Entrepreneurs contribute £125bn – business news 20 August 2021
James Salmon, Operations Director.
Entrepreneurs and freelancers contribute £125bn to the economy. Consumer confidence slips but stays above pre-pandemic levels. Remote staff would accept lower wage. Sunak unlikely to increase income tax and more.
Entrepreneurs and freelancers contribute £125bn to the economy
A survey commissioned by business banking app Mettle has looked at the economic contribution of entrepreneurs, the self-employed and those with a side hustle business.
It found that the total economic contribution from this sector is estimated at more than £125bn, a figure that represents about 15% of the total UK economy at the end of 2020.
The survey found the average estimated turnover of small business owners was £52,620. The analysis shows that 21% of male-led businesses make over £100,000, with 13% of female-run businesses also breaking the £100,000 barrier.
More than half (53%) of respondents expect a turnover of up to £50,000 this tax year, marking a jump on the 46% who said the same last year.
The average estimated turnover for self-employed individuals is £25,066. The poll also found that 52% of small business owners do not feel supported by their bank.
Consumer confidence slips but stays above pre-pandemic levels
Data from research company GfK shows that British consumer confidence surpassed pre-pandemic levels for the second month in a row in August.
While the consumer confidence index fell by one point to -8 in August, levels of optimism remain close to record highs. The major purchase sub-index fell by five points to -3, while the savings index rose by five points to 25 and the sub-index for the general economic situation over the coming year slipped by one point to -6. The sub-index for personal financial situations over the coming year was flat at 11.
Joe Staton, client strategy director at GfK, said: “With the economy continuing to open up and GDP bouncing back, the overall picture for the economic health of the nation is looking good for the remainder of 2021. There are compelling reasons here to be cheerful as we begin to put the hardest pandemic months behind us.”
Lisa Hooker, PwC’s consumer markets leader, commented: “The high level of consumer confidence across all age categories was driven by the success of the vaccine rollout.”
Remote staff would accept lower wage
With the pandemic driving a shift toward remote working that looks set to continue despite restrictions being lifted, a majority of workers say they would accept a reduced wage to continue working from home. A survey of more than 1,000 UK employees by the HR software provider CIPHR found that nearly three-quarters would agree to a reduction in pay in return for being able to work remotely on a permanent basis.
Sunak unlikely to increase income tax
According to reports Boris Johnson and Rishi Sunak have clashed over potential tax changes – with the Prime Minister said to be in favour of a levy of around 2p on income tax while the Chancellor strongly opposes increasing the rate.
Tom Selby, an analyst at AJ Bell, says the Government is unlikely to raise income tax, saying doing so “would be too toxic”. He added: “They have the triple tax lock as part of the 2019 manifesto, all of the noises coming out of the Treasury suggest they want to stick to that as much as possible.” Mr Selby added that policymakers were more likely to “go after National Insurance instead and look to label it as something different”. He also reflects on other possible reform of taxation as ministers look to foot the nation’s coronavirus bill, suggesting wealth taxes “are probably the fairest way – ensuring those with the broadest shoulders are targeted to take on the costs of paying for COVID-19”.
UK ‘ahead of the pack’ with post-pandemic tax plan
Rupert Harrison, portfolio manager at BlackRock, looks at the cost of the pandemic and how countries are looking to balance the books. He says the UK is “ahead of the pack”, having announced future tax rises on company profits and incomes to help stabilise the ratio of national debt to income. Looking ahead to the “difficult spending review facing our government this autumn”, he says new entitlements to social care and the build-up of pressures on the NHS “will likely have to be paid for with higher taxes”.
Morrisons
Private equity group Clayton Dubilier & Rice raised its offer for Wm Morrison Supermarkets to 7 billion pounds with a 285p per share cash offer for Morrisons which has been agreed by the board. CD&R also pledged to support Morrison’s existing management team and not to carry out material sales and leasebacks of the grocer’s extensive real estate portfolio. Fortress has urged shareholders not to take any immediate action suggesting it will improve its offer.
Duff and Phelps in £25m legal action
Duff and Phelps, the company that ran Rangers after it went into administration, has launched a multi-million pound damages action against Scotland’s prosecution service. The firm has lodged an initial claim for £25m from the Lord Advocate, arguing that it has suffered significant lost earnings since David Whitehouse and Paul Clark – who have already received damages of £21m – were wrongfully arrested. They were accused of wrongdoing but prosecutors had no “probable cause” to arrest them and they were eventually acquitted.
Former Debenhams workers launch legal fight
A group of former Debenhams workers are taking legal action after losing their jobs with just a few days’ notice, with lawyers arguing that there was a “complete failure” to follow the statutory process and that the workers’ employment rights were breached. The staff were not given the 45-day minimum consultation period for redundancy. Debenhams’ administrators, FRP, said it was difficult to abide by the statutory consultation period as decisions had to be taken on a day-by-day basis.
Lloyds looks to landlord market
Lloyds Banking Group is reportedly planning to snap up 50,000 homes for rent in a move that could see it become one of the UK’s largest landlords. In plans sources say have been announced internally, the bank has launched the Citra Living brand as it looks to move into the private rental market. If the bank hits a target to acquire the properties by 2030, it will pass Britain’s current largest landlord Grainger, which currently owns 9,100 properties. Heather Powell, a partner at Blick Rothenberg, comments: “If this level of investment in residential stock ‘built to rent’ continues, the letting market in the UK will undergo a seismic change – with small independent landlords being squeezed out to the periphery.”
Marks & Spencer
Marks & Spencer reported sales revenue increased 29% with clothing revenues up 92% – the board now expect adjusted pre-tax profit of between £300m-£350m and will provide more in depth guidance later.
Mastercard
Competition Appeal Tribunal has approved of a £10bn class action against Mastercard that could entitle 46m UK adults to roughly £300 each if successful.
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