Business news 29 October 2024
PM says Tax rises needed to avoid austerity and more on the coming budget. Business confidence falls, businesses suffer from public service failures, retail, markets, insolvencies & more business news that we thought would interest our members.
James Salmon, Operations Director.
PM: Tax rises needed to avoid austerity
Sir Keir Starmer says the Budget will embrace the “harsh light of fiscal reality,” with the Government set to take “tough decisions” and raise taxes in order to prevent austerity. The Prime Minister vowed to “protect the payslips of working people” and spoke of “broader shoulders” carrying a “higher burden on tax.” Sir Keir said: “Nobody wants higher taxes, just like nobody wants public spending cuts. But we have to be realistic about where we are as a country.” While Labour’s manifesto included a pledge that there would be no increase in income tax, National Insurance or VAT, the Chancellor is expected to deliver a number of tax hikes on Wednesday, with an increase in employer National Insurance widely believed to be on the cards. This, it is estimated, will raise up to £20bn. Sir Kier said the tax hikes are needed to “prevent devastating austerity and a disastrous path for public finances.”
Hikes are coming but cuts should too
With the Budget set to deliver tax increases of up to £40bn, Dan Neidle, founder of Tax Policy Associates, suggests that instead of immediately raising taxes, Labour should focus on stimulating economic growth. He argues that the current tax system may hinder growth and proposes abolishing stamp duty on shares, which could potentially boost the FTSE and pay for itself. Mr Neidle also emphasises the need for tax reform, saying the “horribly over-complex” corporation tax would be a good starting point. He goes on to say: “The picture will be a happier and more coherent one if the tax rises are accompanied by a story about growth that’s backed by tax reform.” He suggests that if the Budget delivers some tax cuts alongside the rises, “it will demonstrate that this is a Chancellor acting pragmatically, rather than ideologically.”
Budget to add £35bn to the tax burden
Chancellor Rachel Reeves’ first Budget will seek to to add approximately £35bn annually to the tax burden to address a significant financial shortfall and enhance public services. Key proposals include imposing VAT on private school fees and a crackdown on non-domiciled status, which could generate £1.5bn by 2028. Additionally, Labour is likely to raise employer National Insurance contributions, potentially yielding up to £20bn annually. The Office for Budget Responsibility estimates that freezing tax thresholds could bring 3.8m more individuals into the tax system, boosting revenues by £41bn. Other measures under consideration include changes to capital gains tax and inheritance tax.
Employer NI hike could hit wages
Analysis by the Institute of Economic Affairs (IEA) think-tank suggests that an increase in employers’ National Insurance will likely end up making employees worse off. This comes amid speculation that Chancellor Rachel Reeves is planning to hike employer NI while also lowering the threshold at which businesses start paying the levy. The IEA says that if employers are hit with higher NI contributions, they may reduce wages to keep their employment costs at a certain level. It went on to warn that if firms reduce wages to cover the cost of a higher NI bill, tax receipts through other levies – such as income tax – would fall.
Business confidence falls
Business confidence in the UK has fallen to a four-month low, with the Lloyds Bank Business Barometer seeing a three-point drop to 44% in October. The month-on-month decline reflects growing pessimism among companies regarding the UK economy and their trading prospects, with this exacerbated by an expectation that the Chancellor is set to outline fiscal tightening measures. Ministers are reportedly looking to raise £40bn through a combination of tax rises and spending cuts in an effort to boost funding for public services. The report shows that optimism about the economy weakened by three points to 35% in October, while 55% of businesses felt more confident about the economy than three months ago, down from 57%. Hann-Ju Ho, senior economist at Lloyds Commercial Banking, said: “Although overall business confidence dipped in October, it follows a sustained period of significant optimism, and business sentiment remains above historical levels.”
Businesses suffer as staff wait for care
According to poll for the Trades Union Congress, UK businesses are losing valuable staff working time due to delays in accessing healthcare and caring responsibilities. Over half of the 500 business leaders surveyed reported that employees had taken time off in the past year because of public service issues. The Institute for Public Policy Research highlighted that the 900,000 individuals lost to the labour force since the pandemic could cost HMRC £5bn in lost revenue this year. The TUC emphasised that improved public services would enhance productivity, saying: “Better public services would help companies grow by allowing workers to be more productive.”
Markets
Yesterday, the FTSE 100 closed up 0.45% at 8285.62 and the Euro Stoxx 50 closed up 0.54% at 4969.83. Overnight in the US the S&P 500 rose 0.27% to 5823.52 and the NASDAQ rose 0.26% to 18567.19.
London traded slightly ahead helped by rising airlines and insurers. Topping the gainers was Easyjet up 13p on sharply lower crude oil prices. Crude oil held their loss at almost $4 per barrel as investors perceived a cooling of Middle East tensions. There was some commentary to the effect that crude’s downtrend had resumed. BP lost 7p per share whilst Shell lost 42p.
US market futures were muted early Tuesday as investors readied for key corporate earnings releases, including reports from notable tech names.
This morning on currencies, the pound is currently worth $1.298 and €1.20. On Commodities, Oil (Brent) is at $72.1 & Gold is at $2750 On the stock markets, the FTSE 100 is currently up 0.27% at 8308 and the Eurostoxx 50 is up 0.44% at 4992.
Bitcoin advances past $71,000 for the first time since June.
Boeing is raising about $21 billion in a share sale, one of the largest ever by a public company, as it seeks to prevent a potential credit rating downgrade to junk.
Retail
UK Shop Prices continued to ease in October amid warnings they remain vulnerable to ongoing geopolitical tensions, climate change and government regulation. Overall prices are now 0.8% cheaper than a year ago, the third consecutive monthly fall and a drop from September’s 0.6% deflation, according to the British Retail Consortium-NielsenIQ shop price index.
Property sales up 26% but prices climb slowly
The level of new property sales has increased to its highest level since late 2020, according to Zoopla data. The 306,000 homes currently working through the buying process represents a 26% increase on a year ago. These sales are worth a combined £113bn, with this 30% up on this time last year. Despite the increase in activity, house prices have increased by just 1% over the last 12 months, with Zoopla saying price inflation is “being held back by a large choice of homes for sale and affordability pressures which are keeping buying power in check.” Richard Donnell, executive director at Zoopla, said the “sustained increase in sales activity … reflects growing confidence amongst buyers and sellers.” Looking ahead, he said the market “remains on track for a modest 2% price increase in 2024 and 1.1m sales.”
Buyers face stamp duty hit
While there had been speculation that Rachel Reeves would freeze the point at which stamp duty comes into effect at £250,000, it is now believed that Chancellor has ruled this out and the threshold will be lowered back to £125,000 in March. Rightmove analysis shows that this means the average first-time buyer will be hit with a stamp duty bill of £3,538, compared to nothing in the current scheme. While 61% of first-time buyers are currently exempt from stamp duty, this will fall to 40% if the exemption threshold falls back to £125,000.
FCA fines Wise boss £350k over ‘tax issues’
The Financial Conduct Authority (FCA) has handed Kristo Kaarmann, co-founder and chief executive of money transfer company Wise, a £350,000 fine over his failure to notify the City watchdog about “significant tax issues.” Mr Kaarmann failed to notify the regulator about a previous tax issue and fine during an assessment over whether he was a fit and proper person to run a company. He had been fined £365,651 by HMRC in 2021, having failed to notify officials of a capital gains tax liability after he sold shares worth £10m in 2017. The FCA said Mr Kaarmann’s approach to the tax issues was “careless as opposed to deliberate or reckless.”
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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.