Business news 27 September 2024
Car production, manufacturing, small modular reactors, international economic news, annuity sales, non-doms rethink, landlords, markets, insolvencies & more business news that we thought would interest our members.
James Salmon, Operations Director.
Car production falls but sector remains optimistic
Car production fell 8,4% year-on-year in August, with data from the Society of Motor Manufacturers and Traders (SMMT) showing that 41,271 new cars left production lines, 3,781 fewer than in August 2023. Production for the domestic market fell by almost 20% while exports were down by 5.9%. SMMT chief executive Mike Hawes said that amid the “traditional summer shutdowns” and factories preparing to switch to new models, “August was always going to be a quieter month for output.” He added: “The sector remains optimistic about a return to growth, however, with record levels of investment announced last year.”
JLR to invest £500m in car plant
Jaguar Land Rover (JLR) will spend half a billion pounds upgrading a factory for electric vehicle production in Merseyside. JLR said it had already spent £250m on new car production lines, machinery, people and digital technology at the Halewood plant, with plans for £250m more over the coming years. Barbara Bergmeier, JLR’s executive director of industrial operations, said Halewood would be the company’s first “all-electric production facility.”
Defence tech investment surges
Venture capital in European defence technology is set to reach $1bn annually by 2024. The UK is home to six of Europe’s top 10 cities for defence tech, with London, Bristol, Reading, Oxford, Leeds, and Cambridge all making the list. Over the past six years, UK cities have secured nearly $2.2bn of investment.
Small modular reactors
Rolls-Royce is among four companies to have been shortlisted for public support in building mini nuclear power plants in the UK. Alongside Holtec Britain, GE Hitachi and Westinghouse Electric, Rolls-Royce will enter the next stage of negotiations with the UK government over support for small modular reactor developments.
Markets
Markets remain in a positive mood as investors continued to cheer the recently announced economic stimulus in China.
Overnight in the US the S&P 500 rose 0.4% to 5745.37 and the NASDAQ rose 0.6% to 18190.29. This morning the FTSE 100 is currently up 0.11% at 8294 and the Eurostoxx 50 is up .06% at 5036.
This morning on currencies, the pound is currently worth $1.3364 and €1.201. On Commodities, Oil (Brent) is at $71.8 & Gold is at $2664.
British Land will replace Darktrace in the FTSE 100 next month, as the cyber-security company is taken private by Thoma Bravo for $5.3 billion.
The US Economy
The US Economy grew at a 3% annualized pace in the second quarter, a faster rate than Wall Street had expected. The estimate of second quarter US gross domestic product (GDP) was unchanged from the second estimate which had shown 3% annualized growth. Economists had estimated the reading to show annualized growth of 2.9%. The third estimate for second quarter GDP confirms that economic growth was higher than the 1.4% annualized growth seen in the first quarter.
The Eurozone Economy
ECB Executive Board member Isabel Schnabel expressed growing concern about the eurozone economy. Last night in Stuttgart, she said the euro-area economy is stagnating, that surveys signal a slowing economy and that there are increasing signs of softening in the employment market, though it remains resilient.
The Chinese economy
China cut the amount banks must hold in reserve, releasing an estimated $142.6 billion in liquidity into the financial market as leaders embark on one of their biggest drives in years to kickstart growth.
Annuity sales up by almost 40%
Data from the Financial Conduct Authority (FCA) show that sales of retirement annuities increased by 38.7%, from 59,163 in 2022/23 to 82,061 in 2023/24. Helen Morrissey, head of retirement analysis at Hargreaves Lansdown, said: “After years on the sidelines of the retirement income market, annuities are enjoying their time in the sun, as increasing interest rates pushed incomes skyward.” Rob Hillock, a senior manager in the personal financial planning team at consultancy Broadstone, said: “The increase in annuity rates has fed through into a significant rise in sales through 2023/24 as pension savers rush for security and to lock in elevated rates.” The FCA figures also show that the total number of pension plans accessed for the first time increased by 19.7% in 2023/24 to 885,455, up from 739,652 in 2022/23.
Treasury reconsidering non-dom tax plans
The Treasury is reassessing aspects of Labour’s manifesto regarding the abolition of non-domicile tax status due to concerns about potential revenue loss if wealthy foreigners choose to leave the UK. Treasury officials have indicated that the anticipated £1bn revenue may not materialise, as previous concessions aimed at discouraging emigration could significantly impact the funds raised. The Office of Budget Responsibility (OBR) has deemed the revenue projections as “highly uncertain,” with small changes in emigration assumptions potentially leading to minimal financial gains. Government officials say Chancellor Rachel Reeves is ready to rethink the plans on targeting non-doms if the numbers do not add up, noting that no final decision has been made. Describing the reports as “purely speculation,” the Treasury said the OBR “will certify the costings of all measures announced at the Budget in the usual way.” The spokesperson added that the Treasury is “committed to addressing unfairness in the tax system, which is why we are removing the outdated non-dom tax regime,” adding that it will be replaced with a “new, internationally competitive, residence-based regime focused on attracting the best talent and investment to the UK.”
Politicians should pay tax on gifts
Politicians should pay tax on gifts in the same way that other industries and individuals do, Blick Rothenberg has suggested. Currently, firms and workers in sectors where gifting is common are made pay to income tax and, in some cases, National Insurance on items they receive. Robert Salter, a director at Blick Rothenberg, has called on HMRC to standardise the law around how gifts are taxed, saying: “HMRC should consider treating the gifts which are provided to politicians in the same manner as other taxpayer gifts to ensure that the wider rules are as clear, simple and consistent as possible in this regard.”
Landlords face huge bills over tax avoidance scheme
As many as 1,000 landlords could be hit with six-figure bills after using a tax avoidance scheme promoted by Property118. The property forum sold plans promising to help buy-to-let owners avoid duties such as capital gains tax and stamp duty. HMRC last week declared that two of the offerings are tax avoidance schemes. Property118 is fighting HMRC’s decision and has asked landlords to contribute to its legal and business costs.
Amazon pays corporation tax for first time since 2020
Amazon UK Services has paid corporation tax for the first time since 2020, handing over £18.7m. Analysts suggest that the tax payment is due to reduced capital spending and fewer tax breaks. The company, which employs over half of Amazon’s UK workforce, previously received significant tax credits in 2021 and 2022 under the super-deduction tax break introduced under the Conservatives. Overall, Amazon’s total UK tax contribution reached £932m last year, up from £781m, with the firm paying corporation tax, business rates and digital services tax. Paul Monaghan, chief executive of the Fair Tax Foundation, argues that Amazon needs to be more transparent about its UK tax affairs. He said the public “want to know how much corporation tax they pay in the UK. They want to know how much profit they actually account for in the UK from the £27bn of revenue they collect here.”
Consumer duty increases pressure on City, KPMG says
The Financial Conduct Authority’s (FCA) “intense” supervision of the consumer duty regime has ramped up regulatory pressure on City firms, according to KPMG. The firm’s biannual Regulatory Barometer shows that requirements related to complying with and embedding consumer protection regulations saw the greatest increase among the categories it tracks. Its score rose to 7.4 out of 10 from 6.8 in March. Philip Deeks, head of KPMG’s Regulatory Insight Centre, said: “UK firms have really felt the weight of the consumer duty over the last six months as the reform has shifted from policy interpretation and implementation to high supervisory intensity.” KPMG said regulatory pressure is also building in other areas that impact consumers, with the score for payments rising to 7.1 from 6.8, while digital finance increased to 7.3 from 6.9. It added that while ESG and sustainable finance were still “high on the regulatory agenda”, the burden on firms had fallen to 7.9 from 8.4.
Woodford victims face £11m fees
The Woodford Equity Investment Fund has left over 300,000 investors facing more than £11m in fees for compensation following its collapse in 2019. The fund, which peaked at over £10bn in 2017, was suspended due to liquidity issues. A High Court judge approved a compensation scheme of up to £230m in February, but only 20% of investors participated in the vote. According to a report from auditors PwC, costs have reached £11.5m as of July 31, with potential for further increases. Investors have received a total of £2.73bn in payouts since the fund’s winding up, but uncertainty remains regarding the remaining £44.7m.
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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!
The Credit Protection Association – Prompting Punctual Payments – Ethical, Effective, Efficient, Economical collections.