Reopening – Business news 13 April 2021.
James Salmon, Operations Director.
We look at the reopening, covid loans, GDP, customs arrangements and lots more business news for our members and visitors.
Reopening
Retail confidence was apparent as UK media showed long queues outside Primark and Harrods. UK Footfall exploded as England eased covid 19 restrictions and non-essential retail was allowed to open for business for the first time in months. In the first few hours of trading footfall in shopping centres jumped nearly 340 per cent when compared with last week.
Its not good news for everyone. With restaurants opening up, Food delivery app, Deliveroo continued to fall as shares dropped. Also concerns rose over meal kit providers. HelloFresh shares fell as it emerged the most popular search was “how to close HelloFresh account”.
Covid loans
Banks have begun sending letters to customers, warning them that repayments for covid loans will soon be expected. HSBC, Barclays, NatWest and Lloyds have each begun sending letters to customers, with the first set repayments due to start in just two weeks.
GDP
UK GDP was up 0.4% in February coming from a 2.2% decline in January, the ONS said this morning. Wholesale and retail trade sales picked up slightly, but consumer-facing services industries remained well below pre-pandemic levels. The services sector grew by 0.2%. Output in the productions sector rose by 1% during the same month, while manufacturing grew 1.3% following a contraction in January.
The modest rise in GDP is a positive step towards showing signs of the early stages of an economic recovery. While the unemployment rate remains low, much of the country is reopened and vaccinations are administered extensively across the land, the economy has been like a coiled spring waiting to be let go.
SMEs should use delays to customs changes to implement new systems
Experts are warning Britain’s small businesses to get systems in place so they can export smoothly to the EU whilst the rollout of new border procedures are delayed. Management consultant Neil McEvoy said: “Businesses need systems in place that provide scheduling and planning tools, in order to ensure every shipment is compliant when sent to the EU.” He added: “If SMEs get their selling systems ready for May they will survive, because Europe offers ‘low-hanging fruit’, with lots of people looking to spend. There will be many businesses that don’t and they will go to the wall. For those that get it right, the market is huge.”
City to boost Square Mile’s recovery with fund for SMEs
Catherine McGuinness, Policy Chair of the City of London Corporation, details in a piece for City AM a new Covid Business Recovery Fund to help underpin the Square Mile’s economic recovery. “The scheme is designed to support SME businesses which contribute to the Square Mile’s vibrancy at street level and directly provide services to returning City workers, visitors and residents.” McGuinness adds that most workers are keen to return to the Square Mile while City leaders have stressed their commitment to central London office space. She concludes: “The vibrancy of our unique ecosystem relies on each part of the City community – multinational businesses to domestic SMEs, international workers to local residents – working in partnership. Together we can bring back the buzz of life in the Square Mile.”
Just Eat
Just Eat said 200 million orders were placed in the first quarter of 2021, marking a 79% increase from the same period last year. UK customers placed the most orders, with almost 64 million of those 200 million orders. The company has been one of the major winners of the pandemic as millions of people have been forced to stay at home. As the economy re-opens, its fortunes will be watched with interest to see if this was a temporary blip or a permanent change in habits.
North West business leaders optimistic
With coronavirus restrictions lifting across the country allowing hospitality and non-essential retail to open up again, leaders from across the North West are looking ahead with optimism. Neil Sturmey, a senior partner at Grant Thornton in the North West, noted that it had been “the longest winter” for high street retailers and the hospitality sector, with both “overdue some good news”. “That is coming,” he said. “Most of us are desperate to go out again and many businesses are hoping that we are heading for a golden summer.”
UN chief calls for wealth tax on rich boosted by pandemic
United Nations secretary-general Antonio Guterres has urged governments to impose a “solidarity or wealth tax” on rich people who profited during the coronavirus pandemic. “We must make sure funds go where they are needed most. Latest reports indicate that there has been a $5trn surge in the wealth of the world’s richest in the past year,” Guterres told a UN meeting on financing for development. “I urge governments to consider a solidarity or wealth tax on those who have profited during the pandemic, to reduce extreme inequalities,” he added. The call from Guterres follows a similar plea from the International Monetary Fund which has advocated a “temporary COVID-19 recovery contribution” to be levied on those companies and individuals that have benefited financially during the pandemic.
Liberty Steel misses filing deadlines
Liberty Steel has failed to file accounts for some of its biggest British businesses in time. Sanjeev Gupta is urgently seeking finance to shore up his industrial empire after its main backer, Greensill Capital went bust. Credit Suisse, a lender to Greensill, is trying to recover money lent to Gupta’s companies via court action in the UK and Australia. An insider said most of the companies had not filed audited accounts for the year ending on 31 March 2020 because they would no longer represent an up-to-date view of the businesses.
American CEOs say Biden’s tax hikes will slash wages, hiring and profits
A majority of CEOs in the US have said the Biden administration’s plans to hike corporation tax from 21% to 28% would have a “moderately” to “very” significant adverse effect on their company’s competitiveness. A Business Roundtable Survey found 98% of American CEOs believe the rate increase will stunt wage growth, weaken expansion, innovation and hiring. Raytheon Technologies CEO Gregory Hayes said: “The tax system needs to support innovation, R&D, capital investment and economic growth.” He continued: “As we look toward recovering from the COVID-19 pandemic, keeping competitive tax policies in place is needed to help reinvigorate the U.S. economy and lead to more opportunity for Americans.” Meanwhile, writing in the FT, Richard Murphy says Biden’s plan for international tax reform would need robust country-by-country reporting if it’s to stop international tax arbitrage. Finally, Conservative MP Sir John Redwood has warned that a new global minimum corporation tax rate of 21% would seriously harm investment flows into Ireland, which has used a 12.5% tax rate to build its economy.
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