Business news 26 February 2025
Energy Price cap climbs again. PM announces hike in defence spending. Firms rethink their plans as taxes rise. Pensions, house prices, markets, insolvencies & more business news that we thought would interest our members.
James Salmon, Operations Director.
Energy Price cap climbs again
Ofgem has announced that the energy price cap is rising by 6.4%, meaning a household using a typical amount of gas and electricity will see their bill rise by £111 a year to £1,849. This marks the third consecutive increase for the cap, which limits the amount suppliers can charge per unit of energy and is revised every three months. Jonathan Brearley, chief executive of the energy watchdog, has urged households to consider a fixed price deal on their energy bills, saying this could lower costs and “provide certainty over coming payments.”
PM announces hike in defence spending
Sir Keir Starmer has announced that defence spending will climb to 2.5% of GDP by 2027. The Prime Minister said the “biggest sustained increase in defence spending since the end of the Cold War” will see the rate climb to 2.5% from the current 2.3% of GDP, with a target of hitting 3% in the next Parliament.
“This investment means that the UK will strengthen its position as a leader in Nato and in the collective defence of our continent, and we should welcome that role,” Starmer said. The PM said the UK would have to fund a long term peace keeping commitment for Ukraine, however a number of MP’s made the point the pace of the PM planned defence spending increase was insufficient. Furthermore there is also the risk of other department spending cuts given the offset might not be enough.
Sir Keir said that the increase will be funded by a cut to international development assistance aid, which will be reduced from its current level of 0.5% of gross national income to 0.3% in 2027. Paul Johnson, director of the Institute of Fiscal Studies, described the move as “another axe taken to overseas aid,” and went on to warn: “Further increases in defence will mean cutting the welfare state or raising taxes.”
Firms rethink their plans as taxes rise
The British Chambers of Commerce (BCC) has revealed that 82% of businesses are reconsidering their plans due to the impending rise in employers’ National Insurance contributions. Chancellor Rachel Reeves has announced a 1.2 percentage point increase to 15% and a reduction in the salary threshold from £9,100 to £5,000, with this expected to generate £25bn annually by the decade’s end. The BCC analysis, which polled around 1,300 firms, highlighted widespread dissatisfaction with government policymaking, with 79% believing the effects of new policies are not being properly assessed. Alex Veitch, director of policy at the BCC, said: “Firms are already telling us they are sitting on a powder keg of costs,” indicating that many will need to raise prices and reassess recruitment strategies. He added: “Ministers need to read the room and recognise the impact this tax hike will have.”
Tax hikes put retail roles at risk
Up to 160,000 part-time shop workers may lose their jobs due to impending tax increases, according to the British Retail Consortium (BRC). The BRC warns that over 10% of part-time roles could be eliminated in the next three years, driven by a £25bn rise in employer National Insurance contributions and a 6.7% increase in the National Living Wage. Helen Dickinson, BRC’s chief executive, said: “Retailers face a mountain of costs from the Budget and while they continue to absorb costs where they can, higher prices and job losses are inevitable.” The Confederation of British Industry, meanwhile, has reported that retailers are cutting back on investments at the fastest rate in nearly six years, further exacerbating job security concerns.
Gen X least confident over retirement savings
Generation X are the least likely to feel confident about their retirement savings, according to a survey. The poll, for Annuity Ready, a lifetime annuity comparison service within the Legal & General Group, found that just 28% of people born between 1965 and 1980 believe they are on track for a comfortable retirement. This compares to 50% of Gen Z and 47% of Millennials, as well as 37% of Baby Boomers. The study also shows a shift away from salary-based pensions, with 65% of Gen X saying a final salary pension scheme is no longer available to them as a savings option even though 45% said it was when they first started working. Analysis also shows that 17% of Generation X are worried about never being able to fully retire.
House prices set to soar
UK house prices are projected to increase by 3.5% this year, driven by lower borrowing costs and a supportive Bank of England, which is expected to cut the bank rate to 3.75% by year-end. According to a poll of 20 housing market experts, prices will continue to rise by 4% next year. However, rental costs are anticipated to outpace house price growth, with a national increase of 4% expected this year.
Foxtons
An expose by Bloomberg has described a ladish culture at the London estate agents of racist comments, heavy drinking, unwanted touching of junior staff and drunk driving where senior management either ignored inappropriate behavior or were complicit. Where whistle blowers were either bribed into silence or cut off from future sales leads so they couldn’t meet targets and forced out.
Tesla
Tesla reported European sales down by 45% in a direct reaction by consumers to Elon Musk’s political meddling.
Markets
Yesterday, the FTSE 100 closed up 0.11% at 8668.67 and the Euro Stoxx 50 closed down 0.11% at 5447.90. Overnight in the US the S&P 500 fell 0.47% to 5955.25 and the NASDAQ fell 1.35% to 19026.39 as US investors grow increasingly concerned that President Donald Trump’s tariff threats will weaken the economy and stoke inflation.
Trump added copper to the list of global trades he was considering for tariffs.
The Bloomberg Magnificent 7 Index, which tracks seven mega-cap tech companies, fell 2.3% on Tuesday, marking a collective correction and a 10% drop since its 17th December 17 (Tesla, Amazon, Microsoft, Alphabet, Apple, Nvidia, and Meta Platforms, have lost a combined $1.5 trillion in market value since that high).
This morning on currencies, the pound is currently worth $1.2645 and €1.2045. On Commodities, Oil (Brent) is at $73.00 & Gold is at $2914. On the stock markets, the FTSE 100 is currently up 0.57% at 8718 and the Eurostoxx 50 is up 1.16% at 5511.
Global shares are signalling rises as investors geared up for key earnings results from Nvidia Corp later today which could help reignite the artificial intelligence-driven rally.
Ukrainian President Volodymyr Zelenskiy will reportedly meet with Donald Trump in Washington later this week to sign an agreement over half of the war-battered country’s natural resources, although at only a fraction of the previously reported figures.
The EU are also reportedly moving to secure their own deal of Ukraine’s mineral wealth. Stephane Sejourne, the EU’s industry commissioner said: “Twenty-one of the 30 critical materials Europe needs can be provided by Ukraine in a win-win partnership. The added value Europe offers is that we will never demand a deal that’s not mutually beneficial.”
The US House of Representatives passed a budget resolution that sets out a framework for enacting President Donald Trump’s fiscal plans. The resolution envisages $4trn-4.5trn of tax cuts and $1.5trn-2trn of spending cuts.
Heathrow
Heathrow has said a 31% surge in annual profits and a record year for passengers underscores the need for it to build a third runway. Owners of the west London airport reported pre-tax profit of £917 million for 2024, up from £701 million in 2023, with a 6% rise in annual passengers travelling through its four terminals to 83.9 million. But revenue fell 3.5% to £3.56 billion and underlying earnings also dropped 8.7% to £2.04 billion, which Heathrow said was a result of lower charges paid by airlines, set by regulator the Civil Aviation Authority.
Farmers face cashflow crisis amid IHT hit
Farmers have warned of a “cashflow crisis” that threatens their survival, with the Government’s proposed changes to inheritance tax (IHT) for agricultural properties having sparked concern. Prior to October’s Budget, farmers were able to claim 100% relief from IHT on agricultural land but reforms mean they will have to pay the tax on the value of land above £1m at an effective rate of 20%. Confederation of British Industry chief executive Rain Newton-Smith has hit out at the tax raid, suggesting it has dented confidence and could damage the economy. A poll by finance and mortgage advisory firm Ashbridge Partners shows that two in five farmers expect their farm to be unsustainable within five years, with 56% fearing that their farms will become financially unviable by 2035. The National Farmers’ Union estimates that around three quarters of farms will be impacted by the tax
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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!