Business news 29 March 2023
James Salmon, Operations Director.
One in five SMEs plan green focus. Britain risks ‘Cascading Failures’ over poor climate planning. Green tax on imports & energy efficiency support. And more business news.
One in five SMEs plan green focus
A fifth of UK SMEs plan to make working towards becoming net-zero a “core business strategy” for 2023. A study of 1,000 small business owners found 75% plan to maintain or increase investment in sustainability over the next two years, while 28% hope to use greener suppliers and products within their supply chain. It was found that 80% have measured their carbon footprint or plan to in the near future. The research, commissioned by climate tech start-up Ecologi found 76% of firms believe having an environmental strategy is good for business. Of those who have set environmental targets, 59% said they are on track to meet them – with 32% ahead of their plans. Changes made by businesses include reducing energy consumption (44%), recycling more (34%), installing solar panels for power or switching to a renewable energy provider (31%), and increasing staff education (26%). The poll also revealed that 37% of respondents believe the Government should provide more support to SMEs seeking to transition to net-zero.
Britain risks ‘Cascading Failures’ over poor climate planning
The Climate Change Committee (CCC)- the government’s independent adviser – has warned that Britain is “strikingly unprepared” for a changing climate and is facing disruptions to energy, food supply, transport and communications infrastructure if it’s climate policy doesn’t adapt fast. The country is already facing the effects of a “lost decade” in failing to prepare for extreme weather.
Chris Stark, who heads the independent body warned “There is no option but to adapt to the change in the climate. The question is only whether we do that well by doing it early, or wait until later when it will cost more, with greater disruption and greater problems”
The report goes on to warn of the effect of “cascading failures” that could be caused to the water, power, communications and health systems of the country.
“We know the UK has in place clear national strategies for cyber and terror attacks and it must apply the same level of seriousness to planning for climate change,” said Richard Millar, the CCC’s head of adaptation.
Green tax on imports & energy efficiency support
Tomorrow, the energy secretary, Grant Shapps is set to announce proposals to tax cheap imported products made in polluting factories overseas with green import taxes. Separately middle-income families will be given grants to make their homes more energy efficient under updated government plans to hit net zero by 2050.
BoE on heightened alert over banking turmoil
Governor Andrew Bailey says the Bank of England is on “heightened” alert for further turmoil in the banking sector, saying that while recent issues have not caused stress in the UK banking system, the Bank will “go on being vigilant.” Appearing before MPs on the Treasury Committee, Mr Bailey pointed to a period of “very heightened, frankly, tension and alertness” following the collapses of Silicon Valley Bank and Signature Bank and concern over Credit Suisse which prompted its takeover by rival UBS. He also said that while rising interest rates were “an issue” for US banks, they were less likely to affect UK lenders because they were regulated differently. Meanwhile, Sam Woods, the chief executive of the Prudential Regulation Authority, suggested to the MPs that the stress tests applied to UK banks would need to be looked at, noting that new technology means deposits can be withdrawn electronically almost instantly.
Grocery price inflation hits a record high
Shop price inflation climbed to a record high in March, with the British Retail Consortium (BRC)-NielsenIQ index showing that prices are 8.9% higher than they were a year ago. This is up from February’s 8.4% increase. Overall food inflation accelerated to 15%, up from 14.5% last month, while the price of fresh food was 17% higher than March 2022. Inflation on items other than food also reached a new record of 5.9%, up from 5.3% in February. Helen Dickinson, chief executive of the BRC, said says shop price inflation has yet to peak, warning: “As Easter approaches, the rising cost of sugar coupled with high manufacturing costs left some customers with a sour taste.” She added: “Food price rises will likely ease in the coming months, particularly as we enter the UK growing season, but wider inflation is expected to remain high.” Meanwhile, separate analysis shows that grocery price inflation has hit a record high, climbing to 17.5% in March from 17.1% in February.
AI could replace equivalent of 300m jobs
Artificial intelligence (AI) could replace the equivalent of 300m full-time jobs, according to a report by investment bank Goldman Sachs. The report says Generative AI, which is able to create content indistinguishable from human work, is “a major advancement.” It suggests that while the technology could replace a quarter of work tasks in the US and Europe, it may also create new jobs and drive up productivity. Exploring the level of impact AI could have on different sectors, the analysis suggests that 46% of tasks in administration and 44% in legal professions could be automated but only 6% in construction and 4% in maintenance are likely to be. Considering the potential impact of AI, Torsten Bell, chief executive of the Resolution Foundation think-tank said: “We do not know how the technology will evolve or how firms will integrate it into how they work,” adding that “all firm predictions should be taken with a very large pinch of salt.”
Silicon Valley Bank
Antony Shaw, CEO HSBC Australia said acquisition of Silicon Valley Bank’s UK business for £1 made “great sense” from a business perspective and wasn’t down to pressure from regulators. “It’s an opportunity that doesn’t come along very often,” Shaw said “To secure that asset portfolio, liability portfolio, but also those 700 talented individuals and those 3,000 customers makes great sense.”
Strikes
Teachers rejected a government pay offer and 133,000 civil servants announced plans to strike, undermining efforts to end months of industrial action.Talks have also broken down with junior doctors.
Next buys Cath Kidston in £8.5m deal
Retailer Next has bought the Cath Kidston fashion brand from administrators at PwC in a deal worth £8.5m. Next has taken on the name and intellectual property but not Cath Kidston’s four shops. These will remain open to self off stock before closing permanently. Cath Kidston collapsed in 2020 with the loss of nearly 1,000 jobs and the closure of all its UK shops. It was bought and relaunched by private investment firm Baring Private Equity Asia, which then sold the business to restructuring firm Hilco Capital in July 2022.
Separately, Next has said it will increase prices by less than expected this year. It now expects prices to rise by 7% in the spring and summer, and 3% in the autumn and winter, less than the increases it had warned of in January.
Next has also released its financial statements and hailed a “good year” in 2022 despite various challenges, but expects a “difficult” year ahead. In the financial year that ended in January, revenue rose 8.8% to £5.03 billion from £4.63 billion the year before, as total trading sales rose 8.4% to £5.15 billion
Government set to see smaller Bulb bailout bill
The National Audit Office (NAO) estimates that the Government’s bailout of the bust energy supplier Bulb will cost far less than previously calculated due to a sharp fall in wholesale gas prices. The public spending watchdog said the Government may end up spending £246m on saving the supplier, which was acquired by Octopus Energy last year. This is far less than the £6.5bn estimate made by the Office for Budget Responsibility in November. The NAO calculates that the gross cost to the taxpayer is just over £3bn. It expects Octopus to repay £2.96bn, with the firm not expected to repay these funds until 2024 or 2025.
Lineker scores tax fight victory
Match of the Day presenter Gary Lineker has succeeded in a long-running legal dispute against HMRC over an alleged £4.9m tax bill. The former England striker had been accused of being a “disguised employee” for his work with the BBC and BT Sport. He had been pursued for £3.62m in income tax and £1.31m in National Insurance over his presenting work between 2013 and 2018. Investigators said that he should have been classed as an employee but he was instead paid as a contractor through Gary Lineker Media. Tribunal judge John Brooks has ruled that Mr Lineker had direct contracts with the broadcasters, which meant that legislation aimed at clamping down on tax avoidance did not apply. HMRC has suggested that the decision may not be the end of the matter and that it is considering an appeal.
Alibaba
The Chinese tech giant has announced plans to break up its $250 billion empire and spin off 6 divisions in IPOs boosting shares by 12% in Hong Kong and raising the entire tech sector. The move should appease the Chinese government, worried about the power of big Tech and also unlock billions in shareholder value.
Banks raided in tax probe
French authorities have raided the Paris offices of five major banks in relation to an ongoing fraud and money laundering investigation. France’s national fraud prosecutor said the raids at HSBC, BNP Paribas, Société Générale, Exane and Natixis relate to a preliminary investigation into so-called ‘cum cum’ schemes. The fraud office launched its investigations after receiving complaints from the country’s tax authorities. The scandal involves allegations of tax evasion in relation to money owed on dividends, with domestic banks taking over shares in a company from a foreign holder just before a dividend is paid, with the domestic operation benefiting from a tax break. The raids are linked to an investigation into the matter which was opened in December 2021.
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
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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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The Credit Protection Association – Prompting Punctual Payments – Ethical, Effective, Efficient, Economical collections.