Business news 25 January 2024

Economy boosted as activity accelerates. London firms fear inflation will hit progress. London remains the leading financial centre.  And more business news that we thought would interest our members.

James Salmon, Operations Director.

Economy boosted as activity accelerates

Activity in the UK economy’s private sector accelerated in January, marking the third consecutive month of growth. The S&P Global/CIPS flash UK PMI came in at 52.5 for January, with this up from 52.1 in December on an index where a reading above 50 indicates business activity is expanding. The analysis shows that the services sector climbed to an eight-month high of 53.8, with some firms noting “a turnaround in demand due to lower borrowing costs.” Although the manufacturing sector remained in contraction, it hit a 9-month high of 47.3 in January. It is noted that disruption in the Red Sea means manufacturing firms saw longer waiting times in their supply chains. Production across the sector fell for the 11th month in a row. Chris Williamson, chief business economist at S&P Global Market Intelligence, said the survey marks “a promising start to the year,” while Gabriella Dickens, senior UK economist at Pantheon Macroeconomics, said the economy is “quickly escaping the mild recession that it went into in the second half of last year.”

London firms fear inflation will hit progress

Two thirds of London businesses are concerned that inflation and high interest rates will dampen economic activity in the first half of 2024, according to a quarterly survey from the London Chambers of Commerce and Industry (LCCI). The survey also shows that a majority of those polled saw fuel and energy costs increase in Q4 2023, with firms warning that they would have to pass these increases onto consumers. On their expectations for the year ahead, just 28% of firms expect the capital’s economy to improve in 2024. Despite this, half of London businesses expect their profitability to improve over the next year. Karim Fatehi, interim chief executive of the LCCI, said the findings “present a mixed picture,” saying: “On one hand, cost pressures … indicate that many firms will be struggling to stay afloat. On the other hand, businesses have never been more confident about their own prospects, with 50% predicting an increase in their own profitability over the next 12 months.”

London remains the leading financial centre

London has kept its place as the top global financial centre, according to a new report from the City of London Corporation which measures the world’s cities across 101 metrics. London’s overall competitiveness score fell slightly from last year, dropping from 60 to 59. However, it held onto the top spot as New York City fell from 60 to 57. Singapore placed third with a score of 48, while Frankfurt came fourth with 44 and Paris was fifth with 40. Chris Hayward, policy chair of the City of London Corporation, said: “I am pleased to see London retain its crown as the leading global financial centre after tying with New York City last year, but our competitive edge must be revived.” He went on to praise regulatory changes “which have sparked business optimism by removing barriers to international talent and ease of doing business.” Michael Mainelli, Lord Mayor of the City of London, added that the report “shows how the UK’s financial services are key to driving growth and promoting the breadth of specialist expertise available in the City of London.”

Tsar could boost economy by £149bn

A report from charity ReGenerate suggests that appointing a ‘Better Business Tsar’ could deliver a £149bn boost to the economy. It is argued that the UK should follow the lead of the US, Japan and France in supporting business as they work toward tackling social and environmental challenges. Holly Branson, chief purpose and vision officer at Virgin, said the report “illustrates powerful ways that government can work more effectively with businesses to address some of the biggest social and environmental challenges of our time,” while Greggs CEO Roisin Currie said businesses “have a big responsibility to improve the world around us and working more effectively with government – and government working more effectively with business – is a critical priority to making a positive, lasting change.”

Chancellor urged to reform share schemes

The Chancellor has been urged to overhaul share incentive plans and unlock a “new wave of employee share ownership.” Share incentive plans offer workers a stake in their employer and allow them to reduce the amount of income tax, National Insurance and capital gains they would normally pay on returns. In a letter to Jeremy Hunt, share ownership group ProShare calls for reform of rules which say employees must hold the shares for five years. The letter, which was signed by 41 companies including Abrdn, Aviva, BAE systems, Legal & General and Vodafone, says committing to a five year investment “means the plan is not relevant for many employees, with the issue exacerbated for younger and lower paid groups.” A separate letter from Sir Graham Brady – which is signed by a number of backbench MPs and peers – says “simple reform” of reducing the five year period would help “unleash a new wave of employee share ownership for the next 20 years.” HMRC figures show that 480 schemes from employers were approved in 2020/21, down from well over 500 each year in the decade to 2017/18.

FOS expects more than 180k complaints

The Financial Ombudsman Service (FOS) is expecting more than 181,000 consumer complaints in the next financial year, with many involving everyday financial concerns. These include a rise in disputed transactions driven by an increase in financial fraud and scams, as well as unaffordable lending linked to cost-of-living pressures. The FOS has set itself a target of resolving 90% of cases within five months while reducing the case fee by £100 to £650. It will also reduce compulsory and voluntary jurisdiction levies on businesses resulting in a total £60m reduction in case fees and levy costs. FOS chief executive Abby Thomas said: “We are planning to be more ambitious next year, resolving complaints more quickly and improving the service we offer.”

Workers hit by frozen thresholds as tax bills soar

Households in the UK are paying nearly £3,000 more in tax on average since a stealth tax raid by ministers, according to analysis by RSM. The personal tax bill has risen by over 32% from £267bn to £353bn since Boris Johnson became Prime Minister in 2019. This includes income tax, National Insurance contributions, capital gains tax, and inheritance tax. Per family, this works out as an average tax bill of £12,533, up from £9,605 in 2019. The freeze on tax thresholds has contributed to the £2,900 increase, with workers hit by fiscal drag. Chris Etherington of RSM said: “Many taxpayers may have felt they were worse off and paying more in tax, and these figures highlight the extent of that.”

IFS: Hunt’s tax cuts likely to be reversed after the election

The Institute for Fiscal Studies (IFS) has warned that any tax cuts rolled out by the Chancellor in his upcoming Budget are likely to be reversed after the election as the UK faces the most challenging debt burden since the 1950s. The think-tank said spiralling debt costs and a “miserable” growth outlook mean that whoever is in power faces the most difficult tax and spending choices since the pandemic and financial crisis. Britain’s debt pile is almost equal to the size of the economy, at 97.7% of GDP. The IFS said: “The challenge is that with higher levels of spending on debt interest and forecasts suggesting that economic growth will continue to be weak, getting debt falling will be much more difficult than in the recent past – and arguably more difficult than at any point in the post-war period.” The report added: “As a result, there will be limited scope to cut taxes or increase spending by a meaningful amount while staying within that constraint.” Amid reports that the Chancellor is considering tax cuts in his March Budget, the IFS warned: “Tax cuts today must add to the risk that either tax rises or spending cuts are required further down the line.” IFS director Paul Johnson has called on the Tories and Labour to “be honest” during the election campaign, saying: “If they are promising tax cuts, let’s hear where the spending cuts will fall. If they are going to raise, or even protect spending, they should tell us where taxes will rise.”


Shares in London closed firmly in the black on Wednesday with gains ranging from 0.6% on the FTSE 100 to 1% in the 250. Markets were also in a buoyant mood across the pond in the US  with Wall Street extending recent gains as investors look to today’s GDP data The S&P was up 0.1% to 4868.55 and the Nasdaq up 0.36% to 15481.92.


Good & bad news from the US Federal Aviation Administration who ordered Boeing to halt production of its top-selling 737 MAX 9 planes because of “unacceptable” quality issues. The FAA, however, allowed those already sold to return to the air, a relief to carriers which had to cancel hundreds of flights when they were grounded.


Elon Musk warned investors that its EV sales growth could be “notably lower” in 2024. In its latest earnings report the carmaker also revealed slower revenue growth and shrinking margins in the last quarter of 2023 (after it had cut prices). Shares in Tesla fell by more than 5% on the announcement. Elon Musk, said production of a lower-cost EV built using “revolutionary manufacturing technology” would begin in 2025, no doubt in response to the threat from BYD.

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The Credit Protection Association – Prompting Punctual Payments – Ethical, Effective, Efficient, Economical collections


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The Credit Protection Association – Prompting Punctual Payments – Ethical, Effective, Efficient, Economical collections.