Business news 24 May 2024

Private sector growth falls and services sector inflation cools. Consumer confidence climbs. Tax set to take centre stage in election campaigns. Markets, Driverless cars, manufacturing, insolvencies & more business news that we thought would interest our members.

James Salmon, Operations Director.

Private sector growth falls and services sector inflation cools

Growth across the private sector slowed in May, while services sector inflation started to ease, according to the S&P Global/CIPS flash UK PMI. The index came in at 52.8 in May, down from 54.1 in April, on a gauge where a reading above 50 represents growth. City analysts had expected a reading of 54. Activity in the services sector grew in May but at a slower rate than in April, with a score of 52.9 compared to last month’s 55. Meanwhile, manufacturing output saw growth in May after a slight decline in April, posting a two-year high of 52.7.

Chris Williamson, chief business economist at S&P Global Market Intelligence, said the cooling of services inflation is “welcome news,” adding that it is “needed to open the door for the Bank of England to start cutting interest rates.” He added that the PMI data – alongside slowing price growth and easing inflation – supports the view that the Bank will start cutting interest rates in August, “providing the data continue to move in the right direction over the summer.” Andrew Wishart, senior UK economist at Capital Economics, also noted that the PMI data suggests that the Bank “will be able to press ahead with a first cut at the August meeting.”

Consumer confidence climbs

Consumer confidence continues to rise, with an index from GfK increasing by two points in May. Confidence in the general economic situation over the next 12 months climbed, rising by four points to minus 17 – with this 13 points up on a year ago. The forecast for personal finances over the next year rose by five points to seven. However, there was a slight dip in the index’s major purchase measure, indicating ongoing cost-of-living pressures. GfK client strategy director Joe Staton noted that while conditions are improving, the cost-of-living crisis remains a daily reality. Linda Ellett, UK head of consumer, retail and leisure at KPMG, noted that increasing confidence levels “are yet to translate into a notable uplift in discretionary spending.”

Tax set to take centre stage in election campaigns

Looking at what some of the key issues will be going into July’s general election, Ruby Flanagan in the Mirror says tax “always takes centre stage when it comes to any election campaign.” She argues that taxation is a “divisive issue” as some feel that higher taxes are needed to fund “already stretched” public services, “while for others ever-increasing taxes are evidence that public spending is out of control.” Laura Suter, personal finance director at AJ Bell, warns: “Taxpayers will struggle to stomach further tax increases, while tax cuts will eat into the future Chancellor’s budgets, which is crucial to any spending commitments either party plan on.” Elsewhere, Greg Heffer in the Mail says Labour will look to fund its spending plans through a crackdown on tax avoiders; the Tories will aim to abolish National Insurance; and the Lib Dems are promising “fair and progressive taxation” and plan to “tax income from wealth more similarly to income from work.” Meanwhile, the Express offers insight from Hargreaves Lansdown’s Sarah Coles, who says Chancellor Jeremy Hunt has “already pledged that the Conservatives will move gradually towards lower taxation,” adding that “you can expect Labour to have tax firmly on the agenda too.”

Election decision prompted by lack of money for tax cuts

Gordon Rayner in the Telegraph says the Prime Minister opted to call an early election after Treasury officials concluded there would be no money for “meaningful” tax cuts in an autumn Budget. He says Rishi Sunak and Chancellor Jeremy Hunt “would have needed to borrow money for a pre-election tax cut, which they are very much against; hope for a windfall from economic growth, which is unpredictable; or make sizeable spending cuts elsewhere, which the Treasury doubted was possible in the time available.” Mr Rayner says there was just £6bn left in Treasury coffers after March’s Budget, adding that this would need to increase to £30bn to deliver any significant giveaways in the autumn.

Labour victory not guaranteed, says FSB

An election victory “is not in the bag” for Labour, the head of Britain’s largest small business lobby group has said. Federation of Small Businesses (FSB) national chairman Martin McTague said each party needs to win the votes of business owners if they are to secure victory on July 4. Mr McTague told BBC Radio 4’s Today programme: “We are seeing increasing confidence with our members but it is very hard to interpret whether that is because they have confidence in the Conservative Party’s management of the economy, or they are starting to feel confident about an incoming Labour government. We know it is not in the bag. Either party needs to win the votes of these business owners.”

Minimum tax on billionaires gaining traction

A minimum tax on billionaires is gaining traction among G20 countries, according to French economist Gabriel Zucman. Mr Zucman said  studies have shown that a 2% minimum annual tax on individuals with at least $1bn in wealth could raise about $250bn per year. The proposal suggests a system similar to the global minimum tax on multinational corporate profits, allowing governments to levy extra taxes on companies from non-participating nations. While US Treasury Secretary Janet Yellen has rejected the idea of a global arrangement for taxing billionaires and redistributing proceeds, Mr Zucman remains hopeful that the US will come around to the proposal.


Energy bills in the UK will decline in by 7% on average from 1st July under a new price cap announced by Ofgem.


UK Retail Sales fell in April, as miserable weather kept shoppers at home, according to a first estimate on Friday. Retail sales fell by 2.7% in April from a year prior, the Office for National Statistics said. Sales had increased by 0.4% on-year in March, being revised up from being flat previously. According to FXStreet, retail sales were expected to fall by just 0.2% annually in April. Sales fell by 2.3% in April from March, following a 0.2% fall in March from February. March’s reading was worse than consensus of just a 0.4% slip.


Global markets dropped as expectations of higher interest rates for longer  in the US were raised by comments from FED members. Yesterday, the FTSE 100 softened, closing down 0.37% at 8339.23, however the Euro Stoxx 50 closed up 0.25% at 5037.60.

Overnight in the US the S&P 500 dropped 0.74% to 5267.84 and the Nasdaq fell 0.39% to 16736.04. The pound is currently worth $1.2707 and €1.1735. Brent is at $81.1, Gold is at $2341. This morning at the time of writing the FTSE 100 is down 0.35% at 8309 and the Eurostoxx 50 is down 0.35% at 5020.

Driverless cars

The UK is set to pass legislation allowing driverless cars on our roads by 2026. The Automated Vehicles Act includes a section called,  bans companies from exaggerating the self driving capabilities of their vehicles.

Meanwhile, London-based startup Wayve is raising $1 billion to put its self-driving software into modern cars. The funding will come from existing investors including Microsoft Corp., Nvidia Inc. and Softbank Group Corp.


UK Manufacturing rebounded in May, a closely-watched survey showed on Thursday. The latest S&P Global flash UK manufacturing PMI came in at 51.3, up from 49.1 in April and a 22-month high. The output index also pushed into positive territory, rising to a 25-month high of 52.7 from April’s 49.4.

Johnson Matthey

Johnson Matthey said it remained ‘well positioned’ to tackle market dynamics despite seeing annual profit hit by falling precious metals prices. In the year ending March, the London-based chemicals maker said pretax profit for continuing operations profit fell 52% to £164 million from £344 million. Adjusted pretax profit for continuing operations fell 19% to £328 million from £404 million. Revenue fell 14% to £12.84 billion from £14.93 billion.

House prices climb by 0.7%

House prices in the UK have increased by 0.7% in March, marking the first annual increase since June last year. The average UK home is now worth £283,000, up 1.8% compared to last year. New-build prices have risen by 17% in the past year, while existing homes have fallen by 1.8%. Scotland and Northern Ireland have seen the highest price increases at 6.7% and 4% respectively, while London has experienced a 3.4% decrease. In Yorkshire and the Humber, prices rose by 5%. The data from the Office for National Statistics is based on sold prices and comes with a time lag.

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