Business news 29 November 2024
NI increase could cost 130,000 jobs. UK firms falling behind on growth. Car production slips in October. Shoppers retreat as footfall drops plus markets, insolvencies & more business news that we thought would interest our members.
James Salmon, Operations Director.
NI increase could cost 130,000 jobs
Analysis from Bloomberg Economics suggests that up to 130,000 jobs could be lost if firms reduce employment in the wake of the increase in employers’ National Insurance. This, the analysis notes, would amount to a 0.4 percentage point increase in unemployment. The analysts said that reduced employment is not the most likely outcome, saying the cost of higher taxes is likely to be distributed more evenly across wages, margins and prices. Recent research from Deutsche Bank suggested that around 100,000 jobs could be lost due to the tax changes.
UK firms falling behind on growth
Data from Panmure Liberum shows that UK companies are failing to keep up with international peers on sustained growth. The report shows that the US outperforms the UK and EU, with 137 (9.1%) of its stocks growing more than 10% for 10 consecutive years. This compares to just 4% of European and British stocks. Britain’s best performing firm is AIM-listed fintech Alpha Group, which has grown revenue by more than 10% every year for the last nine years. Second place in the UK goes to AJ Bell and JTC, with eight years of consecutive growth. The best American performer, Lululemon, has had 19 years of strong consecutive growth, while Europe’s Fortnox has seen 16 years of growth. The longest recorded streak of 10% revenue growth was Amazon, which managed 24 years before it fell short in 2022.
Car production slips in October
UK car production fell sharply in October as exports declined due to weak demand, with Society of Motor Manufacturers and Traders data showing that output fell by 15.3% year-on-year. Production of electric and hybrid vehicles declined by a third compared with October 2023. The report also shows that 670,346 units were manufactured in the UK from January to October, marking a 10.8% decrease from the same period in 2023. While the number of cars produced for domestic use increased by 5.3% in the period, exports fell by 14.8%.
Shoppers retreat as footfall drops
UK shopper numbers declined for the second consecutive month in November, primarily due to the late timing of Black Friday, adverse weather from Storm Bert, and low consumer confidence. According to the British Retail Consortium (BRC) and Sensormatic, total footfall at retail destinations dropped by 4.5%, with shopping centres experiencing a 6.1% decline. Helen Dickinson, chief executive of the BRC, said: “Footfall took a disappointing tumble in November,” highlighting the impact of the storm and consumer hesitance. Despite these challenges, Kien Tan, a senior retail adviser at PwC, expressed optimism for the upcoming Black Friday weekend, noting: “There are more people looking for discounts, and disposable income is up 10% year on year.” Retailers are hopeful that the holiday sales will revive foot traffic during this crucial shopping period.
Consumer confidence up but remains weak
Consumer confidence has increased slightly but remains weak, with the British Retail Consortium (BRC)-Opinium Consumer Sentiment Monitor showing that consumer expectations for their personal finances over the next three months climbed to -3 in November from -4 in October. Expectations of personal retail spending remained positive, climbing a point to 3, but the outlook for the economy dipped by two points to -19. BRC chief executive Helen Dickinson said: “There was little shift in consumer confidence since the Chancellor’s Budget, with many worried about the economy in the lead up to Christmas.” She added: “While there was a very slight improvement in people’s expectations of their personal financial situation, this was offset by declining expectations of the wider economy.”
Employer confidence climbs
Analysis by the Recruitment and Employment Confederation (REC) shows that employers’ confidence in the economy rebounded in 2024. While a poll of more than 500 employers shows that optimism over investment and hiring decisions has increased, the REC is concerned that this may be dampened by tax changes announced in the Budget. REC chief executive Neil Carberry said the “scale of the changes to employers National Insurance – in particular, the decision to increase the tax far more for lower earners – will be a headwind for hiring confidence from here on in.”
Small businesses scale-back holiday celebrations
Over half of SME owners believe festive celebrations are vital for boosting team morale, yet many are being forced to reduce their Christmas parties this year due to financial pressures. A recent study for business account company ANNA revealed that SMEs plan to cut festive activities by 10%, with the average budget set at £1,353, or £108 per employee. Factors contributing to this cutback include increased supplier costs (41%), lower demand for services (36%), and high taxes (33%). However, 53% of SMEs are unaware that they can claim back £150 per head in tax for their festivities. A spokesperson for ANNA said: “It’s claimable at the end of your company’s financial year,” emphasising the importance of keeping receipts and tracking expenses.
Typhoo falls into administration
Typhoo Tea has fallen into administration, with this coming amid a decline in sales, spike in losses and increase in debts. Kroll has been appointed to handle the administration and find a buyer, with vape and battery maker Supreme the front runner. Kroll said Typhoo has been exploring a sale of the business and assets “which is in the process of concluding,” adding that the administration process provides the tea company with protection, allowing administrators to finalise a sale and rescue the business. Typhoo’s revenues fell from £34m in 2022 to £25m last year, with losses soaring to £38m.
Independent shops face hit from NI hike
Analysis for small business platform Enterprise Nation suggests that independent high street retailers could be hardest hit by the 1.2% increase in employers’ National Insurance contributions set out in the Budget. Emma Jones, founder and chief executive of Enterprise Nation, said: “Entrepreneurs are always resilient – but they will need help to navigate the road ahead.” She says small businesses must look to technology adoptions to enhance productivity, competition and innovation strategies in order to navigate the changes.
Markets
This morning on currencies, the pound is currently worth $1.269 and €1.201. On Commodities, Oil (Brent) is at $72.70 & Gold is at $2662. On the stock markets, the FTSE 100 is currently flat at 8275 and the Eurostoxx 50 is flat at 4758.
House sales set to surge
House sales in the UK are projected to increase significantly over the next four months, driven by impending tax breaks set to expire in April 2025, according to Zoopla. This comes after Chancellor Rachel Reeves announced that the zero-tax stamp duty threshold will decrease to £125,000 from £250,000 – and from £425,000 to £300,000 for first-time buyers. Zoopla, which reported a 1.5% rise in prices over the past year, expects a further 2.5% increase next year and a 5% jump in transactions. Zoopla forecasts 1.1m sales in 2024, a 10% rise from 2023, influenced by pent-up demand and changing demographics.
WeWork UK saw £840m in losses
The UK arm of US co-working start-up WeWork lost almost £150m in the year before its New York-based parent company filed for bankruptcy. The UK division saw a pre-tax loss of £147.9m in 2023, having logged a pre-tax loss of £122.6m in 2022. The UK business also lost £142.7m in 2021, £246.7m in 2020 and £233.7m in 2019. WeWork’s parent company filed for bankruptcy in late 2023, having seen a drop in demand for office space in the wake of the pandemic, and emerged from the process in June.
HMRC: Increase in inquiries from pensioners clogs phone lines
The chief executive of HMRC has attributed a decline in customer service to a surge in queries from pensioners. Facing questions on HMRC’s poor call handling times from the Public Accounts Committee, Sir Jim Harra highlighted that there had been a rise in enquiries from taxpayers owing to frozen thresholds as well as state pensioners paying tax for the first time. He added that the increase has placed “upward pressure” on HMRC’s services, which have struggled to meet customer service targets. Sir Jim noted: “The state pension has always been a taxable source of income but obviously a combination of the frozen tax allowances and the triple lock mean that more and more state pensioners find that their total income is large enough to be subject to income tax.” MPs on the committee also admonished HMRC for automatically hanging up on taxpayers after 70 minutes, with data showing that last year, the the tax office cut off 55,922 taxpayers after leaving them waiting on the phone for more than one hour and 10 minutes. Myrtle Lloyd, director general of customer services at HMRC, said: “The 70-minute limiter is a technological limiter because at very busy times if you’ve got loads of people waiting in excess of 70 minutes, then it brings the system down.”
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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.