Record stock shortages hit manufacturers – business news 24 August 2021

James Salmon, Operations Director.

Record stock shortages hit manufacturers. Staff shortages and supply chain issues slow UK recovery. Small firms allocated £25m eBay funding. One in three mid-sized firms will restructure to cope with post-Brexit trading and more business news.

Record stock shortages hit manufacturers
The Confederation of British Industry’s (CBI) latest Industrial Trends Survey found that manufacturers are suffering the worst stock shortages on record, with carmakers particularly badly hit by the lack of availability of semiconductors.

It reported 22% growth for the quarter to August, representing a slow-down from the 37% rise for the three months to July. This was driven primarily by the motor vehicles industry, which saw output drop from a near-record pace to being flat for the period.

Alpesh Paleja, lead economist at the CBI, warned that ongoing disruptions “could choke off future manufacturing growth”. He said: “It’s therefore vital that businesses and the Government continue to work together to smooth over some of the frictions in supply chains and the wider sector, until activity settles back down to normal levels.”

Staff shortages and supply chain issues slow UK recovery
The UK Economy slowed sharply in August as companies struggled with unprecedented shortages of staff and materials, though strong inflation pressures cooled a bit.

Labour and supply shortages held back Britain’s economic recovery in August, according to the latest IHS Markit/CIPS Flash UK Composite PMI, which gave a reading of 55.3 for the month – the lowest since February and down from July’s 59.2.

IHS Markit said the number of companies reporting that shortages of staff and materials were hurting growth was a record 14 times the normal level.

Chris Williamson, chief business economist at IHS Markit, added: “Rising virus case numbers are deterring many forms of spending, notably by consumers, and have hit growth via worsening staff and supply shortages.”

In The US, the pace of the economic rebound slowed to an eight-month low in August, according to business surveys. IHS Markit’s purchasing-managers’ index registered 55.4, down from 59.9 in July, however remained well above 50.  Supply-chain bottle-necks and staff shortages, added to the spread of the Delta variant of covid-19, have held back activity.

Small firms allocated £25m eBay funding
More than £25m in funding has been allocated to thousands of small businesses as part of eBay UK’s finance programme. The company’s Capital for eBay Business Sellers programme was launched three months ago with its first financing partner, YouLend, and has funded 17 businesses on average per day. The programme is now being extended with two further financing partners, Funding Xchange and Wayflyer.


The Chinese ride hailing app has suspended plans to launch in Europe and several UK cities due to concerns over its data management of customer data.

One in three mid-sized firms will restructure to cope with post-Brexit trading
New figures from BDO show 32% of mid-sized businesses think they will need to substantially alter their business model to remain viable amid the new post-Brexit arrangements between London and Brussels.

The survey of 500 firms showed 36% are prioritising adapting their company to align with the new trading arrangements. This compares with one in four that are focusing on their rebound from the pandemic.

Stuart Lise, Partner at BDO, commented: “The resilience of mid-sized businesses has been tested beyond all expectation in the last few years, but they have continued to demonstrate their ability to quickly adapt to new and often challenging scenarios.” He called on the Government to provide adequate support and “ensure future growth is not hindered by rising costs and red tape.”

HMRC warns workers to check payslips
HMRC has urged workers to check their payslips to make sure they’re not being underpaid. The move comes after it was revealed how 155,000 people were underpaid in the 2020/21 tax year because they weren’t being paid the minimal amount required by law. Steve Timewell, director individuals and small business compliance at HMRC, said: “Being underpaid is no joke for workers, so we always apply the law and take action. Workers cannot be asked or told to sign-away their rights.” He continued: “We are making sure that workers are being paid what they are entitled to and, as the economy reopens, reminding employers of the rules and the help that is available to them.”

Employers should face tax penalties over low pay
The Institute for Public Policy Research (IPPR) has argued that employers who fail to meet minimum standards on pay and conditions should face tax penalties while those delivering on fair work criteria should benefit from business rate reductions. A study by the think tank found women were 44% more likely to experience low pay than men, while black and ethnic minority workers were 38% more likely than white workers. The authors defined low pay as less than the real living wage of 2019/20, which was set at £9.30 an hour. The IPPR asserted that many jobs were not providing workers “enough to make a decent life for themselves and their families”. It went on to argue that radical action was needed to move out of the COVID-19 crisis with a fairer labour market. It cited evidence of poor progression out of routine jobs, and uncertainty for many about working rotas

Workers learn to love remote working
A survey of American workers by PwC this month found that people approved of working from home the longer they did it. The firm said that 41% of workers surveyed wanted to remain at home full-time for work, up from 29% in January. Citing research from the Centre for Cities, the Times suggests a similar sentiment appears to be emerging in the UK. The think tank found that only 18% of staff in Britain’s 31 largest cities had returned to their city centre workplace a week after “freedom day” on July 19th. In London only 15% of workers were back in the week starting July 26th.

Survey finds digital assets seen as strong fiat alternative
Deloitte’s Global Blockchain Survey 2021, which polled a sample of 1,280 respondents worldwide, found that 76% of financial services industry (FSI) leaders thought digital assets will be “a strong alternative to or replacement for fiat currencies in the next five to ten years.” Of those respondents whose organisations have already adopted blockchain solutions or digital assets, dubbed “FSI pioneers” by Deloitte, all agreed that digital assets would be important to their industry in the next two years while 94% saw digital assets as a strong alternative or replacement for fiat currency. Linda Pawczuk, Richard Walker and Claudina Tanco, who authored the report, said: “Global FSI leaders see digital assets – and their underlying blockchain technologies – as a strategic priority now and in the near future.”

Anti-money laundering fines surge as watchdogs impose tougher penalties
New research from the investigations, risk and regulatory consultancy Kroll shows fines for anti-money laundering failings at banks and financial services firms were five times higher last year than in 2019. Total enforcement fines linked with AML efforts reached $2.2bn in 2020, up from $444m in 2019. Authorities levied $1bn in the first half of 2021, on track to hit last year’s total. “Investigations were not paused for COVID-19,” said Claire Simm, head of financial services compliance and regulation at Kroll. “The value of fines has surged as regulators impose tougher penalties, continuing to send the message that despite any obstacles, enforcement remains a top priority.”

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