Business news 25 September 2024
‘Burdensome’ employment laws could hurt SME growth. Economic growth ‘will exceed forecasts’. Shein allowed to dodge tax. Five areas where Rachel Reeves could support SMEs ahead of the Autumn Statement. Tax, markets, insolvencies & more business news that we thought would interest our members.
James Salmon, Operations Director.
‘Burdensome’ employment laws could hurt SME growth
Thousands of small businesses risk closure if plans to end probationary periods for employees without specific exemptions go ahead, employment platform Employment Hero has warned. New employment laws announced by the Government will see probationary periods scrapped, with employees granted day one rights. The reforms will also see flexible contracts banned and workers granted a right to switch off. Kevin Fitzgerald, HR chief at Employment, predicts that the changes will disproportionately harm small businesses. Urging ministers to exempt the smallest firms from the removal of probation periods, he described this regulation as the “most burdensome” of the new employments law and warned that it is likely to stifle growth in the sector. Emma Jones, founder and chief executive of small business support platform Enterprise Nation, said: “We think if new workers’ rights regulations are introduced, small businesses must be exempt from proposed fines for failure to comply with these new regulations.”
Economic growth ‘will exceed forecasts’
The UK economy is projected to grow at double the previously expected rate this year, with KPMG forecasting a 1% increase in GDP, having previously predicted an increase 0.5%. It expects growth to hit 1.2% in 2025, with this up on the 0.9% increase it predicted in July. This optimistic outlook comes despite the Bank of England lowering interest rates slowly. KPMG said the base rate will fall once more this year and eventually fall to 3.5% in 2025 from its current level of 5%. The firm also noted that consumer spending is expected to rise by 0.4% this year and 1.4% next year, influenced by a shift towards saving over spending due to interest rate rises.
Starmer ready to be unpopular
Keir Starmer told the Labour conference he will take “tough, long-term decisions” that will make him unpopular and said Labour’s program of “national renewal” is unchanged despite a slew of setbacks early in his premiership.
“The time is long overdue for politicians to level with you about the trade-offs this country faces,” Starmer said in his first keynote speech as prime minister to the Labour Party’s annual conference in Liverpool yesterday. “Because if the last few years have shown us anything, it’s that if you bury your head because things are difficult, your country goes backwards.”
Superdry boss: Shein allowed to ‘dodge tax’
Superdry chief executive Julian Dunkerton says Shein is being allowed to “dodge tax,” arguing that the Chinese fast fashion firm has an unfair advantage because import duties are not charged on the low-value parcels it sends direct to customers from overseas. Mr Dunkerton said it would be in the UK’s interests to scrap this tax “loophole,” saying: “The rules weren’t made for a company sending individual parcels [and] having a billion-pound turnover in the UK without paying any tax.” He added: “We’re allowing somebody to come in and be a tax avoider, essentially.” Urging the Government to act, he said: “Personally, I would force them into paying import duty, VAT and possibly even an environmental tax.” Shein has previously said it complies fully with all its UK tax liabilities. A Treasury spokesperson said: “Our customs and tax regime balances reducing burdens for businesses and consumers buying lower-value goods from overseas with the interests of UK businesses.”
Chancellor warned over CGT hike
Businesses supported by BGF, the UK’s leading private equity investor, have expressed concerns over potential cuts to investment if Chancellor Rachel Reeves raises capital gains tax (CGT) in the upcoming Budget. A survey of 58 companies revealed that 88% of executives view an increase in CGT as detrimental to entrepreneurship, with 74% anticipating a negative impact on their operations. The poll also saw 78% say a higher rate of CGT would influence their thinking on investment. Andy Gregory, BGF’s chief executive, said: “What we’re hearing of is an uncertain environment that business leaders are having to navigate,” adding that this comes as they face “some very specific concerns that may, or may not, be contained in the Budget and could significantly impact growth prospects” for small and medium-sized enterprises. The Treasury has not confirmed any changes to CGT, but it remains a significant source of potential revenue, especially as the Government has ruled out increases to income tax, National Insurance or VAT. The Office for Budget Responsibility estimates that the Treasury will raise £15.2bn in CGT this tax year, with this accounting for 1.3% of all tax receipts.
See our separate article : Five areas where Rachel Reeves could support SMEs ahead of the Autumn Statement
Markets
Global markets were mostly higher yesterday as investors welcomed China’s plans to reinvigorate its economy with a host of new stimulus measures. The world’s second largest economy is expected to benefit from cuts to interest rates and bank’s cash reserve requirements. London blue chips rallied in response although it was muted due the pounds gains.
Gold prices hit a new record high, climbing towards $2,650 an ounce in anticipation of further easing of interest rates from the US Federal Reserve.
Yesterday, the FTSE 100 closed up 0.28% at 8282.76 and the Euro Stoxx 50 closed up 1.13% at 4940.72. Overnight in the US the S&P 500 rose 0.25% to 5732.93 and the NASDAQ rose 0.56% to 18074.52.
This morning on currencies, the pound is currently worth $1.338 and €1.196. On Commodities, Oil (Brent) is at $75.1 & Gold is at $2655. On the stock markets, the FTSE 100 is currently up 0.05% at 8287.2 and the Eurostoxx 50 is down 0.56% at 4912.
Bank of England governor Andrew Bailey has said he sees interest rates on a “downward” trajectory after August’s 0.25% cut. Bailey said that he was “very encouraged” by inflation, after price rises peaked at 11.1% in 2022 before scaling back to 2.2% come August.
AIM future uncertain
The future of London’s AIM market is precarious, with many firms contemplating delisting, according to Bobby Kalar, chief executive of challenger energy supplier Yu Group. He expressed disappointment over the lack of engagement from institutional investors and noted that “many AIM companies are questioning the market’s future and the desirability of remaining listed.” EY data shows that four companies listed on AIM in the first of 2024 after nine companies listed last year. By contrast, 16 new companies entered the market in a single quarter three times from 2017 to 2018. Separate data from UHY Hacker Young shows that a dip in IPOs and increase in delistings means the number of companies on the index is at its lowest level in more than 20 years.
Reporting gap between FTSE and AIM widening
The Financial Reporting Council (FRC) says the reporting gap between FTSE 350 companies and those listed on AIM is widening. The watchdog highlighted that queries relating to the impairment of assets and cash flow statements each rose by more than 10% in all cases opened this year. There was also an increased number of restatements in these areas, mainly outside the FTSE 350. The FRC said it was “pleased” that the quality of reporting for FTSE 350 businesses has been maintained, with improvements in several reporting areas. It added that it questioned “significantly fewer companies” over their disclosure of judgements and estimates. Sarah Rapson, the FRC’s executive director of supervision, said: “While it is pleasing that the quality of corporate reporting has been maintained, a widening quality gap between FTSE 350 companies and other companies is concerning.”
One in 10 wealthy families may leave UK over schools tax
One in 10 wealthy families is considering moving abroad as a result of the Government’s planned tax raid on private schools, according to wealth management company Saltus. The Wealth Index report polled more than 2,000 high-net-worth individuals in the UK with assets worth more than £250,000. Around half have children in private schools, and 10%of these said they are contemplating relocating overseas to avoid Labour’s VAT hit on fees, which will come into force from January 1. Among all high-net-worth parents polled, 55% said they thought their child’s education would be disrupted as a result of the VAT raid. In total, 6% said paying school fees is their biggest concern. Jon Macintosh, managing director of Saltus, said there is a “discontent about tax” among high-net-worth individuals, adding that this “becomes more pronounced when specific measures like VAT on school fees are raised.”
Wealth tax rises could harm growth
Experts at Hargreaves Lansdown have raised concerns over potential wealth tax increases that could adversely affect UK investment and economic growth. This comes amid speculation that the Budget could target the tax relief offered on private pension contributions from salaries and the size of the tax free cash lump sum people are allowed to take from their pension pots. Sarah Coles, head of personal finance, cautioned that “tax policy tends to be made in a piecemeal way,” which could lead to unintended consequences, while Helen Morrissey, the firm’s head of retirement analysis, says that any reduction in tax-free cash from pensions would be “hugely unpopular,” as individuals rely on these funds for significant life expenses.
Tax agents arrested
Eleven individuals, including tax agents, have been arrested on suspicion of fraud related to research and development tax credits. These credits are designed to incentivise business innovation, with the schemes reportedly worth multibillion-pound investments. HMRC officers conducted searches at various business addresses across Britain as part of the ongoing investigation into these alleged criminal activities.
China
China’s Central Bank on Wednesday said it would slash another key interest rate, a day after it unveiled a raft of new measures aimed at boosting its ailing economy. The medium-term lending facility – the interest for one-year loans to financial institutions – was cut from 2.3% to 2.0%, the People’s Bank of China said in a statement.
Rightmove
Rightmove has rejected the third offer from Rupert Murdoch’s REA Group, saying it “continues to be unattractive and materially undervalues the company and its future prospects”. Made up of 341p in cash and 0.0422 new REA shares per Rightmove share, the latest bid from the Australian property portal owner implied an offer value of 759p, Rightmove pointed out.
Visa
The US Department of Justice has filed a lawsuit against Visa, accusing the payment giant of monopolising the debit card market. Visa processes over 60% of US debit transactions. The action alleges Visa unlawfully limits competition and charges merchants exorbitant fees for processing debit-card payments, conduct that affects the price of nearly everything.
DFS
DFS Furniture has said improving house market conditions and growing incomes should prompt a recovery over the coming months after reporting a loss for the year. Reported pre-tax losses for the year sat at £1.7 million, against a £29.7 million profit in 2023, the furniture retailer said in an update on Wednesday.
Holiday bookings
Package holiday retailer On The Beach said winter bookings are far ahead of last year, and those for next summer are “very” encouraging. Shares rose over 5%.
FCA to ‘intensify engagement’ over name and shame plans
The Financial Conduct Authority (FCA) is planning to “intensify” its engagement with the City over plans to ‘name and shame’ firms under investigation. Therese Chambers, the regulator’s joint executive director of enforcement and market oversight, says the FCA has been “reflecting on the range of serious concerns raised and working to build understanding” based on responses to a consultation in April. She added that while consumers groups, whistleblowers and some other regulators welcomed the prospect of greater transparency, “the companies we regulate were overwhelmingly against.” Under the proposals, the City watchdog would publicly name companies facing an enforcement investigation on a more regular basis and at an earlier stage. Trade bodies including UK Finance and TheCityUK have voiced concern that this could negatively impact firms’ reputations or valuations, while also hurting Britain’s appeal as a financial centre. Elsewhere, City Minister Tulip Siddiq has asked the City watchdog to rethink the name and shame plans, suggesting she could overrule them.
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Why you should become a member of CPA!
The Credit Protection Association (CPA) has been assisting thousands of UK businesses to get paid, since 1914. We have supported our members through all sorts of difficult trading environments. With high interest rates and a struggling economy and elevated insolvencies, our services can help your business navigate these difficult waters.
Unlike other credit management and debt collection companies, we offer a range of services to our members that are all included as part of a fixed annual subscription, tailored to your needs.
Under your annual subscription you will have access to our main services:
- Our Creditcare credit reports provide credit ratings and limits along with a host of detailed information on your potential customers to enable you to trade with confidence and set appropriate credit policies for new customers.
- Our monitoring service will alert you to any significant changes in the status of those customers.
- Our Overdue account recovery service can be used to chase up payment on any invoices to those customers that have not been paid on time. Unlike other debt collection companies, this service directs your customer to pay direct to you and allows you to maintain your goodwill with them, rather than inserting ourselves into your relationship with you customer and insisting they pay CPA instead. Our Overdue account recovery service resolves over 80% of accounts referred to us.
All of the above services and other complimentary services such address verification, are included in your subscription!
And for the small minority of debts not resolved through our Overdue account recovery service, you can refer the debt to our collections department to escalate the late payment collections process.
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 and be warned of any potential risks. CPA has been improving business cash flow for over 100 years, by tackling late payers and campaigning against the late payment culture in the UK.
Unlike other credit management companies, we offer our members a fixed annual subscription regardless of how high the value of their debts maybe!
Rather than to borrowing more money to improve your cashflow, CPA suggests that business owners tackle the problem at its source. If late payments are a strain on your cashflow, then talk to CPA about how we can help you reduce those late payments.
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’s collection department 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.