Business news 25 March 2024

The long term sick, Labour’s job market shake up, manufacturing bottoms, retail holds steady, interest rates, fiscal targets damage, long term gilt warning, mortgage rates, HMRC, British steel, rents, insolvencies and more news we thought would interest.

James Salmon, Operations Director.

Sick people leaving workforce at record highs

The number of people leaving the workforce due to long term sickness has hit the highest level on record, according to Resolution Foundation analysis. The number of adults who are economically inactive due to ill-health climbed from 2.1m in July 2019 to 2.8m in October 2023, with this marking the “longest sustained rise” since 1994-1998, when records began. The rise in long-term sickness means the UK is the only G7 economy which has not returned to its pre-pandemic employment rate. Louise Murphy, senior economist at the Resolution Foundation, said Britain’s labour market is “finally returning to normal,” but warned that the pandemic “has left an alarming legacy of the longest sustained rise in sickness-related inactivity since the 1990s.” She also noted. “Younger and older people together account for nine-tenths of the rise in overall economic inactivity,” warning that this could have “serious effects both on individuals’ living standards and career paths, as well as wider strains on the NHS and welfare spending if we fail to improve the nation’s health and reduce economic inactivity.” Shazia Ejaz at the Recruitment and Employment Federation, believes long NHS waiting lists “are a big factor for why not enough people are well enough to work.” She added: “Better infrastructure around transport, childcare and social care will all help tackle the inactivity challenge the UK faces.”

Jobs shake-up could make firms ‘hesitant’ to hire

Alex Baldock, the chief executive of electronics retailer Currys, has warned that Labour’s plans to shake up the jobs market could put companies off hiring staff. Labour, which has proposed reforms that include ditching zero-hours contracts and ‘firing and rehiring’ practices, would also look to effectively scrap the ability for businesses to put workers through probationary periods. Under the plans, firms would have to provide employees full rights, including sick pay and parental leave, from the first day. Mr Baldock said such policies would make firms more “hesitant” to take on new people, saying: “If you get rid of a very valuable probationary period for every colleague, that’s going to make businesses more hesitant to hire in the first place.” He added: “’Many things are better sorted out between individual businesses and individual people, rather than by government diktat.”

UK manufacturing slump reaches bottom as output starts to recover

The slump in UK manufacturing has reached its bottom and output is starting to recover, according to a survey by the CBI. The CBI index rose to minus 18 this month from minus 20 in February, in line with analysts’ forecasts. Rob Wood, chief UK economist at Pantheon Macroeconomics, stated that while manufacturing sector growth remains weak, it has at least found a bottom.

British retail sales hold steady in February

Figures from the Office for National Statistics show retail sales remained flat in February, beating expectations of a 0.3% drop. Growth in clothing purchases offset falling food and fuel sales, the ONS said. February’s flat retail sales contrasted with December’s drop of 3.2%, and then a 3.6% rise in January. Online sales increased as wet weather hit footfall – the south of England experienced its wettest February since data began being collected in 1836. Separately, data from GfK showed consumer confidence has turned positive for the first time in over two years. Disposable household incomes are finally rising as wages go up at the same time as food price inflation and energy bills fall. Oliver Vernon-Harcourt, of Deloitte, said: “Brighter days are ahead with the short-lived and shallow recession behind us and inflation reaching its lowest rate in two years.”

Bailey optimistic, but accused of misreading economy again

The Governor of the Bank of England, Andrew Bailey, told the FT in an interview that the markets are correct to price in more than one interest rate cut this year as he grows increasingly confident inflation is heading towards target. His comments come as some experts say the Bank has waited too long to cut rates, just as policymakers were late on putting rates up. “The Bank of England tightened the screws too much, which is squeezing much needed future growth,” says Carsten Jung, an economist at the IPPR think tank. He told the Telegraph: “The Bank should thus cut rates more quickly than its current plans. The tightening stance by both the Chancellor and the Bank of England contribute to the UK’s growth falling far behind America’s fast recovery.” Suren Thiru, economics director at ICAEW, adds: “The Bank of England remains overly cautious on the prospect of rate cuts given the startling inflation slowdown and an economy in recession.”

KPMG has warned that the UK economy will experience sluggish GDP growth and falling inflation, predicting that the economy will expand by only 0.3% this year and struggle to achieve meaningful growth next year. The report says rising unemployment, weak business investment, and high interest rates will keep the economy constrained for the next two years. KPMG expects inflation to return to its 2% target in the first half of the year, paving the way for interest rate cuts. However, it says delaying these cuts could compound the ongoing weakness in the economy. Yael Selfin, chief economist at KPMG UK, said that although GDP was slowly gathering momentum, “persistent weakness in the economy’s supply potential will prevent growth from exceeding 0.2% to 0.3% per quarter”.


The FTSE was up around 50 points on Friday lead by gains in the financial sector.  US stocks dipped on Friday evening as the recent rally paused. Elsewhere oil stabilized on the possibility of a Gaza ceasefire and gold slipped as the US dollar firmed.

Vodafone & Three

The Competition & Markets Authority (CMA) on Friday said a planned merger between Vodafone UK and Three UK could raise consumer prices and harm investment into UK mobile networks. Vodafone UK is owned by Berkshire, England-based telecommunications provider Vodafone, and Three UK is owned by Hong Kong-based telecommunications, ports, infrastructure and retail conglomerate CK Hutchison Holdings Ltd. Both are major providers of mobile telecommunication services in the UK, and two of only four UK mobile network operators, the others being BT/EE and Virgin Media O2.

Fiscal targets damage economy, think-tanks warn

Fiscal targets set by the Prime Minister and Chancellor are “not fit for purpose,” influential think-tanks have warned, saying Government spending decisions have constrained economic growth. Carsten Jung, senior economist at the Institute for Public Policy Research, said: “Fiscal rules were introduced to constrain politicians from making bad spending decisions. The evidence now suggests they are also constraining them from making good ones.” Meanwhile, Ben Caswell, a senior economist at NIESR, said that during economic downturns, these rules “disproportionately favour reductions in investment expenditure,” adding that this “can hinder an economic recovery and limit potential long-run growth.” Separately, James Smith, research director at the Resolution Foundation, said the fiscal targets had “encouraged £26bn of growth-sapping cuts to public investment.” A Treasury spokesperson said: “Thanks to our responsible action with the public finances we are on track to meet our fiscal rules,” adding: “Our rules provide sustainable growth and stability, reducing borrowing and debt so the economy can withstand shocks.”

Treasury warned over waning demand for long-term gilts

The Treasury has been warned that a decline in demand for long-term gilts leaves the UK in danger of market chaos similar to that seen in the wake of the mini-Budget in 2022. Ahead of the recent Budget, senior bankers and pension fund managers held meetings with the Debt Management Office (DMO) and Bank of England, with officials warned that the UK risked suffering its first failed debt auction in 15 years. There is concern that supply will outstrip demand within the next 18 months, with the Government set to issue historic amounts of debt and changes in the pension industry turning retirement funds from buyers to sellers. Experts say a failed auction could trigger a confidence crisis over the Government’s ability to fund itself. Imogen Bachra, a senior rates strategist at NatWest, said the DMO was likely to be “very careful” to avoid the risk of a failed auction but added that she “shared concerns” about waning demand.

Mortgage rate cuts anticipated after inflation data and rates decision

Brokers and housing market analysts expect mortgage rates to fall in the coming weeks following positive inflation data and an upbeat outlook from the Bank of England.

Triple lock to remain under Tories

Jeremy Hunt says that if re-elected, the Conservatives will keep the triple lock system to decide rises in the state pension. The Chancellor said that the policy, which ties the increase in the state pension to the highest of average earnings growth, inflation or 2.5%, will “absolutely” remain if the Conservatives win the general election. Mr Hunt told the BBC’s Sunday with Laura Kuenssberg that continuing the policy would be an “expensive commitment” but added: “You can only make that commitment if you’re confident that you’re going to deliver the economic growth that is going to pay for it.” Labour has said it is “committed to retaining” the triple lock but has yet to confirm if the pledge will feature in its election manifesto.

Tax office struggles to answer calls

HMRC has been struggling to answer calls, leaving almost a million unanswered in January. The average wait time to speak to a tax adviser exceeded 25 minutes for the first time ever and the tax office is looking to shift more customers towards online self-service. The Telegraph offers tips to beat the helpline queues, including using the chatbot to speak to an agent and persisting in trying to contact HMRC for complex tax queries. It warns, however, that writing a letter is not an efficient way to get a response from HMRC. Paul Slokan, an associate director at RSM, says the best time to call is 8am when the lines open. He says: “By 9am most people are in the office. If you call at that time you are more than likely to get the automated message that they are too busy and to call back later.”

British Steel’s green funding talks stall

British Steel’s talks with the Government for £300m of green funding have stalled, putting around 2,000 jobs at risk. The support is crucial for the company’s future as it plans to replace its blast furnaces with electric steelmaking facilities. However, the negotiations have hit a roadblock and the company’s finances have come under scrutiny. The group delayed publishing its 2021 accounts for more than a year and when they were finally released in January, the auditors resigned as they had been unable to confirm the existence of £46m of stock. Unions are planning to question British Steel’s bosses about its financial health, with the company already three months late in publishing its 2022 accounts. It is noted that any state funding will reportedly depend on owner Jingye committing to protect jobs and investing at least £1bn in the group by 2030.

Higher earners net Treasury an extra £4.7bn

Higher earners paid an extra £4.7bn to the Treasury last year due to the erosion of the personal allowance, which traps 1.35m workers in the 60% tax band. The personal allowance taper, introduced in 2010, affects those with an income over £100,000, resulting in an effective income tax rate of 60%. The hidden tax band has been frozen since its introduction, causing more individuals to be impacted. The tax take from the 60% charge has increased from £2.6bn in 2018-19 to £4.7bn in 2022-23, according to figures obtained by RSM. Over the past five years, higher earners have paid £18.6bn in taxes due to this trap. The personal allowance remains frozen at £12,570 until 2028. Making pension contributions can help individuals avoid the 60% tax bracket. Stephanie Court of RSM described the personal allowance taper as “one of the longest-standing stealth taxes”.

Majority of Tory voters favour defence spending boost over tax cuts

A majority of Conservative voters would prefer an increase in defence spending to tax cuts, according to a Savanta poll for the Sunday Telegraph. The survey found that 59% of people who backed the Tories in 2019 say that the Government should increase levels of funding for defence, even if that means reducing its scope for tax cuts. Only 27% of 2019 Conservative supporters said the Government should cut taxes, even if that would result in less spending on defence. Chris Hopkins, Savanta’s political research director, said: “The Prime Minister is betting his and his party’s political future on an improving economy that will allow him to dole out tax cuts to a grateful public. But our latest research suggests this might be misguided, with nearly two thirds of Conservative voters wanting him to increase defence spending, even if it means he can’t cut taxes.”

Selfridges CFO steps down after four months

Preetha McCann is understood to have stepped down as Selfridges chief financial officer earlier this month. Ms McCann joined from professional services group EY in November, replacing Matthew Smith. McCann’s departure comes amid growing uncertainty over the future ownership of the luxury department store.

CPRE warns rising rents are forcing middle earners out of rural South

Analysis by the Council for the Preservation of Rural England (CPRE) reveals that middle earners in the South are facing difficulties affording rent in rural areas due to soaring prices. In 15 rural local authorities, those earning the median income would spend over half of their income on rent. Sevenoaks, Bath and North East Somerset, Tandridge, Chichester and Lewes are identified as the most unaffordable areas for renting in Britain. Rural rents have risen by 27% over the past year, nearly twice the rate of urban areas. The CPRE called on policymakers to redefine affordable housing based on local incomes rather than market prices and suggest measures such as facilitating land purchase by local councils for social housing and implementing a register for second homes and short-term lets with higher council taxes.

Latest Insolvencies

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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 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 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.