Pandemic drives increase in new businesses – business news 3 August 2021
James Salmon, Operations Director.
Pandemic drives increase in new businesses, pingdemic prompts a change to the NHS app, 250k jobs at risk as furlough scheme winds down, Supply constraints slow manufacturing growth, Chancellor lauds benefits of the office, Two thirds are counting on inheriting wealth, inflation and much more.
Pandemic drives increase in new businesses
Research from fintech firm Tide shows that the pandemic has been the reason for 26% of new businesses opening this year, with the firm saying it has provided a “unique” opportunity for entrepreneurs as lockdown gave them the opportunity to rethink their careers and kickstart new projects.
The study suggests that half of new businesses are full-time occupations rather than a side-hustle. Tide found that more than two-thirds of new business owners are first-time entrepreneurs, while 9% of new businesses were opened as a result of a job loss and 3% were created due to furlough.
On what the future holds, 65% of new business owners are confident their business will turn a profit in the coming year. Companies House data shows that there were 21.8% more businesses incorporated in the UK in the year to March 2021 than in the previous 12 months.
If you have started a new business and sell on credit, i.e you get paid after you have provided the services or goods to your supplier, then have you considered your credit management? Getting the right policies, systems and support in place from the off can stop customers taking advantage and purposely delaying payment because they think they can get away with it.
CPA offers credit management services by subscription at a range of levels to suit all sizes of businesses. Give us a call today on 020 8846 0000 and ask for Peter Uwins for a no-obligation chat about how we can help you.
Pingdemic
In an effort to curb Britain’s ‘pingdemic’ of contact tracing notifications, the country’s government has restricted the parameters of the National Health Service’s Covid-19 phone app. Under the changes taking effect yesterday, only those who come into contact with an infected person within two days prior to the positive test will be asked to self-isolate, rather than within five days previously. The changes won’t however affect the geographic sensitivity of the app or change the risk threshold.
“We want to reduce the disruption that self-isolation can cause for people and businesses, while ensuring we’re protecting those most at risk from this virus,” Health Secretary Sajid Javid said in a statement. “This update to the app will help ensure that we are striking the right balance.”
250k jobs at risk as furlough scheme winds down
Analysis by the New Economics Foundation suggests 250,000 jobs could be at risk when the furlough scheme comes to an end in September, while a tapering that means firms are now responsible for 20% of furlough payouts “will not be cost-effective” for some employers.
Alex Chapman, senior researcher at the foundation, said: “The current end date for the furlough scheme is arbitrary and can cause unnecessary harm to thousands of workers.” The think-tank’s report raises similar concerns to a British Chambers of Commerce study which found that a fifth of businesses plan to let staff go as a result of the increase in employer contributions, which rose from 10% on August 1.
Supply constraints slow manufacturing growth
IHS Markit/Cips’ manufacturing purchasing managers’ index stood at 60.4 in July, down from 63.9 in June and the record 65.6 reported in May but above the 50 mark that separates expansion from contraction.
With output and order book growth slowing to the weakest in four months, IHS Markit/Cips noted that supply constraints had an impact, while cost and price pressures increased.
Rob Dobson, a director of IHS Markit, said that while manufacturers are benefiting from reopening economies, with solid inflows of new work from both domestic and overseas markets, the recent surge in global manufacturing growth has delivered near-record supply chain delays.
James Brougham, an economist at the manufacturers’ lobby group Make UK, said: “We can now see the limiting impacts of the growing supply chain and input price disruptions on UK manufacturers’ road to recovery”.
Chancellor lauds benefits of the office
Rishi Sunak has urged workers to get back to the office now work from home guidance has been withdrawn, highlighting the merits of making relationships in the workplace.
Noting that he remains in contact with the mentors he found when he first started his job, the Chancellor said: “I doubt I would have had those strong relationships if I was doing my summer internship or my first bit of my career over Teams and Zoom.” With that in mind, he said he believes it is valuable for young people in particular to be able to physically be in an office.
Mr Sunak also noted that while ministers have lifted the recommendation to work remotely where possible, the final say lies with employers. “We’ve kind of stopped saying that people should actively work from home and have now left it up to businesses to work with their teams to figure out the right approach,” he said.
Two thirds are counting on inheriting wealth
Research for investment management firm Fidelity shows that 65% of under-45s expect to receive an inheritance of wealth to fund their financial goals and get on the property ladder.
It was found that 32% who have already or expect to receive an inheritance or lifetime gift directed the funds to their savings or pension, 24% used the money to pay off a mortgage, and 22% used the funds to join the property ladder. While 18% used the money for one-off expenses or luxury items, 17% paid off debts and 9% put the money toward repaying their student loan.
Dawn Mealing, head of advice policy at Fidelity, says that buying a home and saving for retirement are among the “most significant milestones upon the road to financial security”, adding that the poll shows just how many people are “counting upon the passing down of wealth” to achieve them.
NIESR: Inflation to hit 3.9% in early 2022
The National Institute of Economic and Social Research (NIESR) says consumer price inflation will reach 3.9% early in 2022 but should fall back to 2% in 2023 if the Bank of England lifts interest rates. The think-tank also revised its growth forecast for the UK for 2021, increasing it from 5.7% to 6.8%. NIESR also warns that unemployment is likely to rise by 150,000 once the Government’s furlough scheme is wound down at the end of September, taking the jobless rate from the current 4.8% of the workforce to 5.4%. NIESR deputy director Hande Küçük said: “Supply-side factors and effects of reopening amid the recovery in consumption are likely to keep inflation well above the Bank of England’s 2% target for the most part of next year.”
House prices and inflation
Ahead of the Bank of England’s latest forecast for consumer price inflation, which is due this week, the Times’ Philip Aldrick considers the argument for bringing house prices into the Bank’s inflation mandate. He notes that as property is an asset, it comes under the financial stability umbrella rather the Bank’s monetary policy unit, but says there is an “obvious logic” to including a proxy for house prices in consumer price inflation, with rent, mortgage payments, stamp duty and maintenance costs little different from other payments that are included in the headline inflation rate. Mr Aldrick says the while low rates have fuelled housing booms, the Bank “stands idly by as bubbles inflate because it has no remit to respond”.
Greggs
Greggs declared its first dividend since 2019 after upgrading its performance amid a jump first-half profit amid a boost from cost cuts. ‘Despite the general uncertainties in the market, Greggs has traded well in recent months [and] as a result, we now expect full year profit to be slightly ahead of our previous expectation,’ the company said.
Travis Perkins
Travis Perkins swung to a first-half profit and reinstated its interim dividend following a recovery in repairs, maintenance and improvement markets. Net profit for the six months through June amounted to £52.5 million, compared to year-on-year losses of £113.3 million and included a loss from discontinued operations of £47.3 million.
Fast-track licences add 17k al fresco seats
Analysis by PwC shows that there were more than 3,300 fast-track applications for outdoor seating in Britain during the pandemic as pubs and restaurants looked to boost customer numbers when socialising indoors was not permitted and customers felt more confident eating outside. The fast-track pavement licences were introduced in July 2020 and resulted in at least 17,045 extra customer seats.
Direct Line
Direct Line Insurance reported an 11% rise in half-year pretax profit to £261.3 million from £236.4 million a year before, amid below-normal Motor claims and “benign” weather conditions.
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The Credit Protection Association – Prompting Punctual Payments – Ethical, Effective, Efficient, Economical collections.