Business news 30 November 2022

James Salmon, Operations Director.

Small firms ‘not clamouring for bonfire of EU laws’. Brits sit on savings. Medium-term inflation can guide rate moves.  And more business news.

Small firms ‘not clamouring for bonfire of EU laws’

Small firms are “not clamouring for a bonfire of regulations” from the EU after Brexit, according to a poll from the British Chamber of Commerce (BCC). It was found that less than 5% of small firms understand the Bill paving the way for deregulation, with over 70% of companies unaware of the Retained EU Law Bill and its impact on their operations.

The Government says the Bill intends to “make it easier to amend, repeal or replace EU law retained on the UK statute book to reduce regulatory burdens and costs on UK businesses.” Of the 938 firms polled, just 5% understood the law change. Only a quarter knew some details, two-fifths knew none and 30% had not heard of the Bill.

William Bain, head of trade policy at the BCC, said: “Businesses did not ask for this Bill, and as our survey highlights, they are not clamouring for a bonfire of regulations for the sake of it.” He added: “They don’t want to see divergence from EU regulations which makes it more difficult, costly or impossible to export their goods and services.”

Brits sit on savings

People are holding onto savings they built up during the lockdowns brought about by the pandemic, with Bank of England data showing that households set aside £6.4bn in savings last month. This is £1.6bn higher than the monthly average recorded before the pandemic. Amid a cost-of-living crisis that has seen inflation hit 11.1%, people are seemingly pulling back on debt fuelled spending, with just £400m spent on credit cards in October.

Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said: “Households have remained unwilling to draw on savings or take on more debt in order to support their level of real expenditure.” He added that people are “clearly not spending to their fullest. In addition, the muted level of consumer borrowing in October shows that households without savings are not flexing their credit cards.”

Medium-term inflation can guide rate moves

Bank of England policymaker Catherine Mann says medium-term inflation is a useful gauge for how much further the Bank will need to raise interest rates, and when they can start to be reduced. She said: “Looking at medium-term expectations is a very important ingredient to my assessment of what the appropriate Bank Rate at the next vote might be.” Addressing an online event hosted by The Conference Board, a US business organisation, Ms Mann argued that rapid increases in interest rates were an effective way to tame inflation expectations, and that rates could be cut once these had eased. She also warned of a “dramatic change in the underlying pace of inflation,” saying that it is “this embeddedness that is a concern for the central banker.”

Energy

UK Ofgem confirmed a five-year investment package for the electricity distribution network companies to help deliver “cheaper, cleaner, more reliable local grids”. Listed utilities SSE and National Grid noted Ofgem’s final determination on the RIIO-ED2 electricity distribution price control, which will run from April 1, 2023 to March 31, 2028. Both firms said they will now review the decision.

Some workers face 93% tax rate
Those earning more than £125,000 and still paying off their student loan face an effective top tax rate of more than 90%, according to analysis from investment firm AJ Bell. While the top rate of tax is technically 45%, some people are seeing marginal rates of 60%, with this rising to as high as 93% as a result of successive governments tweaking the tax system and clawing back benefits. The personal allowance is tapered away at a rate of £1 for every £2 of income for those earning between £100,000 and £125,140, meaning workers face an effective 60% tax rate on those earnings.

Mortgage approvals slip as property demand cools
Bank of England (BoE) data shows that UK mortgage approvals fell by 10% in October, from 66,000 in September to just under 59,000. This was the lowest number of mortgages approved by UK lenders since June 2020.

Octopus’ Bulb deal challenged by rival firms
Octopus Energy’s acquisition of collapsed supplier Bulb has been challenged in court, with rivals Eon, British Gas and Scottish Power opposing the deal. The firms have filed judicial review applications at London’s High Court, challenging the Government’s decision to approve the takeover and to provide funding to allow the deal to take place. The suppliers have voiced concern over a lack of transparency in the deal and the use of public funds as part of Bulb’s buyout.

China

The government agreed to buy out the 20% stake in a nuclear station that is owned by a Chinese state-owned firm and will seek other investors in the Sizewell C power station. On Monday Prime Minister Rishi Sunak said maintaining close ties with China had been “naive”.

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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.