Business news 27 July 2023
James Salmon, Operations Director.
Confidence among small businesses slumps in Q2. MPs start probe into small business de-banking. UK SMEs consider diversifying bank pool. And more business news that we thought would interest our members.
Confidence among small businesses slumps in Q2
Confidence among small businesses in the UK has slumped in the second quarter, with the Federation of Small Business’s (FSB) Small Business Index falling to minus 14.2 points. The decline in confidence reflects the downbeat economic conditions that small businesses have had to navigate, including persistently high inflation and rising interest rates. Some sectors, such as accommodation and food services, were hit worse than others, with confidence falling by 18.1 points. However, professional, scientific, and technical activities was the only major sector to reach positive territory.
The FSB’s national chair, Martin McTague, commented that it was disappointing but not surprising that momentum from the first quarter had petered out. Despite the decline in confidence, McTague highlighted that small firms are survivors and there are positive signs in the findings, such as the recent decrease in inflation.
MPs start probe into small business de-banking
The all-party parliamentary group on fair business banking is investigating the treatment of small businesses in light of the closure of Nigel Farage’s bank account. Craig Beaumont, chief of external affairs at the Federation of Small Businesses, said: “We’ve seen a steady rise in small businesses losing their bank accounts over the past three years, often with little notice and no explanation. The regulator should be setting standards for transparency so that when this happens, the customer knows the reasoning and can challenge it if it’s wrong.”
UK SMEs consider diversifying bank pool
Three quarters of small businesses in the UK are considering spreading their deposits among a range of different banks following the banking crisis in March. A survey conducted by payments provider Neo found that 75% of UK SMEs are considering diversifying their bank pool, with 6% already having done so. The collapse of Silicon Valley Bank (SVB) earlier this year, which resulted in the largest bank run in history, has made businesses more aware of the need to spread their deposits among multiple banks. Many depositors at SVB, including tech companies, were at risk of losing access to their funds. The Bank of England is now considering proposals to update its deposit protection scheme in response to the crisis.
FRC concerned over climate disclosures
The Financial Reporting Council has said British companies are struggling to properly disclose their efforts on cutting carbon emissions and plans to transition to a low-carbon economy. Key findings from the regulator’s thematic review assessing the quality and maturity of climate-related metrics and targets disclosures “show an incremental improvement in the quality of companies’ disclosure of net zero commitments and interim emissions targets. However, disclosures of concrete actions and milestones to meet targets were sometimes unclear, and comparability of metrics between companies remains challenging.”
FRC Executive Director of Regulatory Standards Mark Babington said: “This review highlights the continued need for clearer, more decision-useful disclosures of companies’ plans to transition to a low-carbon economy. We encourage companies to focus on explaining targets, actions, and any impacts on the financial statements. With greater maturity in reporting, we expect clearer and more concise disclosures reflecting how companies measure and manage their individual climate risks and opportunities.”
Fed raises US interest rates to highest level in 22 years
The US Federal Reserve raised its benchmark interest rate by 0.25 percentage points on Wednesday to the highest level in 22 years, and kept the door open to further increases this year. The Federal Open Market Committee said inflation remained “elevated” and agreed unanimously to lift the federal funds rate to a new target range of 5.25% to 5.5%. The increase comes despite the rate of price rises dropping further than expected – to 3% in the year up to May.
Fed Chair Jerome Powell said the economy still needed to slow and the labor market to weaken for inflation to “credibly” return to the US central bank’s 2% target.
US market futures were little changed in overnight trading after the US Federal Reserve instituted the quarter percentage point hike. Overnight, the DOW rose 0.23%, the S&P 500 dropped -0.02% and the NASDAQ dropped -0.12%. The pound is at $1.296.
City AM saved from administration by THG
London-based business newspaper City AM has been saved from administration by multimillionaire businessman Matthew Moulding, who runs the online health and beauty retail platform THG. The 18-year-old freesheet, which distributes 70,000 copies a day targeting financial workers in London, was on the brink of collapse before being acquired by THG. City AM’s co-founder Lawson Muncaster described the deal as a “perfect fit” and expressed excitement about the partnership. The acquisition, made through a “pre-pack” deal with administrators BDO, will see City AM’s 40 editorial and commercial staff join THG. The newspaper had built up £1.2m in debt due to the impact of the pandemic on commuter habits and the advertising market. The sale to THG ensures the survival of City AM and its brand.
Shell
Shell reported a sharp year-on-year drop in second-quarter profit on weaker fossil fuel prices. Shell posted adjusted earnings of $5.1 billion for the three-month period through to the end of June, missing analyst expectations of $6 billion
Barclays
Barclays reported a net income of £1.3 billion for the second quarter, in line with expectations
Joe Lewis bailed in US fraud case
A New York City court has imposed sweeping restrictions on British billionaire Joe Lewis as he awaits trial on insider trading charges. The tycoon, whose family trust owns Tottenham Hotspur football club, was charged with 16 counts of security fraud, and three counts of conspiracy for crimes alleged to have taken place between 2013-21. Joe Lewis pleaded not guilty in a New York court to the charges of insider trading.
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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
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?
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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?
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!
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Check our compensation calculator to see how much your business could be owed!
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The Credit Protection Association – Prompting Punctual Payments – Ethical, Effective, Efficient, Economical collections.