Covid to cost global economy $28 trillion – business news 14 October 2020.
James Salmon, Operations Director.
Covid to cost global economy $28 trillion, Unemployment hits three year high, covid-19, market and other business news.
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.
IMF: COVID-19 will cost global economy $28 trillion
The International Monetary Fund (IMF) has warned that the COVID-19 pandemic will cost the global economy $28trn (£21.5trn) in lost output by 2025.
However the IMF is forecasting a somewhat less severe recession than it predicted in June. The change in the outlook applies to both the global economy and the UK. However, the IMF says in its World Economic Outlook that the global economy is still in deep recession and the risk of a worse outcome than in its new forecast is “sizable”.
The IMF said a stronger than expected performance in Q2 and Q3 means global output is likely to fall by 4.4% in 2020 compared with the 5.2% drop forecast in June.
However, the organisation said that rising infection rates in some emerging market economies had forced it to pare back its estimate of the rebound in 2021 from 5.4% to 5.2%.
For Britain, the IMF predicts the economy will decline by 9.8% this year, less than the 10.2% forecast in the summer.
For 2021, the IMF expects Britain to see a recovery of 5.9%.
Looking at the global picture, IMF chief economist Gita Gopinath warned that there is “tremendous uncertainty” about the future. On the impact of a second wave of COVID-19, she added that “the toll on economic activity would be severe, and likely amplified by severe financial market turmoil”.
Unemployment hits three year high
The UK unemployment rate has risen to its highest level in over three years, climbing to 4.5% in the three months to August, compared with 4.1% in the previous quarter.
Figures from the Office for National Statistics (ONS) also show that redundancies have hit their highest level since 2009.
The data show that an estimated 1.5m people were unemployed between June and August, with the number of people made redundant hitting 227,000 – an increase of 114,000.
Overall employment has fallen by 480,000 since the start of the year, with 16- to 24-year-olds accounting for 60% of the decline. Meanwhile, HMRC data show that the number of staff on company payrolls rose by 20,000 in September.
Firms urged to declare furlough errors
Companies have just one week left to disclose incorrect claims made to the Government’s furlough scheme, with HMRC having given employers an amnesty to come forward with errors before saying it will start “gloves off” investigations. Ministers last month said that up to £3.5bn of support through the jobs retention initiative may have been claimed fraudulently or paid out in error. BDO’s Richard Morley comments: “Given that HMRC has clearly started to actively follow up on tip-offs and potentially incorrect claims, including recent arrests, businesses and individuals should start reviewing their furlough claims now.”
Covid-19 general news
Global cases pass 38 million and deaths 1.08 million.
On Tuesday, the U.K. suffered its highest daily death toll since June, with scientists warning numbers will continue to surge in the coming weeks. Separate figures showed there were 3,905 Covid-19 patients in the hospital in England, up from 2,783 the previous week
Prime Minister Boris Johnson is under increasing pressure to order a national “circuit breaker” lock-down, as the new three-tier system of covid restrictions began in England. Labour Party leader Keir Starmer has warned local restrictions are not working and has demanded a lock-down in England lasting two or three weeks, after documents revealed the government’s Scientific Advisory Group for Emergencies had called for the same action three weeks ago. But Johnson has so far resisted such a lock-down as he tries to keep as much of the economy open as possible.
The race to find medical breakthroughs to contain covid-19 stumbled as Eli Lilly & Co. halted tests of its antibody treatment a day after Johnson & Johnson paused its vaccine trial.
The World Bank approved an envelope of $12 billion for developing countries to finance the purchase and distribution of Covid-19 vaccines, tests and treatments.
The United Nations World Food Programme said it would need to raise $6.8bn to avert impending famine caused by the coronavirus crisis.
The Guardian’s Robert Booth looks at issues with Britain’s coronavirus test and trace system, noting that ministers opted for a centralised system using private companies, with Deloitte awarded a contract to help run testing sites.
Markets.
UK stocks fell yesterday as concerns around the timeline of a Covid-19 vaccine and new business curbs hit risk appetite ahead of a self-imposed UK deadline for a Brexit trade deal with the European Union. US Markets fell for the first time in five days as investors grappled with the latest news regarding US coronavirus stimulus and the first batch of corporate earnings. Asian Markets were lower in Wednesday trade, as investors reacted to a speech from Chinese President Xi Jinping.
Oil prices rebounded as strong data from China offset returning supply in Norway, the Gulf of Mexico and Libya.
Gold prices were steady, buoyed by optimism a US stimulus package would be passed, as gold is seen as an inflation hedge although gains were capped by a stronger dollar
Apple
Apple announced an iPhone 12 capable of tapping into faster 5G networks, designed to improve upgrades with 40% of users having an iphone thats over 3.5 years old. It is expected to bolster sales ahead of company’s busiest sales quarter before christmas. At a virtual event, the firm showed off the 5G iPhone 12 in several colours, with a 6.1-inch screen and edges that are flat instead of curved.
US inflation
US CPI rose 0.2% in September, according to figures released today from the Bureau of Labor Statistics. The rise was in line with market expectations.
EU-US trade
The European Union may impose new border taxes on up to $4 billion in US goods annually as punishment for subsidies provided to Boeing, the World Trade Organization has ruled. The decision is the latest step in a long-running feud between the US and EU over state subsidies for plane Boeing and EU rival Airbus.
Ocado
Ocado added thousands of new customers following the launch of its partnership with Marks & Spencer amid a sustained rise in the number of consumers choosing to shop online. In the 12 weeks to 4 October, Ocado increased sales by 41.9% as the ecommerce retailer was buoyed by its new deal with M&S that launched at the beginning of September.
Just Eat
Just Eat Takeaway said the surge in online food orders caused by Covid-19 continued into the third quarter, with orders jumping 46% compared to a year earlier. Order growth accelerated from the jump of 32% the European food delivery giant recorded in the first half of 2020.
Low interest rates push up DB deficits
The Bank of England’s decision to cut interest rates in response to the coronavirus crisis has increased defined benefit (DB) deficits, with UK pension schemes facing a funding hole of £166.1bn at the end of September. Deficits have increased by £26bn in the space of a month, and over the past year aggregate deficits have risen by almost £50bn. AJ Bell senior analyst Tom Selby says: “Low central bank interest rates place downward pressure on Government gilt yields, which is bad news for DB pension schemes as this pushes up the value of liabilities.” Former Pensions Minister Baroness Altmann said negative interest rates would make the problem even worse, commenting: “Negative rates make it even more difficult to fund pensions as final salary pensions cannot fall in value unless the employer is becoming insolvent.”
Britain behind on tax competitiveness
Analysis by the Tax Foundation places Britain 22nd among the Organisation for Economic Co-operation and Development’s 36 advanced nations in regard to tax competitiveness. The think-tank places Britain 33rd on property taxes, 17th for corporation tax and 24th on income taxes. The analysis, a joint report put together with the Centre for Policy Studies, says tax rises reportedly being considered by the Treasury would take the country from 22nd to 30th in the headline index, with the Chancellor said to be weighing increases in corporation tax and capital gains tax to balance the books amid the COVID-19 pandemic. The Centre for Policy Studies has warned Rishi Sunak against increasing taxes in the middle of the coronavirus crisis and ongoing Brexit uncertainty, with its head of tax Tom Clougherty saying: “Trying to close the fiscal gap now … would be an act of self-sabotage.”
Self-employed warned over pre-pay tax system
The Independent’s Kate Hughes says some of the UK’s 4.76m self-employed workers could be hit with tax bills which exceed their earnings next year. She says that issues may arise as the self-employed have been allowed to defer paying the tax they owe amid the pandemic, while also warning that such workers may also see “significant problems” as the tax system demands they pay their tax for the coming year in advance. The calculations for these pre-pay bills, she notes, are based on previous earnings and “won’t take plummeting real time income levels into account”. Pointing to analysis by mutual insurer Royal London, Ms Hughes says: “Many self-employed people may have to settle tax bills which bear no relation to 2020’s real earnings.”
Amazon to pass on digital tax
The Times’ Oliver Wright reports that Amazon will not be affected by the new digital services tax, with small traders who use its online marketplace set to bear the brunt. The paper reveals that the tech giant will not have to pay the levy on goods it sells itself, with the 2% charge only applying to revenues it receives from third-party sellers that pay to use its marketplace platform. Amazon says it will pass on this cost in higher fees. Andrew Goodacre, chief executive of the British Independent Retailers Association, has critici sed the levy, saying: “All it has done is resulted in small sellers paying more and making less while Amazon gains further competitive advantage.” A Times editorial also takes aim at the digital services tax, saying that while it is a “well-intentioned attempt to level the playing field”, it is “hitting precisely the wrong target”.
HMRC: 55k home workers use new tax relief portal
HMRC says 54,800 home workers have made tax relief claims via a new online portal since it launched on October 1 – with this equating to a rate of three claims a minute. The portal has been designed to process tax relief on additional expenses for employees who have been told to work from home amid the coronavirus crisis, with relief offered to help cover the extra costs associated with working remotely. While HMRC estimates that 5m people may be eligible to apply, Harry Brennan in the Telegraph crunches numbers from the Office for National Statistics, saying they suggest more than 7m people eligible to claim have yet to do so.
Mortgage availability falls to 10-year low
Mortgage options for house hunters have more than halved in the last 12 months, with the number of loans available falling to a 10-year low, according to industry analysts Moneyfacts. Mortgage availability has drastically diminished since the start of the COVID-19 crisis and there are now 2,259 loans on the market. This represents a 54% drop compared to last October, when there were 4,955 deals available. Small-deposit mortgages have all but disappeared as banks limit their lending amid economic uncertainty. Most will no longer lend to borrowers with less than a 15% deposit. Just 51 mortgages are available to borrowers with a 10% deposit.
Professional services at risk post-Brexit
A House of Lords’ EU services subcommittee report has warned that UK-based accountants are among professionals at risk of losing contracts and jobs when Britain formally leaves the EU in January. The report accused the Government of ignoring the “hugely important” professional services industry in trade negotiations with the EU. The professional services sector, which makes up around 13% of the UK workforce, is the UK’s leading services export. The EU is the largest market for UK professional services, accounting for 37% of exports from the sector.
BDO leads on listed firm audits
Analysis by Adviser Rankings, which collects auditor data, shows that BDO has overtaken PwC as the firm with the largest number of London-listed audit clients, having gained 36 in the 12 months to October. The additions mean BDO now has 310 listed audit clients while PwC has 307, 46 fewer than last year’s total. KPMG has 260, EY has 225, Deloitte accounts for 198, Grant Thornton has 111 audit clients, PKF Littlejohn has 82, while RSM has 78. The analysis shows that Deloitte, EY, KPMG and PwC audit every FTSE 100 company. City AM says the Big Four are in a period of change amid regulatory scrutiny on the back of a number of scandals, with the Financial Reporting Council having told the firms they have until 2024 to operationally separate their auditing sections. Commenting on the findings, BDO’s head of audit Scott Knight said: “Many tenders have been deferred this year due to pandemic-induced disruption, but we’re confident the market will continue to move in the current direction throughout 2021 as companies seek more choice and invest in quality.”
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?
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.
You put up with the PAIN – now claim the GAIN!
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.
Did you know that your business is entitled to a minimum of £40 for every commercial invoice paid late to you over the past 6 years?
How many of your invoices are paid late each month – 20, 50, 100 or more?
At £40 per invoice that’s claim of £57,600, £144,000, £288,000 plus interest. The more invoices the bigger the claim!
At £100 per invoice it’s £144,000, £360,000, £720,000 plus interest.
For over 20 years, CPA has calculated and recovered Late Payment Compensation on behalf of Clients!
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.
Read our blog here on how to crack down on the late payment culture.
Read our blog here on how to give late payers the slap they need.
The “Why” of the late payment culture.
New PM should walk the walk and back small firms over late payments
Paying late is “crack cocaine” to big business.
Late payment culture risks “spiraling out of control”
visit our late payment compensation page
See our full blog and FAQ on late payment compensation
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?
Call us today