Business news 28 March 2025
Living standards set to plummet. Reeves may have to hike taxes again. Trump’s tariffs threaten UK car industry. Workers rights, markets, insolvencies & more business news that we thought would interest our members.
James Salmon, Operations Director.
Please note: on the 19/3/25 CPA moved after 45 years on King Street, to new offices a couple of miles down the road at Profile West, 950 Great West Road, Brentford, TW8 9ES.
Living standards set to plummet
Living standards for the poorest half of households in the UK are projected to decline significantly over the next five years, with a potential loss of £500 per household due to benefit cuts and a weak economic outlook, according to the Resolution Foundation. The decline is comparable only to the early 1990s recession and the 2008 financial crisis. Ruth Curtice, chief executive of the Resolution Foundation, said: “The outlook for living standards remains bleak,” highlighting that 10m working-age households are expected to become poorer during this Parliament. The overall impact of tax and benefit changes will reduce incomes for the second poorest fifth of households by 1.5%, the foundation said, while the richest fifth will see a smaller decline of 0.6%. The report calls for transitional protections to mitigate the effects of the cuts.
Reeves may have to hike taxes again
The Institute for Fiscal Studies has warned that Rachel Reeves may need to freeze tax thresholds and increase capital gains and pension taxes in the Autumn Budget. “There’s a good chance forecasts will deteriorate – if so [the Chancellor] will need to come back for more,” warned Paul Johnson from the IFS. Separately, analysis by Interactive Investor shows that frozen tax bands and higher inflation will cost workers thousands in additional income tax over the next three years. Robert Salter, of Blick Rothenberg, said the combination of frozen thresholds and wider tax rises was a “massive” burden that will “punish” taxpayers. He added: “People are increasingly being perceived as higher earners, and taxed accordingly. They’re losing a larger chunk of any pay increases. It will act as a disincentive to get promoted or do overtime.”
Trump’s tariffs threaten UK car industry
President Donald Trump’s decision to impose a 25% tariff on imported vehicles has raised significant concerns for the UK car industry. Mike Hawes, chief executive of the Society of Motor Manufacturers and Traders (SMMT), stated that the tariffs could harm both UK and US manufacturers, warning that “this will continue to spur growth” in a negative direction. The UK exported £6.4bn worth of cars to the US in 2023, making it a crucial market. The tariffs are also expected to complicate costs for US car makers, who rely on global supply chains.
Rayner asked to delay workers’ rights laws
UKHospitality and the Federation of Small Businesses have called on Angela Rayner to delay her employment rights reforms after the Government’s fiscal watchdog warned they risked job losses and price rises. The Office for Budget Responsibility (OBR) warned that the policies would “likely have material, and probably net negative, economic impacts on employment, prices, and productivity.” Kate Nicholls, the chief executive of UKHospitality, said: “We would like the Government to take some time to get this right, give businesses plenty of notice to implement the changes, and give the economy some time to grow.” Separately, the boss of retailer Next, Lord Simon Wolfson, has also warned that the Labour Government’s flagship employment rights bill risks imposing “a huge burden on employers”. Meanwhile, Ms Rayner is facing a backlash from her own staff as they vote to strike against mandatory office attendance of three days a week. Civil servants are expressing their discontent over “rigid attendance policies” as the Housing Secretary prepares to grant unions more authority.
Report calls for UK digital ID
The UK faces a critical challenge in maintaining its status as a global financial hub, according to a recent study by EY and the City of London Corporation. The report warns that delays in establishing a government-backed digital verification system (DVS) could result in the UK losing out on billions in economic benefits and increasing vulnerability to fraud. The report suggests that a well-designed DVS could unlock approximately £4.8bn in benefits by 2031. While the UK has initiated digital identity pilots, it is lagging behind the US and EU, which have already implemented comprehensive digital ID frameworks.
Reeves insists UK won’t drop DST
Rachel Reeves insists that the UK will not be pressured into abolishing its digital services tax (DST), despite increasing pressure from the US. In a recent statement, the Chancellor said: “We will always set our own tax policy and our own tax rates.” The DST, which imposes a 2% levy on the UK revenues of large digital firms, is projected to generate £800m this year. However, it has become a contentious issue in trade negotiations with the US, with the Trump administration urging amendments or the removal of the tax. Meanwhile, scaling back the DST has already triggered a backlash with Labour’s own ranks with MP Rachael Maskell warning: “This could be the very worst optics: dropping a tax on big tech while announcing welfare cuts.”
Plan for HMRC to snoop on bank accounts criticised
HMRC could be given powers to demand more personal information from banks about their account holders as the Treasury looks to crack down on savers who fail to pay the tax they owe on interest. Commenting on the move, Sir David Davis, a former Conservative Cabinet minister, said: “The simple truth is HMRC makes mistakes, and allowing them to step in and arbitrarily take your savings in circumstances where they may well have made a miscalculation is completely unjust and improper.” He added: “The state has, over the last few decades, taken more and more liberties with our privacy and with our data and in general, it hasn’t improved services, it hasn’t improved security, but what it has done is undermine the integrity of people’s lives.”
Retail
UK Retail Sales unexpectedly climbed by 1% in February, driven by stronger demand at department stores and higher spending on clothing and household goods. Data released on Friday by the Office for National Statistics revealed that the volume of goods purchased surpassed economists’ expectations of a 0.4% decline, as forecast by a Reuters poll. However, the February increase was lower than the 1.4% gain recorded in January. Over the three months to February, retail sales rose 0.3% compared to the previous three-month period, suggesting that consumer spending remained resilient despite sluggish economic growth and subdued confidence.
Markets
Yesterday, the FTSE 100 closed down 0.27% at 8666.12 and the Euro Stoxx 50 closed down 0.57% at 5381.08. Overnight in the US the S&P 500 fell 0.33% to 5693.31 and the NASDAQ fell 0.53% to 17804.03 as the latest Trump Tariff shock of 25% tax on auto imports roiled markets.
Germany’s Economy Minister and auto industry lambasted US President Donald Trump’s plans to impose sweeping 25% tariffs on US car imports, saying the move sends a “fatal signal” to free and rules-based trade.
This morning on currencies, the pound is currently worth $1.2925 and €1.1200. On Commodities, Oil (Brent) is at $74 & Gold is at an all time high of $3077. On the stock markets, the FTSE 100 is currently up 0.15% at 8679 and the Eurostoxx 50 is down 0.5% at 5353.
US GDP increased at an annual rate of 2.4% in the fourth quarter of 2024, according to the third estimate released by the U.S. Bureau of Economic Analysis. This follows a 3.1% increase in the third quarter.
Mark Carney called for Canada to pivot it’s trade away from the US (currently 75%) and declared Canada’s “old relationship” with the US, based on close economic ties and security co-operation, to be “over”.
The US is pushing to control all major future infrastructure and mineral investments in Ukraine, sidelining and potentially gaining a veto over any role for Kyiv’s European allies and undermining its bid for European Union membership.
WH Smith
WH Smith agreed the sale of its UK High Street business to Hobbycraft-owner Modella Capital for £76 million, to create a “pure play global travel retailer”. The WHSmith brand is not included within the sale, and WH Smith’s Travel divisions will continue to trade under its own brand across 32 countries.
The name WH Smith, a fixture on UK town centres since the Victorian era, is set to disappear from the High Street after the firm agreed to sell its shops. The new owner has said it will keep the Post Office outlets that operate in many branches, but will rebrand the High Street chain as TGJones. The WH Smith name is not being sold and will still be used at the airport, railway station and hospital outlets that are also not for sale.
Brits rethink finances to limit tax hit
Brits are increasingly engaging in long-term financial planning in response to rising inheritance tax concerns. Sales of annuities surged by 20% in 2024, reaching £7bn, as families seek to mitigate tax liabilities. Additionally, the gifting of homes and cash to family members has risen significantly, with projections indicating that around 220,000 properties will be transferred tax-free this year.
Lakshmi Mittal plans to leave UK after non-dom tax change
Billionaire steel magnate Lakshmi Mittal is contemplating leaving the UK due to the Government’s crackdown on nondomiciled residents. Having lived in the UK for 30 years, Mittal’s potential departure follows the abolition of the non-dom regime, which previously allowed residents to avoid UK tax on foreign income. A friend noted: “He is exploring his options and will take a final decision over the course of this year.” Mittal, who has a fortune estimated at £14.9bn, owns multiple properties globally, including a lavish home in Kensington Palace Gardens. The move aligns with a trend of wealthy individuals relocating to more tax-friendly jurisdictions, such as the UAE and Switzerland, in response to Labour’s fiscal policies.
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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!