Business news 27 November 2024
Trump’s tariffs threaten UK growth. Tax rises will stifle hiring. Britain plans four-day WWII commemoration. British workplaces among the worst in Europe. Portugal outshines UK for investors. Labour’s workers’ rights bill under fire. Retailers brace for price hikes, insolvencies & more business news that we thought would interest our members.
Sorry there was no blog yesterday due to a family funeral.
James Salmon, Operations Director.
Trump’s tariffs threaten UK growth
Clare Lombardelli, deputy governor of the Bank of England, has expressed concerns regarding Donald Trump’s proposed trade tariffs, warning that they could hinder economic growth in the UK. In an interview with the Financial Times, she stated: “I don’t want to speculate on the specifics but we know barriers to trade are not a good thing.” Lombardelli highlighted that the uncertainty surrounding these tariffs could impact productivity and inflation, noting that the effects depend on how other countries respond. She also mentioned that domestic inflation remains a significant concern, with services inflation currently at 5%, above the Bank’s target.
US President-elect Donald Trump said Monday he intends to impose sweeping tariffs on goods from Mexico, Canada and China, prompting a swift warning from Beijing that “no one will win a trade war.” In a series of posts to his Truth Social account, Trump vowed to hit some of the US’ largest trading partners with duties on all goods entering the country. “On January 20th, as one of my many first executive orders, I will sign all necessary documents to charge Mexico and Canada a 25% tariff on ALL products coming into the US,” he wrote. China will get an additional 10%.
Mexico’s president, Claudia Sheinbaum, warned of a trade war as they respond with like for like tariffs. Ms Sheinbaum suggested inflation and unemployment would rise in both the USA and Mexico under the plans. Mr Trump has vowed to enforce the measures until Mexico and Canada stop illegal migration and drug trafficking to the US.
Trump’s willingness to hit his neighbours with big tariffs doesn’t bode well for us on this side of the pond.
Tax rises will stifle hiring
Tax increases in the recent Budget are making it challenging for businesses to hire new staff, according to the Confederation of British Industry (CBI). Rain Newton-Smith, the boss of the CBI, stated at the group’s conference that firms are “being hit by a tough trading environment that just got tougher” due to changes in National Insurance contributions and inheritance tax. A survey revealed that nearly two-thirds of 185 companies believe the Budget will harm UK investment. Speaking later, the Chancellor insisted she had no other choice than to push through her policies, promising not to come back with more borrowing or more taxes in a future budget. Rachel Reeves faced claims from CBI chairman Rupert Soames that she was treating firms as a “cash cow” and making it harder for businesses to invest in jobs.
Britain plans four-day WWII commemoration
Next year, Britain will commemorate the 80th anniversary of the end of the Second World War with a proposed four-day commemoration, including a bonus bank holiday. The events will honour the sacrifices of the remaining veterans, with around 70,000 still alive. The Government has allocated £10m for commemorative events, with plans for nationwide celebrations similar to those held during the Platinum Jubilee.
British workplaces among the worst in Europe
According to a report by the Commission for Healthier Working Lives, British workplaces are among the worst in Europe for long hours, tight deadlines, and limited autonomy, with only a third of workers able to choose their pace. The report highlights that conditions vary by sector, with construction and hospitality facing the most strain. Despite good relations with colleagues, UK workers report high levels of exhaustion and stress, which have increased over the past 25 years. The report concludes that the UK’s lower labour productivity compared to countries like France and Germany makes these conditions unjustifiable.
Portugal outshines UK for investors
According to a recent report from the European Commission, the UK is becoming less appealing to investors compared to Portugal, a country with a population of just 10m. Following Rachel Reeves’ Budget, Portugal is projected to grow by 2.5% next year, significantly outpacing the UK’s growth forecast. The report from EY indicates that 84% of surveyed investors plan to expand operations in Portugal, while only 68% intend to invest in the UK. Paul Stannard, Chairman and Founder of Portugal Pathways, stated: “This is further fuelled by continued demand for the country’s popular Golden Visa residency-by-investment program.” He emphasised Portugal’s stability, tax incentives, and appealing lifestyle, making it a prime destination for investment.
Labour’s workers’ rights bill under fire
Labour’s impact assessment of its Employment Rights Bill, led by Angela Rayner, has been labelled “not fit for purpose” by the Regulatory Policy Committee (RPC). The RPC highlighted a lack of evidence supporting the issues the Bill aims to address, stating: “Without understanding the direct macroeconomic impacts on employment, wages and output, it is not possible to validate the departments’ estimated impacts.” The Federation of Small Businesses (FSB) echoed these concerns, with Policy Chair Tina McKenzie calling it a “sharp wake-up call” for the Government. She warned that the Bill could disproportionately affect small employers, urging Ministers to reconsider their approach. A government spokesperson defended the Bill, claiming it represents the “biggest upgrade to people’s rights at work in a generation.”
Retailers brace for price hikes
The British Retail Consortium (BRC) has warned that a rise in National Insurance contributions, a higher minimum wage, and a packaging levy will lead to price increases, potentially ending the trend of falling inflation. Helen Dickinson, chief executive of the BRC, stated: “With significant price pressures on the horizon, November’s figures may signal the end of falling inflation.” Retailers, including Tesco and Sainsbury’s, have expressed concerns over shop closures and job losses due to Labour’s Budget measures, which could impose an additional £7bn in costs next year. Meanwhile, disposable income has declined, leaving the average British household with £247 per week.
Halfords has warned of price rises on the back of a multi-million-pound surge in costs related to last month’s Budget. Higher employer national insurance and minimum wages are set to add around £23 million to costs from next year, the motor retailer said in interim results on Tuesday. “The cost implications from the recent UK Budget are particularly acute for a specialist retailer that provides expert advice and assistance to customers,” chief executive Graham Stapleton commented.
Small businesses brace for new rules
Some small businesses in Great Britain are set to cease sales to customers in Northern Ireland due to new EU product safety regulations, effective from 13 December. The General Product Safety Regulation (GPSR) introduces requirements for businesses selling to NI or the EU, including the appointment of a ‘responsible person’ for compliance. Samantha Paton, from Isolated Heroes, expressed concerns, stating: “There’s going to be a significant cost for small businesses.” The added bureaucracy and costs associated with compliance may render it uneconomical for many small craft businesses. A spokesperson from the department for business and trade assured that support for small and medium-sized enterprises (SMEs) is forthcoming, stating: “We will keep this under review.” The Government anticipates that GPSR will have a limited impact on the UK internal market.
Over 6,000 restaurants expected to close in the next 12 months
Caterer.com reports that accountancy firm Price Bailey said hospitality insolvencies will continue to rise as businesses struggle to access new funding. More than one in 10 restaurants are at “imminent” risk of closure amid worsening financial positions and roughly a fifth of all 50,900 British restaurants surveyed had negative net assets on their balance sheets. Of the 10,388 restaurants deemed technically insolvent, over half (6,128) had a risk score in the maximum risk category, which amounted to 12% of the surveyed restaurant businesses ranking them likely to default on their loans. The report highlighted that 1,409 restaurants closed in the year ending September 2024, marking the highest closure rate in over a decade.
Factory closure puts Labour under pressure to ease EV targets
Labour is expected to weaken targets for electric vehicle sales after coming under pressure from struggling car manufacturers. Business Secretary Jonathan Reynolds is expected to announce a “fast track” consultation regarding potential changes to the current mandate, which requires at least 22% of new cars sold in the UK this year to be zero-emission vehicles (ZEV). This target is set to rise to 80% by 2030 and 100% by 2035, coinciding with a ban on new non-zero-emission cars. Manufacturers, including Nissan, have expressed concerns that the ZEV mandate could jeopardise jobs and investment, warning of a “potentially irreversible impact” on the automotive sector. This comes as Stellantis, owner of Vauxhall and Peugeot, on Tuesday blamed the UK’s EV sales rules for its decision to shut its historic van factory in Luton, putting about 1,100 jobs at risk.
Lombardelli supports ‘gradual’ interest rate cuts
Bank of England rate-setter Clare Lombardelli gave her first speech as one of the Bank’s deputy governors on Monday, striking a cautious tone on interest rate cuts due to concerns over rising inflation due to wage hikes and services prices.
Macy’s worker hid $132m of expenses
Macy’s has postponed its quarterly results following the revelation that an employee concealed between $132m and $154m in delivery expenses over three years. The employee, responsible for small package delivery expense accounting, made “erroneous accounting accrual entries” to hide these costs. The concealed amount is a small fraction of the $4.36bn in delivery expenses recognised during the same period. The company’s auditor is KPMG, and the implicated employee has since left the company.
Budget tax raid threatens housing goals
Rachel Reeves’s Budget tax increases are jeopardising the Government’s goal of constructing 1.5m new homes, according to Amit Oberoi, executive chairman of the Considerate Constructors Scheme (CCS). He stated: “Everyone’s biggest worry is they cannot build because they will go into financial distress.” The rise in National Insurance contributions (NICs) from 13.8% to 15% starting in April, alongside a reduction in the salary threshold, is pushing many developers towards insolvency. Over 4,200 contractors have already collapsed this year, with high-profile firms like ISG among them. Oberoi warned that these changes could disrupt vital projects, including social housing, and exacerbate the construction skills gap.
AIM tax hike could cost billions
The recent inheritance tax hike on London’s junior market, AIM, is projected to cost the Treasury over £1bn, according to investment bank Peel Hunt. The Government anticipated raising £92.5m from a 50% inheritance levy on AIM stocks, but Charles Hall, Peel Hunt’s head of research, highlighted that AIM shares will not benefit from the £1m allowance available to farms and family businesses. This exclusion may lead to a significant shift in investment strategies, with Hall stating: “There will be a clear incentive for IFAs to move the existing £6bn of AIM inheritance tax funds into private vehicles.” Consequently, Peel Hunt forecasts an annual withdrawal of over £600m from AIM, exacerbating the already low IPO activity and potential fund closures. The bank urges the Government to reconsider the £1m allowance and reduce the capital gains tax rate for AIM stocks to support the struggling market.
Big firms pay £93.3bn in taxes
Research by PwC reveals that the 100 largest companies in Britain and their employees contributed £93.3bn in taxes during the 2023-24 financial year. This includes £31.8bn in direct taxes, marking a 10.2% increase from the previous year, while the amount collected from employees, including income tax and national insurance, rose by 1.8% to £61.5bn. Corporation tax remains the largest tax obligation among the 31 taxes these companies must pay or collect. Andy Agg, chairman of the 100 Group tax committee, stated: “The survey shows the significant contribution that large companies make to the public finances.” Nine new taxes have been introduced since 2006.
Non-doms rush to exit UK
Tax advisers and lawyers indicate a significant number of non-doms, wealthy foreigners residing in the UK, are planning to leave before April 2025 due to impending changes in inheritance tax (IHT) regulations. The new rules, introduced in Chancellor Rachel Reeves’ recent Budget, will impose IHT on non-doms’ UK assets for their first ten years of residence, after which it will apply to all global holdings. Philip Munro, a partner at Withers, stated: “(The rules are) basically saying if you want to go, you have to go this tax year.” This shift is prompting many non-doms, particularly those aged sixty and above, to expedite their departure to avoid higher tax liabilities.
PM meets NFU leader amid tax row
Sir Keir Starmer held a private meeting with Tom Bradshaw, president of the National Farmers’ Union (NFU), to discuss contentious inheritance tax changes affecting farmers. The proposed changes would require farmers to pay 20% inheritance tax on agricultural properties valued over £1m, a significant shift from the previous policy. Downing Street described the meeting as “constructive,” with Starmer acknowledging the strong feelings surrounding the issue. Bradshaw expressed hope for collaboration, stating: “I welcome the Prime Minister asking to hear directly about farmers’ concerns.”
Return to office boosts London’s commercial property market
London’s commercial property market is showing signs of recovery, with firms like Helical reporting a minor rebound in their property portfolio. Shaftesbury Capital also noted strong leasing demand, completing £15.9m in new leases and renewals, which is 9% ahead of June 2024. The trend towards returning to the office, driven by companies like PwC and Amazon, is expected to boost demand for commercial spaces. Landsec highlighted a shift towards “high-quality space in best locations,” while Savills reported a 1.5% increase in prime commercial rents between Q2 and Q3 2024, with a 13.1% rise over the past year.
Higher mortgage rates and stamp duty to drive house prices down
According to property experts from Zoopla and Knight Frank, house price growth is expected to slow to just 2.5% in 2025 due to rising mortgage rates and increased stamp duty costs. Starting April 2025, 83% of homebuyers will be liable for stamp duty, a significant increase from the current 49%. This change will particularly impact buyers in the £125,000 to £250,000 price range. Without the stamp duty increases, house prices could have risen by up to 3.5%. The rise in mortgage rates, which have increased from 3.68% to 4.14% for five-year fixed rates, is also contributing to the downward pressure on prices.
Barclays leads the mortgage rate cuts
Barclays has made headlines by becoming the first major lender to announce significant mortgage rate cuts since early October. The bank is reducing rates on various products by up to 0.20 percentage points, effective today. This move is expected to benefit both homebuyers and those looking to remortgage. Nicholas Mendes, mortgage technical manager at John Charcol, remarked: “This is a somewhat surprising announcement from Barclays, as the mortgage market showed little scope for any form of rate cuts before Christmas.” The lowest two-year fixed rate will decrease from 4.33% to 4.23%, while the five-year fixed rate will drop to 4.18%. These reductions come amid a backdrop of recent rate hikes by other lenders, suggesting a potential shift in the mortgage market.
Easyjet
EasyJet profit surged by over a third over this year, aided by a record summer period and boom in its holiday business. Reported pre-tax profit soared 34% to £610 million over the year to September on the back of a 14% increase in revenue to £9.31 billion. Some 89.68 million passengers flew with the airline over the year, against 82.75 million in 2023, as capacity grew 8% to 100.45 million seats and load factors remained at 89.3%.
Just Eat
Just Eat Takeaway announced it plans to call time on its London listing. The food delivery firm, which had switched to a standard listing in London around two years ago, said it “recommenced and continued its review to determine optimal listing venues”. “As part of this review, the company has considered, amongst other things, the liquidity and trading volumes, as well as cost and administrative requirements related to its primary listing in Amsterdam and secondary listing in London,” JET added. It has moved to exit London, “in order to reduce the administrative burden, complexity and costs associated with the disclosure and regulatory requirements of maintaining the LSE listing”.
Crypto ownership soars in Britain
As of August, 7m adults in Britain own crypto assets, a rise from 5m in 2022, according to the Financial Conduct Authority (FCA). This increase represents approximately 12% of the adult population, with significant ownership also growing; those holding between £1,000 and £10,000 rose from 20% to 36%. The average holding value is now £1,842. However, misconceptions about investor protection are rising, with one in five owners mistakenly believing they qualify for compensation if things go wrong, up from one in ten last year. Despite the risks, many believe digital currencies will become integral to the financial system.
Latest Insolvencies
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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.