Business news 28 January 2025
New AI spooks markets, rates, productivity, growth predictions, shop prices, NI, austerity, side hustles, job adverts, 4 day week, insolvencies & more business news that we thought would interest our members.
James Salmon, Operations Director.
Higher rates could boost productivity
Higher interest rates could boost productivity, according to analysts at Deutsche Bank. They have suggested that increased borrowing costs could force firms to utilise resources more efficiently. Sanjay Raja, chief UK economist at Deutsche Bank, said higher interest rates could “ incentivise higher productivity as firms grapple with higher debt servicing costs.” He also suggested that an increase debt servicing costs could remove zombie firms – companies that earn enough money to continue operating but are unable to pay off their debt, “raising competition over time.” Previous analysis by Deutsche Bank suggests that zombies make up around 22% of public companies in the UK.
Morgan Stanley’s UK prediction
Morgan Stanley has revised down its forecast for UK economic growth this year on a recent slowdown and signs of labour market weakness. Gross domestic product would likely tick up by 0.9% in 2025, according to the Wall Street bank, against a previous estimate of 1.3%. This would be off the 1.5% seen by the Bank of England, which it had said should be driven by hiked public spending under chancellor Rachel Reeves following October’s Budget.
Shop prices
UK Shop Prices continued their downward trajectory in January, albeit at a slower pace than in December, a survey showed. According to the BRC-Nielson Shop Price Index, shop price deflation was 0.7% in January compared to the same month last year, abating from the 1.0% fall in prices seen in December. Non-food followed the trend, remaining in deflation for the first month of the year at 1.8% as price falls abated from 2.4% in the preceding month. Food inflation eased to 1.6% in January from 1.8% in December
Peer warns of NI increase impact
Lord Morse, former head of the National Audit Office, has warned that a rise in employer National Insurance could be the “straw that breaks the camel’s back” for businesses, arguing that “not all big businesses have equally broad shoulders.” Arguing that ministers had not considered the “differential damage” of the tax hike, he said employer NI “has no direct relationship to that employer’s profitability, and thus to that employer’s ability to pay more tax.”
IFS: Tax hikes may be needed to avoid austerity
The Institute for Fiscal Studies (IFS) has warned that the Government may need to implement further tax increases to avoid austerity measures. The IFS report highlights that government revenues are on track to reach record highs, driven by recent tax hikes in the October Budget. The report also notes that while the UK’s tax revenues have been catching up with those of other advanced economies since the mid-1990s, non-tax income sources have not recovered over the past 40 years. The IFS emphasises that without stronger economic growth, additional tax rises may be unavoidable for Chancellor Rachel Reeves to maintain public spending levels. The think-tank said: “For a Chancellor committed to keeping debt from rising and avoiding a ‘return to austerity’ in the form of cuts to spending on public services then, absent stronger growth, further tax rises may prove difficult to avoid.”
Britons turn to side hustles
Research reveals that 45% of working adults are short of cash each month, by an average of £357, prompting many to seek part-time jobs or side hustles. A third of Brits are considering ways to make extra cash from home, by renting out a room (6%) or driveway (7%), running a small business (18%) or filming paid social media content (10%).
Average advertised salary hits £40k
Analysis by job search site Adzuna shows that the average advertised salary hit a new record in December, passing £40,000 for the first time. Demand for skilled staff saw salaries climb by 7% compared to December 2023’s average. While advertised salaries rose, the number of vacancies fell by 4% month-on-month. The biggest decline in vacancies came in the retail (19%) and hospitality (13%) sectors, while the accounting, consultancy and legal industries also saw a dip in job opportunities. Andrew Hunter, co-founder of Adzuna, said: “Whilst it appears companies are not hiring as much, they are loosening their purse strings.”
Public backs four-day week
Research by Survation indicates that nearly 60% of the public anticipates a three-day weekend becoming the standard work model by 2030. Currently, 200 UK companies have adopted a four-day workweek without reducing pay, benefiting over 5,000 employees. Joe Ryle, campaign director of the 4 Day Week Foundation, said: “With 50% more free time, a four-day week gives people the freedom to live happier, more fulfilling lives.” A study by Spark Market Research highlights that younger workers, particularly those aged 18-34, are keen on this shift, with 78% believing a four-day week will become common in five years.
Pensions
The government plans to allow companies to invest pension fund surpluses in their core business or provide additional benefits to members. At least £50 billion is potentially available, the Pensions and Lifetime Savings Association said.
Markets
US tech stocks faced a reality check after Chinese startup DeepSeek’s AI breakthrough showed AI models could be built at a fraction of the cost, using older computer chips than Nvidia’s Blackwell range. The app which has become the top downloaded app on the Apple store, has been developed reportedly at a cost of just US$5.6m in just two months, hitting the valuations given to chip designers and builders. The potential competitive threat and alternative work-around A/I technology solution has hit leading US providers hard with both BroadCom and Nvidia significantly lower (17%! wiping $589bn from its valuation), and a raft of other technology companies substantially cheaper.
Investors fear that DeepSeek’s emergence could cut demand for AI hardware. Meanwhile President Donald Trump said that DeepSeek’s breakthrough should be a “wake-up call” for American tech firms, although he insisted that the Chinese firm’s low-cost model was “very much a positive development” for the AI industry. Sam Altman, the founder of OpenAI, acknowledged that DeepSeek’s AI offering was “impressive”, but insisted that OpenAI would “deliver much better models”.
Yesterday, the FTSE 100 closed up 0.02% at 8503.71 and the Euro Stoxx 50 closed down 0.59% at 5188.45. Overnight in the US the S&P 500 fell 1.46% to 6012.28 and the tech heavy NASDAQ dropped 3.07% to 19341.84.
This morning on currencies, the dollar advanced after US President Donald Trump said he wanted “much bigger” universal tariffs than 2.5%. The pound is currently worth $1.243 and €1.1925. On Commodities, Oil (Brent) is at $77.6 & Gold is at $2742. On the stock markets, the FTSE 100 is currently up 0.57% at 8852 and the Eurostoxx 50 is up 0.47% at 5212.
Amazon & Darlington
Amazon has chosen Darlington as the first location in the UK to see parcels delivered by drones. The shopping giant says it will now start the planning process for initial flights from its fulfilment centre on the outskirts of the town. The online retailer had previously promised it would start a drone delivery service by the end of 2024.
City taskforce adds small firm specialists
The Capital Markets Industry Taskforce, which is lobbying for reform of the UK’s capital markets, has added two small-company-focused executives. Erin Platts, the boss of Octopus Ventures, and Lisa Gordon, chair of small-cap broker and investment bank Cavendish, have joined the group as it looks to boost AIM, the UK’s junior stock market. Ms Platts, the former head of Silicon Valley Bank’s UK division, will replace Klaus Hommels, founder and chairman of venture capital firm Lakestar. Ms Gordon, meanwhile, takes on a newly created role that will focus on smaller listed firms. The appointments come on the back of a challenging period for AIM, which declined at a record pace 2024, with more than 90 firms leaving the market through takeovers and de-listings.
Ryanair
Ryanair said revenue grew in its financial third quarter, and pretax profit soared, helped by a strong close in festive period bookings. The Dublin-based budget airline said pretax profit multiplied to €143.7 million in the three months to the end of December from €2.7 million a year before, as operating revenue rose by 9.7% to €2.96 billion from €2.70 billion. The company said the quarterly results were boosted by strong bookings in Christmas and New Year, as well as by higher traffic. However, Ryanair said it continued to suffer from delays in the delivery of new aircraft by Boeing Co.
Ashley victorious in HMRC data dispute
The High Court has backed retail tycoon Mike Ashley in a legal battle with the tax office, ruling that HMRC had taken “too narrow an approach” when it refused to hand the Sports Direct boss personal information it held on him. The matter stems for a claim that Frasers Group founder Mr Ashley owed £13.6m in additional taxes from a 2012 property sale. Having successfully challenged the claim in 2022, Mr Ashley’s lawyers made a request for HMRC to share data in connection to the inquiry but argued that the tax office “wrongfully withheld a very considerable amount” of information. Following the High Court ruling, Mr Ashley’s spokesperson said the retail boss “believes HMRC should be held to account” by Chancellor Rachel Reeves, pointing to a “flawed investigation into his finances” and breaches of its duties under data protection laws.
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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.