Economy fails to rebound as hoped and taxes and unemployment to rise – business news 15 July 20 2020.
15 July 2020.
James Salmon, Operations Director.
The economy fails to rebound as hoped, The OBR say taxes must rise and unemployment is predicted to hit 4 million. Commercial property sales are increasing, HMRC fails to answer the phone and we look at the latest on Covid and markets and a lot more.
Here are CPA we want to share the business news stories we have seen that we think will affect our members and readers. Many of us are busy fighting to protect our businesses and therefore might have missed some of the news that could impact small businesses, their owners and those that sell on credit.
Economy fails to rebound as hoped
Data from the Office for National Statistics (ONS) show that the economy rebounded more slowly than expected in May, growing just 1.8% from the previous month when economists had expected an increase of around 5% on the back of lockdown measures easing.
The increase recorded in May follows a record 20.4% fall in April and a decline of 6.9% seen in March.
The ONS figures show that the economy is now 24.5% smaller than it was in February and has shrunk 19.1% in the three months to May compared with the previous three-month period.
Revealing the figures, the ONS warned that the economy is “in the doldrums”.
Chancellor Rishi Sunak said the figures “underline the scale of the challenge we face”, while the British Chambers of Commerce’s head of economics, Suren Thiru, said that while economic output may grow further in the short term, “this may dissipate as the economic scarring caused by the pandemic start s to bite, particularly as government support winds down.”
Ian Stewart of Deloitte commented: “It is likely to take years, not months, to repair the damage done by COVID-19.”
OBR in debt warning
The Office for Budget Responsibility (OBR) has warned that the UK must raise taxes or cut spending as borrowing soars on the back of the coronavirus crisis, noting that the economy faces a decline of 12.4% in 2020.
The OBR said the Government is on course to borrow £372bn this year to pay for the shortfall between tax revenues and public spending, with the UK’s total debt pile set to hit 104.1% of GDP.
It warns that without tax rises or spending cuts, debt could climb to more than 400% of GDP by 2070. The OBR’s Fiscal Sustainability Report suggests the economy will not get back to its pre-crisis level until the end of 2022, while unemployment is likely to rise to a record 12% by the end of 2020, falling back to 10.1% in 2021.
Inflation
UK Inflation rose to 0.6% in June as the lock-down began to ease. The Consumer Prices Index picked up slightly from May’s four-year low of 0.5%, the Office for National Statistics (ONS) said. Food and alcohol prices fell, but prices for clothing and games rose, the ONS said. Despite the slight increase in the rate, inflation remains below the Bank of England’s 2% target.
Jobless could hit 4m by end of year
Unemployment could reach more than 4m by the end of the year, according to a fiscal sustainability report by the Office for Budget Responsibility (OBR). The report warned that 1.3m people will go directly from furlough to joblessness when the job protection program ends in the autumn. Paul Johnson of Institute for Fiscal Studies noted that the new prognosis for jobs in the report was gloomier than the OBR’s analysis early in the pandemic.
Commercial property sales increase
Figures from estate agent Savills show that the investors spent £1.3bn on commercial property in the UK during June. While this is 54% down on the £2.8bn spent in June 2019, it marks a 42% increase on the £755m spent in May and suggests the market may be stabilising amid the coronavirus crisis. Analysis shows that February saw sales of £8.4bn but, as the pandemic started to have an impact, sales slipped to £3.5bn in March and £859m in April. The Telegraph notes that Q2 was the weakest quarter on record for UK investment, while sales during H1 are thought to be 43% below the five-year average.
Wait to talk tax doubles
UHY Hacker Young analysis shows that waiting times for HMRC helplines doubled during the lockdown as demand jumped. Callers were put on hold for an average of 14 minutes, 59 seconds in May, up from six minutes, 43 seconds in March. It was also found that the number of calls to HMRC rose by 18% to 3.2m in May, up from 2.8m in April. The report also reveals that there were 6,437 complaints about the service in May, up 19% on the 5,410 reported in April. UHY Hacker Young’s Sean Glancy said: “HMRC is under huge pressure and the cracks are starting to show – basic tasks are not being completed.”
Brussels plans attack on low-tax states
The European Commission is exploring ways to tackle low-tax member states’ advantageous corporate tax regimes and reduce multinationals’ ability to exploit them.
Supermarket sector tops customer service rankings
Research by KMPG looking at customer service during the coronavirus crisis saw the supermarket sector come out on top, having increased its score by 4% compared to rankings compiled last year. The financial service sector also added 4% and was the next best performing sector. The biggest increase was the 5% added by logistics, restaurant and fast food and public sector brands. Challenger bank First Direct top s the list of consumers’ best brands, with rival Starling Bank ranking third. Shopping channel QVC sits between the banks in the rankings, while John Lewis & Partners and retailer Lush made up the top five. KPMG’s UK head of retail Paul Martin commented: “Looking ahead though, all consumer brands need to review their business models and ways of working, given how much consumers have changed their behaviour in recent months.”
Cardinal collapses
Interiors manufacturer Cardinal Shopfitting and Systems is unable to continue trading given a collapse in its order book amid the coronavirus crisis, KPMG administrators have said, with 135 jobs lost.
Consumers may not see hospitality VAT cut
The Guardian reports that some organisations will not pass a reduction in VAT for tourism and hospitality sectors onto customers. Chancellor Rishi Sunak last week announced that the tax would be cut from 20% to 5% from July 15 until January 12 2021 for restaurants, cafes, hotels and attractions such as zoos and cinemas. Deloitte calculates that this could save families more than £5 on a £45 meal out
Sunak calls for CGT review
The Chancellor has asked the Office of Tax Simplification to conduct a review into capital gains tax and whether it is fit for purpose, with the body launching a survey asking for “evidence to seek views about capital gains tax”. Rishi Sunak said he was particularly interested in “how gains are taxed compared to other types of income”. Industry experts suggest the review could indicate that the Government is considering increasing CGT in an effort to offset its £350bn deficit this year because of coronavirus. Nathan Long, senior analyst at Hargreaves Lansdown, said the review looked like a “tax claw back” from Mr Sunak. “We could be seeing the tips of the Government’s fingernails, as it considers how to claw back the enormous sums spent on bailing the economy out of the COVID-19 crisis,” he said. George Bull, senior tax partner at RSM, said: “It’s an expectation of mine that he will review the existing rates,” while Blick Rothenberg partner Suzanne Briggs said: “To increase CGT rates would be an easy win – and it would also come neatly under the umbrella of simplification and so suit the remit.” Mike Hayes of Moore Kingston Smith, said restricting the CGT exemption on a person’s home would enable the Chancellor to “tap into this vast source of wealth.” The Times notes that the Chancellor could also have an eye on entrepreneurs’ relief, citing experts who believe it could be scrapped
FRC findings raise concern over audit
Sky News ’ Ian King considers the Financial Reporting Council‘s (FRC) analysis of audits which found that a third of those conducted last year required improvement. He says the results of the annual quality test will “raise fresh concerns – if not dismay” over the scrutiny of company accounts among investors and the wider public, warning that auditors are “already in the dock” over failings that have contributed to a number of high-profile corporate collapses. Mr King says the FRC’s findings are “damning” and come at a time when the Government “continues to drag its feet in replacing the regulator itself and tightening scrutiny of the audit sector.” Mr King says the issue of reform of the sector “has dragged on for many years” and warns that a lack of progress undermines the confidence of investors in the quality of audits and in financial reporting, as well as riski ng further corporate collapses. Elsewhere, the FT’s Kate Burgess also looks at the findings of the audit quality review, suggesting a “litany of audit blunders … are fuelling cries for audit reform.” Separately, Nils Pratley in the Guardian considers the FRC report and proposed reform of the sector, saying that while a shake-up should help, the main issue is that “fines for bad audits should hurt”. He argues that while a £10m FRC fine is considered “hefty”, when the smallest of the Big Four has annual UK revenues of £2.4bn, “it’s really not”.
A third of audits fall short of expected standards
One in three audits by top firms failed to meet the expected standards last year, according to the Financial Reporting Council (FRC). The proportion of audits found by the FRC to require improvement or significant improvement increased to 33% from 23% a year ago, although the Telegraph says this may partly reflect the regulator’s decision to focus on higher risk audits and the wider scope of this year’s inspections. David Rule, the FRC’s executive director of supervision, said firms were still failing to consistently achieve the required level of audit quality. KPMG was the worst performer among the Big Four, with 39% of its audits requiring improvements compared to 24% last year. The FRC said the inspection results of KPMG, alongside those of PwC, where 35% did not meet the required standard, were “unsatisfactory” and the firms would be subjected to greater scrutiny. Deloitte achieved the best results with 90% of its FTSE 350 audits and 76% of all its audits requiring no more than limited improvement. It was found that 29% of EY’s audits required improvements. Grant Thornton recorded the worst score out of the top seven firms, with the report revealing that 45% of its audits required improvement, as did 38% of BDO’s and 20% of Mazars’. The FRC plans to step up its proactive supervision of firms and boost the number of quality inspections it carries out in 2020/21. Darren Jones, chairman of the Commons business select committee, said: “These findings should act as a further spur to government to accelerate the pace of reform”.
Covid-19 general news
The Health Secretary Matt Hancock has said wearing a face covering in shops and supermarkets in England is to become mandatory from 24th July. Those who fail to comply with the new rules will face a fine of up to £100.
Moderna Inc.’s Covid-19 vaccine produced antibodies to the coronavirus in all 45 patients tested in an initial safety trial, federal researchers said although some experienced side effects. A much larger trial will follow later this month.
Florida reported a record number of coronavirus deaths, while in Asia, Tokyo raised the Covid-19 warning to the highest level as infections sprethst ad
U.K. levels of Covid-19 infection fell faster than previously reported in May, according to a study of 120,000 people that took place before the country’s lockdown was eased. There were 13 positive cases for every 100,000 people according to a survey by Imperial College London, and the overall reproduction number was 0.57. where estimates has previously put it between 0.7 and 1
ITV’s Robert Peston said in a tweet that “Positive news is coming” on the Covid-19 vaccine that the University of Oxford is developing with AstraZeneca Plc. The vaccine is generating the kind of antibody and T-cell (killer cell) response that the researchers would hope to see,” Peston wrote, adding that details will be released soon in medical journal The Lancet.
219,139 new cases were reported worldwide yesterday, deaths now exceed 578 thousand.
Markets.
As more warnings came of a second wave of Covid-19 in the UK, market reaction was mixed and stocks fell in Europe. Asian stock also fell on the US-China tensions but US markets were up overnight with the S&P up 1.3% and the Nasday rising almost 1%
Oil prices eased lower on worries that new restrictions to stem rising US and Asian covid cases could threaten a recovery in fuel demand just as OPEC+ producers prepare to increase oil output as soon as next month.
Gold prices inched lower today as the US dollar held firm, but concerns over surging covid cases globally and renewed US-China tensions underpinned bullion’s safe haven appeal to investors and kept it priced near $1,800 an ounce.
The UK Government will ban new Huawei products from being a part of the 5G network from next year and all its existing infrastructure will be removed by 2027 in a major U-turn. Huawei will also be banned from supplying equipment to the UK’s new full fibre broadband network, with the embargo likely to begin in two years’ time after an official review is made. The National Security Council concluded that American sanctions on Huawei would increase Britain’s security risks, by making it harder for the firm to find reliable components. The government admitted the U-turn will delay Britain’s roll-out of 5G by up to three years.
Donald Trump signed an executive order ending Hong Kong’s privileged trading status with America, in response to China’s imposition of a crushing national-security law.
Don’t let Covid-19 bust your business!
It will if your cash flow dries up, either sooner or later.
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 sometime to come.
CPA eases cash from tardy debtors – Efficiently, Effectively, Economically and Ethically. Above all tactfully, because maintenance of goodwill is paramount.
To meet the needs of creditors in the current crisis, we have designed a “critical care” package especially tailored for the situation.
- The annual package costs start at very low rates
- A minimum performance warranty is provided
- Several complimentary services included
Clients instruct CPA on-line via their PC or phone, completely user-friendly. Your late paying customers are told to pay you direct (not to us).
A very recent report shows a 23% increase in the number of unpaid invoices since March 11th THIS YEAR – are you getting a build-up of late payers?
Right now, overdue accounts must be a concern and CPA has a great track record of encouraging slow-payers to pay their suppliers quickly.
It takes less than 17 minutes to see how you would benefit, do you have the time now?
No face-to-face meeting required – 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.
Do you sell on credit?
With pressures on the cash flow it is essential that you stay on top of the credit limits you grant customers and watch carefully for any late payments.
Those customers will look for the easiest option to boost their cash-flow. Don’t let it be you.
You can’t just assume your customers can and will pay you eventually, no matter how big their name is.
It is essential to have credit management systems in place to monitor and check your customers credit worthiness.
It is also best practice to use a trusted third party like CPA to make sure you are paid on time by customers, no matter how good a name they have.
About CPA
The Credit Protection Association can help!
Formed in 1914, CPA has been providing credit management services to SMEs for over 100 years.
At the Credit Protection Association, we provide first class credit information that can help you avoid being over extended to customers who are at risk. Our monitoring service can flag up warning signs long before the end, giving you the chance to adjust and reduce your exposure. We provide recommended credit limits and credit scores on a traffic light system and can help you set appropriate credit policies for your customers.
We regularly publish lists of the latest insolvencies but by then it is too late. Our credit reports however predict approximately 96% of company insolvencies long before they arrive.
Companies in trouble usually have very bad cash flow and they try to deal with it by delaying payment to their suppliers, increasing your exposure to them.
If you supply on credit, help us help you identify the risks.
Why use a third party collector?
As a third party collector, we can also get your payments prioritised over those who are not as hot on collections. When your customer receives a letter from the Credit Protection Association regarding their outstanding account, they are going to want to get that resolved as a priority. Our overdue account recovery service can get your unpaid invoices to the top of their “to do” list and get your invoice paid.
Over the years we have collected billions in overdue invoices for our customers.
Our debt recovery and credit management services give our members the financial freedom needed to grow and prosper, while our new Late Payment Compensation department could unlock hidden potential and offer the compensation needed to springboard your business to success.
You might be hesitant about contacting a debt collection agency. What are they going to be like?
Can they help your particular type of business?
There is no need for concern. CPA are courteous, helpful and very probably have had direct experience of working with your type of business.
Debt collection agencies are not all alike.
Success lies in both recovering money and keeping customers happy. The Credit Protection Association was founded in 1914 and has helped tens of thousands of UK businesses to collect outstanding payments and reduce the risk of incurring bad debt. We believe that creditors deserve to be paid for the work or goods they have supplied but we fully understand the need to maintain
the best possible relationship with customers!
At The Credit Protection Association, we provide solutions, advice and back-up in all areas relating to the supply of services or goods on account. Client-members receive everything they need from a single source to reduce debtor days and write-offs.
The Credit Protection Association has helped has assisted tens of thousands of UK businesses with their credit control requirements, since the First World War.
We are polite, firm and efficient when it comes to recovering outstanding debt.
“We have used CPA for a number of years now. The website is easy to navigate around with lots of helpful reports. The staff are always at hand and very friendly. CPA has helped us reduce our debt over the years and keep track of potential issues with our customers.”
~ CPA client in Buckinghamshire
“The service from CPA has proved to be everything that you said it would be. We have already seen a huge benefit. We have had a number of overdue accounts paid promptly and directly to us. It is also a huge weight off our mind to know that once we have passed an overdue payment over to you, you take care of everything whilst keeping us informed.
~ Credit Controller client in Warrington
The Credit Protection Association – Prompting Punctual Payments – Ethical, Effective, Efficient, Economical collections
Ready to speak to an advisor?
For help or advice on credit management, entirely without obligation.
Call us today
0330 053 9263
CPA is passionate about late payment
The Credit Protection Association has been protecting smaller firms against poor payment practices for over 100 years.
We are extremely passionate about breaking the late payment culture that holds back the UK economy and threatens many SMEs with cash flow difficulties being the single biggest killer of Britain’s small businesses.
If you were regularly paid late we can help. Those former customers used you to boost their own cashflow, regularly paying you late.
As a result you had extra costs, you had the distraction of having to chase payment, you had opportunity costs because your capital was tied up in their late invoices.
Under little used legislation, you are entitled to compensation for those late payments.
Now you can boost your own cash-flow.
CPA can help unearth the those hidden treasures.
We have the technology to reveal the compensation you are due and we have the extensive experience and expertise to then turn those claims into cash.
Yes, CPA can help you boost your business cash-flow.
Don’t let your bankers control you, contact CPA today.
The Credit Protection Association – Prompting Punctual Payments – Ethical, Effective, Efficient, Economical collections
Do you realise you could be sitting on a fortune?
Late payments often result in a cash flow crunch and leave SMEs in need of a cash injection.
If you sold B2B on credit then there may be a hidden source of capital you can call on.
If you fancy an bit of extra cash in your business, rather than jumping through hoops with your bank, you could look to uncover the resources from an unexpected source within your own business.
Not many are aware but there could be a hidden fortune within your business, sitting there, just waiting to be uncovered and released.
We can help you uncover the pile of gold, you didn’t even know you were sitting on.
If you trade with other businesses and were often paid late then you could be entitled to significant compensation.
Under little known and under-utilised legislation your business could be due huge amounts in compensation that you didn’t even know about.
Let’s be clear – this is not a way to weaken any customer relationships you value. It is one that identifies who’s been paying late and then recover the potentially significant sums in compensation using Late Payment Legislation from businesses where the relationship has already ended.
You can pick and choose who you want us to follow up – but once we’ve agreed which companies you’d like to pursue compensation from it’s a fast process and there’s no financial outlay to you whatsoever. My team at CPA put its expertise to work to recover the compensation due and fight late payment culture.
That compensation could provide the cash boost your business needed.
But don’t delay, that compensation evaporates if not claimed within six years of the late payment.
How can CPA help?
CPA has developed a unique technology to dig into your accounting records and discover the cash injection you are due by means of compensation. The software does all the hard work. Our software interacts over the cloud with over 300 different software packages, working directly with your accounts package, just so long as it’s stored on a computer.
We recognise that most companies do not have the resources to spend time on the identification and calculation of Late Payment Compensation. Our service can produce an Analyses within just a few days with (usually) less than 30 mins of co-operation from our clients. We work directly with over 300 accounting packages but can also work with bespoke accounts packages. Indeed, speed is essential as the oldest invoices may fall foul of the 6-year time limit.
Once the Sales Ledger Analyses is made available to clients, all that is required is that management decide which commercially sensitive ex-customers to remove from the list and return it to us.
CPA then uses its years of collection experience to explain and recover the Late Payment Compensation Claims. Clients do not handle any part of the recovery process as our team will take all communications from the companies against who the claims has been made. Often, it’s simply a case of explaining the legislation, sometimes we have to go all the way and enforce the legislation through the courts.
The result is that we are realising clients’ claims worth tens and sometimes hundreds of thousands of pounds which, of course, is pure net profit. You may also be among the recipients of “hundreds of thousands of pounds” should you elect to take advantage of our services.
We do the work, you receive the cash.
If you have supplied goods and services to businesses on credit and were regularly paid late then you could be due significant sums in late payment compensation.
We are talking to companies and unearthing claims in the hundreds of thousands from former business customers who paid them late. Large business customers who abused their power to inflict unfair and sometimes illegal payment practices.
We are helping business owners who are looking to boost the returns from their business before they retire. We are helping businesses who have lost major clients after years of loyal service to get properly compensated for systematic late payment. We are helping companies that were looking to close down, who looked insolvent and finding that cash injection they need to avoid insolvency.
Those former clients who regularly paid you late can finally be made to pay.
Ready to speak to an advisor?
For help or advice on credit management, entirely without obligation.
Call us today
0330 053 9263
The Credit Protection Association is a credit management company established in 1914. If you supply goods or services on credit then we can help you!
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