fuelled market of this time last year, but it is still up by 31% compared with the “normal” pre-Covid market of 2019. At the same time, the amount of properties available to buy is 55% down on levels seen in 2019, meaning supply and demand look likely to remain out of kilter for at least the rest of 2022. The number of sales agreed is up by 12% in the year to date compared to 2019, Rightmove added.


Homeserve has revealed full-year revenue growth of 10%, climbing from £1.3bn to £1.43bn over 12 months of trading. Profits at the domestic specialist spiked a whopping 182%, with earnings soaring to £202.6m compared to £71.6m the year before. The strong headline performance was reflected in a sharp increase in earnings per share from 9.3p to 39.5p.

Topps Tiles

Topps Tiles has hailed a record turnover for the first half of the year, with Brits still hooked on repairing and improving their homes following the easing of lockdown restrictions. The London-listed retailer snagged £199m in the six months to 2 April, up more than 15 per cent in comparison with £103m a year prior, Topps revealed in its interim results this morning.


Buy now pay later firm Klarna has announced plans to cut around 10% of its head count – 700 staff – as it warned of a “likely recession”. The Swedish firm blamed a combination of rising prices, a change in consumer sentiment and the war in Ukraine for the move. “What we are seeing now in the world is not temporary or short-lived, and hence we need to act,” said chief executive Sebastian Siemiatkowski.


Starbucks is withdrawing its brand from Russia after 15 years, the latest Western corporation to quit the country after the war in Ukraine. The coffee chain said it would wind down its business (130 sites) in Russia, after suspending operations there in March.

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