Business news 26 July 2023
James Salmon, Operations Director.
Rise in manufacturing output spurs hopes of recovery. UK consumer confidence hits highest level in 18 months. IMF confirms forecast for UK growth. Natwest CEO quits. And more business news that we thought would interest our members.
Rise in manufacturing output spurs hopes of recovery
Output in the UK’s manufacturing sector has increased for the first time this year, raising hopes of a gradual recovery. The latest survey from the CBI shows a slowdown in declining orders and an overall rise in activity between April and June. This comes after a PMI survey revealed output in the sector fell to a three-year low last month. While energy prices have fallen and supply chain disruption has been repaired, weak global conditions and trade barriers have impacted UK companies. A separate survey from the Federation of Small Businesses shows an increase in exports in the second quarter while the ICAEW found that, despite falling production costs, manufacturers have raised their selling prices at the fastest pace on record.
UK consumer confidence hits highest level in 18 months
A survey carried out at the beginning of July by PwC found British consumers were the most upbeat they have been in 18 months. Confidence now sits at -13 versus -25 in Spring after the budget. Lisa Hooker, leader of industry for consumer markets, said: “It is encouraging to see the growth in sentiment across all ages and demographics. Whilst inflation remains the biggest factor affecting finances, we’re also seeing fewer people cutting back and spending intentions have consistently improved over the past 12 months.”
IMF confirms forecast for UK growth
The UK economy will grow by 0.4% this year, the International Monetary Fund has predicted, confirming a forecast made in May and marking a significant upgrade on the 0.3% contraction it predicted in April. The IMF said the UK’s improvement reflected “stronger-than-expected consumption and investment from the confidence effects of falling energy prices”. The Fund added that said Windsor Framework improved trade between Northern Ireland and Great Britain while the financial sector proved resilient in the wake of the collapse of Silicon Valley Bank in the US and Credit Suisse in Switzerland.
The UK will outperform Germany, which is expected to suffer a 0.3% contraction this year, a downgrade on the 0.1% drop previously forecast. This means Germany is now expected to be the worst performing major economy in the world this year.
The International Monetary Fund also raised its growth forecast for the global economy, turning slightly more positive despite slowing momentum from China. In the latest update to its World Economic Outlook, the IMF raised its 2023 global growth prediction by 0.2 percentage points to 3%, up from 2.8% at its April assessment. The IMF kept is 2024 growth forecast unchanged at 3%.
Natwest CEO quits
NatWest CEO Alison Rose has resigned from her position after admitting to being the source of an inaccurate story about Nigel Farage’s finances, telling a BBC journalist the decision was based solely on commercial reasons, when in fact his political views played a major part. In a statement released early this morning, NatWest Group chair Howard Davies said: “The board and Alison Rose have agreed, by mutual consent, that she will step down as CEO of the NatWest Group.” Paul Thwaite, who runs the bank’s commercial and institutional business, will take over interim CEO duties for 12 months.
Chancellor reminds big firms of their social contract
Jeremy Hunt is urging Britain’s biggest businesses to do more to help with the cost of living ahead of bumper earnings reports. In an article for the Times, the Chancellor says that banks must improve “measly” interest paid to savers and oil companies ensure that falls in price are passed on swiftly at the petrol pump. Food producers need to show what they are doing to pass on falling wholesale costs to shoppers. “For many, profits will go up significantly, which I will welcome – that is the business of capitalism. It will mean companies are growing, extra revenue for our public services, bigger pension pots and more jobs. But I also hope we hear about what they have done – and are doing – for their customers directly.”
Climate & Housing
The rories continue to walk back on climate change commitments. Following on from Rishi Sinak saying he wanted to avoid any action that would cost voters money, Michael Gove yesterday retreated on plans to decarbonise housing. These moves ignore the fact that the longer these actions are delayed, the more painful and more expensive they will have to be in the future.
Housing is the second biggest cause of carbon emissions after transport. those emissions were reduced by 15% between 1996 and 2010 but then progress stalled. Moves on heat pumps and insulation were already inadequate. Those inadequate plans have now been cut.
Ofgem plans clampdown on rogue energy brokers
Ofgem will today put forward proposals for new rules aimed at stopping small firms being ripped off by rogue energy brokers. The changes could see energy suppliers forced to reveal the billions in secret broker commissions they load on to business contracts and new legislation bringing brokers under Ofgem’s regulatory remit for the first time. The proposals come after eight small-business bodies – including UKHospitality, Care England and the British Retail Consortium – wrote to the regulator to warn that if it continued to “fail the business community by allowing this exploitation to continue” they would raise their concerns directly with the Government.
BoE’s money printing balloons by £50bn
The Bank of England is facing losses of £270bn on its bond buying sprees – £50bn more than just three months ago. Rising interest rates have pushed the bill for quantitative easing up, which will be paid by the taxpayer. The loss dwarfs the £123.8bn in QE profits sent to the Treasury between 2009 and 2022, suggesting a net cost to the taxpayer of £150bn by 2033. Meanwhile, ratings agency Fitch estimates that the Government will spend £110bn on debt interest payments this year, equivalent to 10.4% of its revenue. This is the largest share of its revenue on interest of any high income country.
Record wage growth in IT and communications sector
The IT and communications sector in England and Wales is experiencing record wage growth, driven by the demand for new broadband networks and artificial intelligence experts. Salaries in the sector surged by 4.4% this spring, the highest pace on record, with the IT and comms sector seeing the fastest growth at 4.9%. The Institute of Chartered Accountants in England and Wales attributes this growth to large-scale infrastructure projects and investment in new technology such as AI. “Some of it will also be because of investment in new tech such as AI,” said Suren Thiru, the institute’s economics director.
London’s top earners enjoy strongest UK pay growth since start of pandemic
Top earners in London have enjoyed the highest pay growth since the start of the pandemic, according to the Institute for Fiscal Studies, with mean earnings up 5% compared with a national average of 2.7%. “Inequality in mean earnings across the country had been falling in the two decades leading up to the pandemic, with the poorest areas seeing the highest pay growth. Since 2020 we have seen a reversal of this trend,” said Xiaowei Xu, senior research economist at the IFS.
Tech Stocks
Tech Titans revealed a mixed bag of results in quarterly earnings. Alphabet’s (Google parent) revenues grew by 7% YoY, to $74.6 billion, beating expectations. But Snap, fell by 4%, to $1.1 billion. While Microsoft reported year-on-year revenue growth of 8%, aided by demand for its AI offerings but fell on slowing demand for its cloud services. Yesterday the NASDAQ rose 0.61%. Facebook reports later today.
Solvency II reforms will encourage investment from insurers
Research by PwC indicates that the Government’s proposed Solvency II reforms will spur insurers to increase investment into the UK economy. Infrastructure assets in their construction phase and higher-risk assets common in “greenfield” projects that typically bear high technological and development risks are likely to become more attractive, the firm said. However, firms will need to focus on key aspects of risk management to protect policyholder security, PwC added.
WANdisco shares plunge over alleged fraud
Shares in WANdisco dropped by 96% as trading reopened four months after the software company revealed an apparent accounting fraud. A senior sales employee had allegedly booked fake deals worth millions of dollars. The company’s founder, David Richards, left in April. The Financial Conduct Authority is investigating the alleged fraud. Trading resumed after the completion of an emergency fundraising and the publication of its overdue annual results, which contained details of several, separate, related-party transactions made by Richards, including a $362,691 payment to Sheffield Wednesday. WANdisco’s market valuation has fallen from £880m to £55m
City AM on the brink of administration
The London free paper City AM is on the edge of administration after failing to find a buyer. Bosses are poised to call in administrators at BDO to begin an insolvency process. Earlier this month the company said it had appointed FRP Advisory to explore a sale after failing to attract new investment. Repeated lockdowns during the pandemic and the legacy of home working has left the business-focused paper struggling to regain its previous audiences
Latest Insolvencies
Appointment of Liquidators – NAGRA A&A LTD
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Appointment of Liquidators – A B PHARMACEUTICALS LIMITED
Appointment of Liquidators – ANCAMART LIMITED
Petitions to wind up (Companies) – PLUMBING TRADE CENTRE LIMITED
Appointment of Liquidators – MPTB LTD
Appointment of Liquidators – ECO COLD REFRIGERATION AND AIR CONDITIONING LIMITED
Appointment of Liquidators – WATERWISE TECHNOLOGY LIMITED
Petitions to wind up (Companies) – MCKENNA GROUP FACILITIES MANAGEMENT LIMITED
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Petitions to wind up (Companies) – MARITIME UK LOGISTICS LTD
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Appointment of Liquidators – DIRECT LABOUR LIMITED
Appointment of Liquidators – A.C. RICHARDS LIMITED
Petitions to wind up (Companies) – WOBBLY BREWERY & EVENTS LTD
Petitions to wind up (Companies) – OGV ENERGY (SCOTLAND) LTD
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Winding up Order (Companies) – DANNSPALL LTD
Appointment of Liquidators – BUTLER & YOUNG RESIDENTIAL LIMITED
Appointment of Liquidators – CRIMOND ESTATES LTD.
Petitions to wind up (Companies) – CIS HOMES LTD
Appointment of Liquidators – HEMA RETAIL LIMITED
Appointment of Liquidators – CLOUTEX LTD
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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.
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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
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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?
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The Credit Protection Association – Prompting Punctual Payments – Ethical, Effective, Efficient, Economical collections.