Business news 27 March 2024

Recession, Ai & Accountancy, Supermarket Prices, finfluencers, rate cuts, The FRC, tax code warning, the Baltimore bridge collapse & more business news that we thought would interest our members.

James Salmon, Operations Director.

PM suggests recession is already over

Rishi Sunak says the recession already looks to be over, telling the Commons Liaison Committee that evidence points toward the economy having “returned to growth.” The Prime Minister said a bigger-than-expected fall in inflation is evidence that the Government’s plan to boost the economy is working.

AI and accountancy

BBC News’ Emma Woollacott considers the impact AI could have on the accountancy sector, saying such technology is increasingly being used for routine and time-consuming tasks often done by more junior accountancy staff. Matthew Campbell, audit chief technology officer for KPMG UK, says: “When you look at some of the tasks that auditors were doing – some of the boring, mundane tasks around churning data and manipulating it into a format where you can then actually do something valuable with it – that’s where artificial intelligence can play a really big part.” A poll from KPMG shows that four in 10 senior audit professionals expect the increased efficiency that AI can bring to lead to a reduction in the size of auditing teams. Ms Woollacott says that with auditing firms under great scrutiny, many are turning to AI. Marc Bena, digital audit leader at PwC UK, says: “As generative AI plays a more prominent role in contributing to first drafts of content, the human auditor role can be elevated to focus on areas of judgement and challenge.”

Supermarket Prices

UK Supermarket Prices increased at their slowest rate in two years over the course of March, at 4.5%. As reported by Kantar, this was the smallest increase seen since February 2022, while the figure also marked a hefty drop from February’s 5.3%. Branded goods sales outdid those of own-labelled products, according to the market researcher, while demand for premium own-branded goods rocketed.

FCA introduces new rules to regulate finfluencers

The Financial Conduct Authority has issued new rules that will target financial influencers who are hiding the risks of the products they are promoting or exaggerating their potential gains. The City watchdog said risk warnings on TikTok and YouTube content should be “clearly and prominently displayed across the screen throughout the financial promotion” rather just in the caption or at the end of the video. For platforms which allow multiple pictures to be posted, such as Instagram, so-called finfluencers should make risk warnings “clear and prominent in every slide.” Influencers could be committing a crime if they promote financial products or services that are subject to regulation without the approval of an FCA authorised person, with the regulator warning that the penalty could involve up to two years imprisonment, the imposition of an unlimited fine, or both. Lucy Castledine, director of consumer investments at the FCA, said: “Promotions aren’t just about the likes, they’re about the law.” While the new regulations apply to general financial advice and product promotion, crypto advertising falls under more detailed rules that came into place in January.

Markets pricing in too many rate cuts

Catherine Mann, a member of the Bank of England’s Monetary Policy Committee, says financial markets are pricing in too many interest rate cuts this year. Markets are pricing in three quarter-point reductions, starting in August, and some have suggested that the Bank will lead a global shift toward lower borrowing costs. Ms Mann says investors are still “too complacent” in betting on a rapid series of rate cuts, saying: “They’re pricing in too many cuts – that would be my personal view – and so in some sense, I don’t have to cut because the market already is.”

FRC is ‘sheriff for only half the county’

Financial Reporting Council (FRC) chief executive Richard Moriarty has called for greater powers to bring the accounting watchdog in line with other regulators. He told the Commons Business and Trade Select Committee: “At the moment, I’m sheriff for only half the county . . . and my arsenal is weaker than other regulators,” adding: “I’m not asking for much more than what other regulators have today.” While three government-backed reviews have proposed changes to auditing and corporate governance, including the creation of the Audit, Reporting and Governance Authority (ARGA), the plans have been hit by delays and the Government has yet to introduce legislation to set up the new watchdog. Mr Moriarty said that while the FRC has come a long way in implementing many of the recommendations, “serious gaps” remain and require legislation. He noted that the FRC is “beholden” to accounting firms for information used in investigations, whereas other regulators can demand data, adding that the watchdog has no competition powers and has to “beg in a voluntary way” for about 40% of its income. John Kingman, who led one of the reviews, told MPs that without the ARGA there was a risk of falling back on improvements made at the FRC, saying: “The house has been impressively rebuilt … but it’s still on inadequate foundations.” Enterprise and Markets Minister Kevin Hollinrake said the Government was “not against” establishing the ARGA and that it was “keen to legislate when we get the time to do that.”

Tax code warning for workers

A survey by financial services company Canada Life has found that 31% of adults in the UK have been on the wrong tax code at some point, resulting in an average overpayment of £689. It was also shown that over two-thirds of those surveyed did not know how to claim back overpaid tax. John Chew, a tax and estate planning specialist at Canada Life, warned: “Those who are not on the right code may find themselves out of pocket. If it’s wrong, you may end up contributing more or less than you’re supposed to.” HMRC has questioned the findings, with a spokesperson saying: “We don’t recognise these figures. Tax codes are based on information provided by employers or pension providers. People can check their code quickly and easily online and update any details that may be affecting it.”

Emission crackdown

The North Sea Transition Authority, the UK’s oil and gas regulator has laid out stricter guidelines for producers to reduce emissions or risk losing out on regulatory approvals. An updated emissions plan “makes it clear that for production to continue in the North Sea, it must also become cleaner,”  itsaid in a report, adding Operators shouldn’t expect approvals if they could curb emissions and choose not to.

Former Glencore boss loses tax battle

Alex Beard, the former head of oil at Glencore, has lost a legal battle with HMRC over nearly £150m of dividends paid out by the global commodities firm. Mr Beard took legal action over the tax rate on dividends totalling £149.7m that were paid to him between 2011 and 2016. HMRC argued that the payments should be subject to income tax rather than capital gains tax, which is lower. The Upper Tribunal agreed that the distributions should have been assessed for income tax.

Baltimore Bridge crash hits global supply chains

After a container ship crashed into a bridge in Baltimore taking it down, the largest port on the US Eastern seaboard has been closed. While not as significant as the disruption to the Suez. The disaster is going to cause further disruption to global supply chains as the port is key to US car exports.

Over 750,000 cars and vehicles transited through Baltimore in the last year – Those are major US brands and UK and EU brands, from General Motors and Ford to Jaguar Land Rover, Nissan, Fiat, and Audi. In addition, Baltimore is a significant exporter of liquified natural gas [LNG] and that has implications for the UK and the EU.

US Secretary of Transportation Pete Buttigieg said at a briefing there was “no question that this will be a major and protracted impact to supply chains”.

Wes Moore, the governor of Maryland, said Dali, a Singapore-flagged vessel, had suffered a power outage before crashing into the bridge

Trump Media

Trump Media, which owns Truth Social, Donald Trump’s social-media platform, soared to a market value of more than $9bn on its Nasdaq launch overnight despite the fact that in its first nine months of 2023, the company lost $49m. Trump’s personal stake in the company is now worth around $4.6bn.

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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 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 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.