Business news 29 April 2024

Half-a-million UK firms are financially distressed. Company insolvencies fall 17% in March. Growth signs point to recovery. Economists expect interest rate cuts in August & more business news that we thought would interest our members.

James Salmon, Operations Director.

Half-a-million UK firms are financially distressed

Nearly half a million UK businesses are financially distressed, according to the latest Red Flag Alert from Begbies Traynor. The report shows that 554,554 UK businesses have entered “significant” financial distress within the past year, marking a 30% increase on the year before. The number of those in “critical” financial distress has risen by 20% to 40,174, with many of these firms in the construction, real estate, financial services and support services sectors. Julie Palmer, a partner at Begbies Traynor, said that despite a degree of optimism going into 2024, the year so far has been “characterised by a continuation of the same pressures that plagued companies” last year. Ric Traynor, executive chairman of Begbies Traynor, said the “pressing issues” facing businesses will “push many over the edge” and contribute to the current high level of insolvencies

Company insolvencies fall 17% in March

Data from the Insolvency Service shows that company insolvencies in England and Wales fell sharply in March. The official figures reveal that 1,815 companies were declared insolvent in March, this was down from 2,177 in February and 17% lower than in March 2023. In the three months to the end of March, 5,759 companies were insolvent, with this 2% fewer than in the same period of 2023. Meanwhile, personal insolvencies were down 9% on the year in March and were 19% lower than in February at 8,708.

Simon Edel, a restructuring partner at EY-Parthenon, noted that there are “more balance sheet restructurings, asset sales and a rising focus on working capital as companies look to reshape their businesses in response to a changing market,” adding: “Distress is also now impacting mid-market and larger corporates, as well as smaller businesses.”

Everest falls into administration

Double-glazing supplier Everest has fallen into administration, leaving 350 jobs at risk. The business, which is owned venture capitalist Jon Moulton’s investment firm Better Capital, has appointed professional services firm ReSolve to handle the process

Growth signs point to recovery

Forecaster Oxford Economics says the economy has started to show signs of significant growth, suggesting that the economy could expand by 0.3% on a quarter-on-quarter basis in Q2, having seen a 0.4% rise in the first quarter. Andrew Goodwin, chief UK economist at Oxford Economics, says an initial batch of business surveys for April have “provided cause for optimism that the recovery has continued into the second quarter.”

Economists expect interest rate cuts in August

Economists polled by City AM expect the Bank of England to start cutting interest rates in August, with officials set to act as inflation edges back to the Bank’s 2% target. In a poll of 21 economists, 57% said they believe the Bank will start cutting rates in August, while a further 38% expect the first reduction to come in June. Just one respondent said they think the Bank will wait until September to reduce rates. Nearly half (48%) predicted that the Bank would cut rates three times in 2024, while 29% expect two reductions and a quarter expect either four or five cuts. It was also shown the 71% believe the Bank will start cutting rates before the US Federal Reserve. Suren Thiru, economics director at Institute of Chartered Accountants, said: “Though interest rates will remain on hold in May, weakening inflation may persuade more rate-setters to vote to loosen policy.” Alpesh Paleja, lead economist at the Confederation of British Industry, said: “We’re probably getting closer to the point where the majority of the Monetary Policy Committee will vote to reduce rates. But there’s still a fair degree of apprehension about domestic price pressures.”

Mortgage costs rise as lenders react to rate cut uncertainty

Homeowners are facing higher mortgage costs as lenders react to ongoing uncertainty over when interest rates will start to fall. The number of mortgages with rates over 6% has increased by 10% since the start of March. Major lenders including TSB, Halifax and HSBC have increased prices on a selection of their mortgages over the past two weeks. First-time buyers are likely to be the worst affected as loans with the lowest amount of equity have the highest rates. The average two-year fixed rate for buyers or owners with 5% equity is now 6.02%. Nicholas Mendes of broker John Charcol said: “Lenders have recently adjusted their positions in response to market uncertainty, signalling a significant change. While mortgage holders are unlikely to experience the same level of volatility and high rates as last year, many may find themselves pondering their next steps as their current deals approach expiration.”

Consumers more confident about finances, says NatWest boss

NatWest chief executive Paul Thwaite says consumer confidence is bouncing back, with people optimistic about the future of their finances for the first time in two years. Pointing to internal and external surveys monitored by banks, he said: “With inflation continuing to fall, and the Bank of England expected to start cutting rates later in the year, people and families are feeling more confident about their financial situation,” adding: “And for the first time since August 2021, more consumers expect their position to be better in 12 months’ time.” While inflation is still above the Bank of England’s 2% target at 3.2%, it has fallen sharply from a peak of 11.1% in October 2022. Forecasts from NatWest suggest the rate will fall to 2.5% by the end of this year.

Spending in pubs at its lowest since Covid lockdowns ended

Consumers are spending less money in pubs and bars than at any point since lockdowns ended, according to a survey by Deloitte, although they are more optimistic about spending overall.

Markets

The FTSE 100 closed on Friday at 8139.83, up 0.75%. The Euro Stoxx 50 closed up 1.39% at 5007.64 after another round of corporate earnings helped boost sentiment, and the recent run of M&A activity continued. With Natwest nearing a 5 year high after it’s first quarter update and Darktrace was approached by private equity firm Thoma Bravo, at a premium of around 45%.

The combined market cap of Microsoft and Alphabet, rose by more than $250bn on Friday after the companies released expectation beating quarterly results , fueled by the AI boom. Aplphabet showed revenue rising 15% to $80.5 billion and Microsoft, saw revenue rise 17% to $61.9 billion.

The big news in currencies is that the Yen had a big rebound of over 2%, having dropped to its lowest in 34 years with speculation that there has been some unannounced official intervention.

Friday in the US the S&P 500 rose 1.02% to 5099.96, the Nasdaq rose 2.03% to 15927.90. The pound is currently worth $1.2514 and €1.11693. Brent is at $88.9, Gold is at $2339 The FTSE 100 is up .4% at 8173 and the Eurostoxx 50 is up .1% at 5012.

Copper

Copper Prices rallied Friday above $10,000 per tonne for the first time in two years, propelled by soaring global demand and tight supplies. In early morning trade on the London Metal Exchange, the price of copper breaching the key level for the first time since April 2022 to peak at just over $10,028. It later stood at $9,992.50 per tonne.

Darktrace

Darktrace said it has agreed to an all-cash takeover offer worth $5.32 billion from funds managed by private equity firm Thoma Bravo LP. Thoma Bravo offered $7.75 in cash per Darktrace share. This is equivalent to 620 pence, a 20% premium to Darktrace’s close in London on Thursday. It also is more than double Darktrace’s initial public offering price of 250p back in 2021.

US Inflation

US Inflation showed little signs of letting up in March, with a key barometer the Federal Reserve watches closely showing that price pressures remain elevated. The personal consumption expenditures price index excluding food and energy increased 2.8% from a year ago in March, the same as in February, the Commerce Department reported Friday. That was above the 2.7% estimate from the Dow Jones consensus.

£152m fraud website will stop victims being conned, says police chief

A new £152m service is set to replace Action Fraud in order to tackle fraud and cybercrime more effectively. With MPs on the Public Accounts Committee having described the current reporting system as “unfit for purpose,” James Thomson, chair of the City of London Police Authority Board, insists the new the service will be able to “streamline victim reporting” and “empower swift police intervention.” The new website aims to speed up the time it takes to report offences, keep victims informed of progress and quickly close fraudulent websites and bank accounts.

Ex-Patisserie Valerie bosses plead not guilty to fraud

Four people, including former chief financial officer Christopher Marsh, have pleaded not guilty to fraud charges in a case centred on an accounting scandal at Patisserie Valerie that led to the bakery chain’s collapse. The defendants are accused of conspiring to defraud shareholders and creditors by misstating and inflating cash figures on the firm’s balance sheets, with it claimed that they made false representations to auditors Grant Thornton, as well as lenders Barclays and HSBC. Patisserie Valerie collapsed in 2019 after a £94m black hole was discovered on its balance sheet. In 2021, Grant Thornton was fined £2.3m for failures in its Patisserie Valerie audits.

London Stock Exchange exodus hits £60bn

Investment bank Peel Hunt has urged the Government to ensure that the UK market remains a leading listing venue, having voiced concern over exits from the London Stock Exchange. With US private equity firm Thoma Bravo taking British cybersecurity company Darktrace private in a £4.3bn deal, the total value of exits has now hit £60bn. Deals worth more than £26bn have been approved by boards since January, while £38bn worth of companies have left the London Stock Exchange for overseas. The Darktrace deal marks the 20th takeover of a London-listed firm this year. Charles Hall, head of research at Peel Hunt, said: “Darktrace should be a proper wake-up call to Government,” warning: “The UK market has an existential crisis and needs urgent action to ensure it remains a leading listing venue.” He suggests that minsters should remove stamp duty to restore competitiveness, reform pensions to encourage home investment and create a British ISA to stimulate retail investment in the UK.

Hunt calls summit to boost flagging UK stock market

The Treasury has invited the bosses of some of Britain’s most prominent private companies to a summit with Chancellor Jeremy Hunt as officials look to entice more companies to London’s stock market amid concerns over an exodus from the City. The event in May will target firms that are potential candidates to float, with a focus on entrepreneurs from the fintech and biotech sectors. Those attending have been told that Mr Hunt will discuss the UK’s capital markets “and how they can support innovative, high-growth companies such as yours to achieve your growth ambitions.” The invitation insists that the Government is “committed to ensuring that the UK remains the best place for companies to grow,” and is “already taking forward an ambitious programme of reforms” to improve the UK’s competitiveness. Alongside the Chancellor, business leaders will meet with government officials, City minister Bim Afolami, the Prime Minister’s chief business adviser Lord Petitgas, and executives from the London Stock Exchange.

One in five London-listed firms issue profit warnings

Nearly one in five London-listed companies have issued a profit warning in the past 12 months, according to a report by EY-Parthenon, with contract delays and cancellations cited as the main reason. A third of profit warnings have come from businesses in consumer discretionary sectors, while the biggest growth in the number of warnings came from the personal goods sector, where more than half of firms issued a profit warning in Q1. Companies in industrial support services, which includes business service providers, industrial suppliers and recruitment companies, have issued 18 warnings in the past six months, with this higher than the total for the whole of 2022. The financial services sector saw 11 warnings in the first quarter, marking the highest level since the pandemic.

Lovers would cheat on partners before cheating the taxman

A survey conducted by a dating website shows that 87% of people would rather cheat on their partners than attempt to evade taxes.  Tax system skews incentives and discourages hard work

Tax system skews incentives and discourages hard work

Mattie Brignal in the Sunday Telegraph said the tax system in Britain skews incentives and discourages hard work, with this affecting everyone including graduates, high-earners and those on benefits. He highlights that income tax thresholds have been frozen, pushing millions of workers into higher tax brackets, while tax revenues as a percentage of GDP have hit the highest level since the 1940s. Sam Ray-Chaudhuri, an economist at the IFS, believes elements of the UK’s tax system often work against each other and suggests that “simplification seems a better goal than raising taxes or introducing new ones.” Deloitte’s Bill Dodwell – formerly the head of the now disbanded Office for Tax Simplification – warns that tax traps and cliff edges inevitably dampen growth.

Labour proposes tax breaks for small businesses

Shadow Chancellor Rachel Reeves say Labour would extend rates relief on firms with second properties from one to five years in order to encourage expansion and boost the High Street. She said: “We know small businesses face barriers to expanding.”

Labour’s tax agenda points to increases

Matthew Lynn in the Telegraph says pensioners and small businesses are facing the brunt of Labour’s tax agenda, as the party’s plans to increase taxes are starting to emerge. He suggests that while Labour reassures voters and industry that they have no plans for a tax raid, the reality is that a tax-raising agenda is becoming clear. The likely changes, he says, could have detrimental effects on the economy, which is already struggling with stagnant growth and rising government spending. Mr Lynn argues that an economic rebound requires lower and simpler taxes but suggests Labour “seems committed to the opposite.”

Tax office pays out £600k in compensation amid delays

HMRC paid out £603,000 in compensation last year due to delays in dealing with taxpayers’ financial affairs. Despite dismissing almost 90% of the 34,000 complaints received, the tax authority upheld close to 4,500 and paid out the compensation. Concerns have been raised about the drop in service standards at HMRC, with MPs accusing senior management of allowing service levels to fall to an “all-time low.” Taxpayers have also been critical of the tax office’s performance, with callers waiting for an average wait time of 24 minutes to speak to an adviser. Last month, the tax office faced criticism for announcing plans to close the customer service phone line for six months and reversed the decision amid the backlash. John O’Connell, chief executive of the TaxPayers’ Alliance, says taxpayers “are at their wits’ end with the chaotic incompetence of the taxman,” adding that “HMRC has the highly sensitive responsibility of collecting taxes, yet is veering from crisis to crisis, damaging confidence in their ability to fulfil their functions.” Mr O’Connell has urged officials to “urgently address the serious problems with staffing, productivity and financial management to rebuild trust with taxpayers.”

Latest Insolvencies

Petitions to wind up (Companies) – FRANT ROAD CLINIC LTD
Appointment of Administrator – EVEREST 2020 LIMITED
Appointment of Liquidators – OMRIND LIMITED
Appointment of Administrator – SHIFT 4 LIMITED
Appointment of Liquidators – PROJECT CONTROL SYSTEMS & SERVICES LTD.
Appointment of Liquidators – GDJ LIMITED
Appointment of Liquidators – PROSCAN DOCUMENT IMAGING LTD
Appointment of Liquidators – TEARAIN PS LTD
Appointment of Liquidators – AUGUSTA PUB COMPANY LIMITED
Appointment of Liquidators – MADDRELL CONSULTANCY SERVICES LIMITED
Appointment of Liquidators – BEDROCK MINING CORPORATION LIMITED
Appointment of Liquidators – PROVESTITURE LIMITED
Appointment of Liquidators – GEN MM LIMITED
Appointment of Liquidators – WESTERN MAIL & ECHO LIMITED
Appointment of Liquidators – INTERNATIONAL DATA CENTRE GROUP LTD
Appointment of Liquidators – J FUTCHER HOLDINGS LIMITED
Appointment of Liquidators – PIHL PROPERTY HOLDINGS LIMITED
Petitions to wind up (Companies) – DOUGLAS HOLDINGS LIMITED
Petitions to wind up (Companies) – OUTPAY LTD
Petitions to wind up (Companies) – ELECTRO-PEDS LTD
Appointment of Liquidators – ENGINEERING ASSET MAINTENANCE SOLUTIONS LIMITED
Petitions to wind up (Companies) – PM SERVICES (NI) LTD
Petitions to wind up (Companies) – COCO CRAFT PIZZA LLP
Petitions to wind up (Companies) – MESSRS T & A RENNIE LIMITED
Petitions to wind up (Companies) – SUNNYSIDE GROCERS LTD
Petitions to wind up (Companies) – BRAVA WINDOWS AND DOORS LTD
Petitions to wind up (Companies) – LEGACY INDEPENDENT FUNERAL DIRECTORS LTD
Petitions to wind up (Companies) – BEST BARGAIN (MEGA) LTD
Petitions to wind up (Companies) – HILLIER RECYCLING LTD
Petitions to wind up (Companies) – S&B FOOD LTD
Petitions to wind up (Companies) – INTERNATIONAL VILLAGE EDUCATION LIMITED
Petitions to wind up (Companies) – HARRISON BUILD & DESIGN ASSOCIATES LTD
Petitions to wind up (Companies) – MARCELGATE LIMITED
Petitions to wind up (Companies) – PARAMOUNT HAULAGE LIMITED
Appointment of Liquidators – QUANTUM CARE SERVICES LIMITED
Petitions to wind up (Companies) – BIG SCREEN CO LIMITED
Appointment of Liquidators – CHEM AVIATION LLP
Appointment of Liquidators – ARROW AVIATION SERVICES LIMITED
Appointment of Liquidators – JMR CONSULTANCY LTD

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.

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.

Unlike other credit management companies, we offer our members a fixed annual subscription regardless of how high the debt value maybe!

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 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.