Business news 30 August 2024
SMEs see signs of ‘recovery and stability’. Business confidence holds steady. Shop closures climb. Government investment can boost growth. Ministers warned over living standards crisis. The budget, markets, house prices, insolvencies & more business news that we thought would interest our members.
James Salmon, Operations Director.
SMEs see signs of ‘recovery and stability’
A survey of brokers by Iwoca shows that SMEs are seeing signs of “recovery and stability.” The fintech firm’s SME Expert Index found that 73% of the 80 brokers polled felt optimistic about the future of Britain’s 5.5m SMEs. Optimism in Q2 came in three percentage points higher than in Q1 and six percentage points up on the fourth quarter of 2023. Colin Goldstein, commercial growth director at Iwoca, said that while the UK’s small businesses have endured a difficult two years, the research “suggests there are signs of recovery and stability ahead.”
Business confidence holds steady
Confidence among British businesses has held steady at an eight-year high this month, according to Lloyds Bank’s latest Business Barometer. The monthly survey of business sentiment maintained its 50% reading in August, with this well above the long-term average of 29%. Hann-Ju Ho, a senior economist at Lloyds Bank Commercial, said: “Official GDP data for the first half of this year was encouraging and the survey results indicate that solid economic performance will likely continue as we move into the second half of the year. Overall, the economy looks to be stable and, from the positive results recorded, businesses are echoing this sentiment.”
Shop closures climb
The Mirror looks at a surge in retail closures, saying pressure on high street stores has been exacerbated by a significant shift towards online shopping and the ongoing cost-of-living crisis, which has left consumers with less disposable income. According to PwC, 14,081 shops from chains exited UK high streets in 2023, averaging 39 closures daily.
Government investment can boost growth
The Office for Budget Responsibility (OBR) says investments by the government significantly enhance long-term economic growth and can be self-financing. OBR analysis suggests that a 1% increase in public investment could yield an 8.7% return over several decades, surpassing the 2.4% borrowing cost. While the immediate benefits may not outweigh the costs within five years, potential growth could rise by 2.4% over fifty years. The OBR said: “The findings contradict the policies of successive Chancellors in curbing investment spending in order to stay within the tramlines of fiscal rules.” Tom Railton, director of the Invest in Britain campaign, said the OBR report “demonstrates the importance of long-term thinking when it comes to public investment and the damage that the UK’s dire public investment record has done to our economy.” Nick O’Donovan, a senior lecturer in political economy and a former economic adviser to the Labour Party, said: “Short-term cuts to capital spending might help to satisfy self-imposed fiscal rules, but they damage future growth prospects.”
Ministers warned over living standards crisis
The Government is under pressure to reconsider frozen tax bands and reverse benefit cuts to prevent further decline in living standards for lower and middle earners. The Resolution Foundation’s latest Living Standards Outlook warns of a “weak” outlook, particularly for poorer households, if the Government pushes ahead with cuts initiated by the Conservatives. The think-tank said reforms to tax and benefit policy “are likely to be necessary” to improve living standards, warning that frozen income tax and National Insurance thresholds could lead to a £230 increase in tax for a median wage worker by 2028/29.
Tax reform could ease regional inequalities
Labour is being urged to implement an £18bn tax reform aimed at addressing wealth inequality as Chancellor Rachel Reeves prepares for her first Budget. The Institute for Public Policy Research (IPPR) suggests that the current tax system favours wealth over work, saying: “The tax system’s bias towards wealth is one of the most significant barriers to levelling up that we face.” IPPR analysis shows that around 40% of investment income in the UK is generated in London and the South East, despite those areas being home to a just quarter of the UK’s population. The IPPR’s report, which aims to address the growing regional inequalities exacerbated by the current tax structure, suggests equalising capital gains tax with income tax to raise £68bn before the next general election in 2029. It also recommends a unified tax schedule for all income types and reforms to property tax, including replacing council tax with a proportional property tax. George Dibb, the IPPR’s associate director for economic policy, said: “Right now, the UK’s tax system is skewed, holding back attempts to reduce regional economic inequalities and benefiting a lucky few who largely get their income from wealth, not work.”
Wealthy flee as tax hikes loom
Amid speculation that Labour is preparing to implement significant tax increases in its upcoming Budget, a record number of wealthy Britons are contemplating leaving the UK. Advisers have reported a surge in inquiries from high-net-worth families seeking to protect their assets, with predictions of a net loss of 9,500 millionaires in 2024, according to Henley & Partners. Concerns are mounting over potential hikes in capital gains tax and inheritance tax, prompting many to consider relocating to countries with more favourable tax regimes. David Lesperance, the founder of tax and immigration advisory Lesperance and Partners, said wealthy clients “have been looking anxiously at the exit door” since the Chancellor “started talking about a ‘fiscal black hole’,” adding that the Prime Minister’s warnings about a “painful” Budget “just reaffirms their concerns that major IHT and capital gains hits will be coming soon.”
Tax raid could hit growth hopes
With Chancellor Rachel Reeves refusing to rule out increases in inheritance tax or capital gains tax as the Budget nears, experts have voiced concern that tax rises would hinder the Government’s growth ambitions. Robert Colvile, director of the Centre for Policy Studies, warned that increasing wealth taxes would “almost immediately” destroy any hope of Labour achieving their “primary goal” of generating growth, while Blick Rothenberg boss Nimesh Shah said it “seems inevitable now that the tax cost for many investors and entrepreneurs is only going to go up.”
Tax roadmap could boost confidence
The Confederation of British Industry (CBI) has urged the Government to publish a long-term tax roadmap to alleviate a “confidence shortfall” among UK firms. With the CBI saying firms are facing “cost pressures” and “middling conditions” – and are in need of a “major boost to confidence” – the CBI’s interim deputy chief economist, Alpesh Paleja, said: “Delivering certainty about the tax and regulatory environment could really help to address that shortfall.”
Tougher tax on banks could raise £14bn
Britain’s major banks could be facing a windfall tax as ministers look to address a £22bn gap in public finances. Analysis by campaign group Positive Money suggests that a 35% tax on the £44.3bn pre-tax profits reported by HSBC, Barclays, Lloyds and NatWest in 2023 would raise £14bn.
Four Day Week
Full-time workers could be given the right to ask their employers to work a four-day week under government plans to increase flexible working. Employees would still have to work their full hours to receive their full pay but could request to compress their contracted hours into a shorter working week, according to plans first reported by the Daily Telegraph.
However, ministers insist they will not impose the change on staff or businesses. “Any changes to employment legislation will be consulted on, working in partnership with business,” said a spokesperson at the Department for Business and Trade. They added that the plan for more flexible working was instead designed to increase productivity and help get more people back into work.
Markets
Yesterday, the FTSE 100 closed up 0.45% at 8381.45 and the Euro Stoxx 50 closed up 1% at 4962.10. Overnight in the US the S&P 500 was flat at 5591.96 and the NASDAQ fell 0.23% to 17516.43 as Nvidia dropped following Wednesday’s after hours quarterly statement and markets reacted to better-than-expected US GDP data and lower US unemployment claims, painting a stronger picture of the US economy. US GDP grew by 3.0% in the second quarter of 2024 against an estimate of 2.8%.
This morning on currencies, the pound is currently worth $1.319 and €1.189. On Commodities, Oil (Brent) is at $80.4 (after concerns over Libyan supply pushed prices up) & Gold is at $2524. On the stock markets, the FTSE 100 is currently up 0.36% at 8409 and the Eurostoxx 50 is up 0.15% at 4974. European stocks have in fact reached a new intra-day record high as cooling French inflation data cements expectations that interest rate cuts are coming.
House Prices
UK House Prices climbed by 2.4% in the year to August and at their fastest pace since December 2022, figures from Nationwide showed on Friday. This meant houses cost an average of £6,222 more at £265,375, with the increase beating the 2.1% uptick seen in July.
CEOs uncertain over successors
In a recent survey conducted by EY and executive search firm Livingston James, fewer than half of Scotland’s CEOs said they believe potential successors exist within their organisations. Only 47% of CEOs see future leaders in their current teams, while 56% of functional leaders feel they could ascend to the top role. Tricia Nelson, consulting leader at EY Scotland, said: “While the role of a CEO has always been demanding, contemporary challenges such as AI, ESG and increased stakeholder expectations may contribute to an overall perception that the job is becoming more difficult.” She added: “Developing the future CEO, with the new required qualities and an increased focus on emerging internal talent, is a critical responsibility of the chair and board.”
Financial product complaints up 70%
Complaints about financial products have increased by around 70% year-on-year, according to Financial Ombudsman Service data. Consumers raised 74,645 cases relating to financial products between April 1 and June 30. This was up from 43,953 in the same period a year earlier. The resolution service said that 25% of claims brought by professional representatives were upheld in the first quarter of this financial year, while the rate among those brought directly by consumers hit 40%. Credit cards were the most complained-about product, receiving 18,175 complaints, with 15,580 of these related to perceived irresponsible and unaffordable lending. It was also shown that the number of complaints about home and business building insurance have hit a 10-year high.
Japanese inflation
Japan CPI grew more than expected in August as stronger wages spurred further improvements in private spending, potentially setting the stage for more interest rate hikes by the Bank of Japan. Tokyo Core CPI- which excludes volatile fresh food prices- grew 2.4% year-on-year in August, government data showed on Friday. The reading was higher than expectations that it would remain steady at 2.2% from the prior month .
Intel
Intel is working with multiple advisors, including Morgan Stanley, to explore options to improve its declining business, according to Bloomberg citing a source with knowledge of the process. These options may involve selling off parts of the company, with Intel’s board set to review the proposals in September.
OpenAI
Apple and Nvidia are reportedly mulling investments in OpenAI as the ChatGPT maker closes in on a new funding round. Microsoft could also reportedly strengthen its stake in the artificial intelligence firm through this, after investing US$13 billion in OpenAI over the last five years.
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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.