Business news 26 April 2022.

James Salmon, Operations Director.

Small businesses squeezed by rising costs. Markets tumble over Beijing lockdown fears. Business leaders call for Jubilee bank holiday to be permanent from 2023. Shoppers urge retailers to ramp up investment in technology. And more business news.

Small businesses squeezed by rising costs.

Nearly nine in 10 small businesses says their margins are being squeezed by an increase in costs, according to the Federation of Small Businesses. Rising fuel and energy costs are the main price pressures hampering SMEs ability to combat what is expected to be a weaker than expected year of economic growth.

“Spiralling costs are eroding small business margins at a rate that many have never experienced before,” Martin McTague, national chair of the FSB, said. Meanwhile, separate research by BDO found eight in 10 retailers had planned for a peak inflation rate of 5% or less this year, suggesting many of them are unprepared for an already 30-year high cost of living of 7% to possibly reach double-digits in the autumn.

Markets tumble over Beijing lockdown fears.

Fears of a new Chinese lockdown sparked a sell-off on global markets on Monday, with sharp drops in European and Asian markets. Mainland China’s CSI 300 saw its sharpest decline since February 2020, falling 5%. Panic-buying gripped Beijing on Sunday and Monday as residents braced for restrictions similar to those suffered by people living in Shanghai.

Further lockdowns will hamper demand in a country experts say in already in a recession.

Craig Botham, of Pantheon Macroeconomics, said the shock from China is “an inflation hit waiting to happen” for the West. It will be felt across global supply chains “as there is nothing that China doesn’t touch in terms of production. It is going to be everything.”

George Lagarias, chief economist at Mazars, warned: “The global economic repercussions from China’s new lockdowns will be formidable. But they will pass. The images of repression, however, will scar China as an investment destination for years to come.”

Treasury set to double support for UK sectors hit by energy crisis.

The Government is set to extend a support scheme for energy-intensive industries for a further three years with the level of support doubling from about £130m a year up to £280m a year.

Business leaders call for Jubilee bank holiday to be permanent from 2023.

Business leaders have written to the Prime Minister and the Chancellor backing plans for the Queen’s Platinum Jubilee bank holiday to be made permanent from 2023. A coalition of trade bodies, including the CBI and UK Hospitality, along with businesses have launched the Thank Holiday campaign arguing the holiday would be a fitting tribute to the Queen’s “selfless service” and recognise the country’s sacrifices through all the challenges of the pandemic.

Businesswoman Deborah Meaden, who stars in the BBC’s Dragons’ Den, is spearheading the call. Research by PwC commissioned for the campaign found that the Government’s existing figures overestimated the potential cost of a new bank holiday by 64%. The research also highlights that sectors particularly badly impacted by the pandemic – retail, hospitality and tourism – would benefit greatly from additional economic activity.

Public Sector Net Borrowing.

Public Sector Net Borrowing in the UK hit £151.8bn in the financial year ending March 2022, the third-highest financial year borrowing since records began. Borrowing excluding public sector banks was 6.4 per cent of gross domestic product, according to freshly published figures from the Office for National Statistics. However, borrowing was less than half of the £317.6 billion borrowed in the same period last year.

Shoppers urge retailers to ramp up investment in technology.

Shoppers are demanding an evolution of payments systems to avoid queues and lengthy online checkout forms, according to a report into retail behaviour by fintech firm Klarna.

“UK shoppers are tech savvy, and their online shopping preference currently ranks ahead of all the other countries in our report,” said Viveka Söderbäck, Consumer Trend Expert at Klarna. “Brits crave digitalisation and expect retailers to invest in new technology that gives them a better shopping experience, especially when it comes to faster checkouts and frictionless payments”.

City AM notes that the BRC/KPMG Retail Sales Monitor found 46.9% of non-food retail sales in the UK took place online during 2021.

Rate-setter calls for modernisation of economic institutions.

Jonathan Haskel, an external member of the Bank of England’s monetary policy committee, has warned that institutional reform is required to prevent permanent low growth and poor productivity.

Haskel argues that the trend towards intangible assets in the digital economy, away from a typical tangible economy, requires new institutions and updated competition policy otherwise the intangible economy is going to stall. He explains that when a firm with intangible assets wants to borrow money “the banking system doesn’t work so well,” adding: “There is a mismatch of institutions.”

Haskel warns that the economy’s long-standing structural features, such as low investment and sluggish productivity, will worsen without a revamp. “We want new companies to spring up with new ideas and that are greener,” he said. “If they can’t get the funding or competition policy is set up in a way that hampers them or planning policy is not right, we are not going to make the transition to a high-growth economy”.

Co-working venture Second Home races to avert collapse.
The shared-office provider launched by former David Cameron aide Rohan Silva in 2014 needs to raise £6m in the coming days to avoid collapsing into administration. Second Home, which operates four sites in London and one each in Lisbon and Hollywood, has hired restructuring and insolvency firm FRP Advisory to advise it on talks about its future. Mr Silva is understood to have a couple of funding options and outlined to investors that Second Home’s performance during the last 12 months had underlined its post-pandemic prospects.

Net zero drive will hold back plans for a bonfire of red tape
Jacob Rees-Mogg, the minister for Brexit Opportunities, has warned that Boris Johnson’s drive for net zero will hold back plans for a post-Brexit bonfire of red tape. Mr Rees-Mogg is spearheading an effort to ditch 1,500 individual Brussels rules, but he says the rise of the net zero agenda means it will not be possible to introduce initiatives such as scrapping one piece of legislation for each one added. The costs of the net zero push should be kept as low as possible, Rees-Mogg explained, adding that it should be driven by technological innovation rather than “endless regulation”.

Homes for Ukraine scheme: tax treatment.

The Government has announced that sponsorship payments under the Homes for Ukraine scheme will not be taxable and that the conditions for some tax reliefs will be adjusted to take account of the scheme. The government is offering an optional ‘thank you’ payment of £350 per month for people accommodating Ukrainian refugees, and will legislate to ensure that these payments will not be taxable.

Where a company purchases a property for a purpose that would otherwise be relievable from the 15% rate of SDLT, relief will continue to be available if the property is to be temporarily used under the scheme. Where a dwelling does not currently qualify for relief from ATED, before the property is included in the scheme, ATED relief will be available from the point of occupation where the entire dwelling is used under the scheme.

Landlords can provide their residential properties to refugees for free. When a property does not qualify as a Furnished Holiday Lets (FHLs), the landlord becomes subject to the normal tax rules for residential property rental income.

Study finds retail investors prioritise profits over ESG concerns.

Two-thirds of retail investors are indifferent to whether their money goes into ethical investments, according to research by brokerage Charles Schwab.

Only 44% said they consider ESG (environmental, sustainability and governance) factors when making new investments, with the proportion falling to 28% among older investors. Among young investors, 55% of millennials and 56% of Gen Z say they regularly thought about the ESG factors of where their money was going.

Richard Flynn, Charles Schwab’s UK managing director, said: “Despite being a major focus for asset management firms, our research shows ESG is not always a priority for retail investors. Investors often want to invest in companies that help to improve the environment, such as renewable energy producers. However, there is a reluctance to sacrifice investment performance or pay higher fees in return.”

Meanwhile, PwC has predicted that ESG-stamped funds will account for more than half total assets under management in Europe by the middle of the decade.

UK companies must do more to eradicate modern slavery, FRC says.

A report by the Financial Reporting Council (FRC), with Lancaster University and UK independent anti-slavery commissioner Sara Thornton, has identified significant shortcomings in the quality of companies’ modern slavery reporting. The findings reveal one in ten companies do not provide a modern slavery statement despite it being a legal requirement.

Where companies did comply, only one third of these statements were considered clear and easy to read.

The FRC’s CEO Sir Jon Thompson said: “High quality reporting is vital to shining a light on how seriously businesses take social issues in their day-to-day operations. It is therefore unacceptable that many companies did not produce a modern slavery statement and that modern slavery considerations appear to not be a mainstream concern for many boardrooms. Looking ahead companies must clearly set out the actions they are taking to deal with modern day slavery in all aspects of their operations.”

Labour would reform UK’s ‘non-dom’ tax status, Reeves says.
Several papers pick up on news that Labour would replace the non-domiciled taxpayer status enjoyed by many wealthy individuals in the UK if the party came to power. Britain’s non-doms can enjoy tax-free status on foreign earnings for up to 15 years. Rachel Reeves, the shadow chancellor, said Labour would introduce a shorter term scheme for those staying in the UK for up to five years. Reeves said her proposed programme would be more in line with schemes in Canada, Germany and France. “This would be a clear, simple and modern system, ending the 200-year-old rules we currently follow that mean domicile is passed down through people’s fathers,” she said. However, analysis of Labour’s plans by Blick Rothenberg indicate the policy could cost the UK almost £7bn in tax income. Nimesh Shah, chief executive of Blick Rothenberg, said: “Labour’s proposal to abolish the non-dom regime does not appear well formed at this stage, and they risk pushing considerable tax revenue out of the UK.”

UK life sciences ride pandemic momentum
City AM reports on the wave of cash flooding into UK life sciences firms in light of the £225m raising by Cambridge Innovation Centre for its second life sciences fund. The paper notes that interest in the sector prompted KPMG to set up a new regulatory team in its life sciences practice in November.

Accountant accused of being a demanding millennial loses age discrimination case.

A 26-year-old accountant has lost an age discrimination case he brought against his former employer after he was sacked for being a demanding millennial. Jay Patel was hired by insurance boss Lucy Raymond-Williams, who was initially inspired by his overcoming dyslexia to earn a first-class honours degree in accounting and management, but who later sacked him for “being too demanding, in common with his generation of millennials.” Mrs Raymond-Williams also said she had “taken the wrong decision in giving a dyslexic person the job. A judge dismissed Patel’s age discrimination claim but ruled he was discriminated on grounds of his disability by being sacked over his dyslexia.

Elon Musk is to Buy Twitter

Twitter has announced Musk is buying twitter for $44 billion or $54.20 per share (38% above the price at the beginning of the month). Elon Musk said he wants to protect free speech on what  he calls the “digital town square” platform.


HSBC reported a slump in profit in the first quarter but the expected rise in central bank interest rates in the coming months gives the bank confidence for future income generation. In the three months to March 31, the Asia-focused lender recorded USD4.17 billion in pretax profit, down 28% from USD5.78 billion in the same period the year prior. Total revenue in the first quarter dropped 4.1% to USD12.46 billion from USD12.99 billion.

Taylor Wimpey

Taylor Wimpey continued to bat off concerns surrounding inflationary headwinds, as the housebuilder agrees to spend another £80m on fixing cladding. It signed the government’s fire safety pledge earlier this month, which means it must fix all cladding issues on buildings over 11 metres, which were built in the last 30 years. With the latest bout of cash earmarked for the fire safety works, which have been subject to fierce campaign following the Grenfell tragedy, Taylor Wimpey has spent £245m on the remediation.

Associated British Foods

Associated British Foods said revenue in the financial first half ended March 5 rose 25% to £7.88 billion from £6.31 billion a year prior. Pretax profit more than doubled to £635 million from £275 million. Operating profit jumped to £686 million from £320 million. The company also more than doubled its interim payout to 13.8 pence from 6.2p.

National Express

National Express said revenue has made a full pandemic recovery, as pent-up demand and a domestic travel boom saw a greater take-up of coach travel last month. The group’s revenue has finally swung back to 2019 levels in the three months to 31 March, with last month’s earnings coming in ahead of pre-pandemic figures. While the popular travel business did not disclose the figure, however, it has grown a third year-on-year.

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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.