Small businesses edge back to health – business news 25 June 2021.
James Salmon, Operations Director.
Small businesses edge back to health, Interest Rates & Inflation, Consumer Confidence, Deliveroo court verdict, remote worker satisfaction and lots more business news.
Small businesses edge back to health
Analysis of business records by Xero has found that small businesses are gradually seeing their sales move back toward pre-pandemic levels.
However, while results for hospitality were the most promising since August 2020, sales have been slow to rebound and jobs remain down over 20% year-on-year. In contrast, retail and the information media and telecommunications sector reported healthy growth.
Gary Turner, managing director at Xero, said: “Small firms have still got a fair way to go to get back to 2019 growth, but this data shows that recovery is underway. The vaccine rollout is paying a dividend, particularly for hospitality, and we expect this to strengthen and boost growth in the second half of year. We do have to be cautious in our optimism should more restrictions be enforced in the colder months, but as things stand the outlook is positive.”
Interest Rates & Inflation
The Bank of England has shrugged off concerns over a pick-up in inflation as the economy recovers from the pandemic. Consumer price inflation hit a two-year high of 2.1% in the year to May, exceeding the Bank’s 2% target. In its latest statement, the Bank’s Monetary Policy Committee (MPC) said it expected inflation to go above 3% “for a temporary period”. The MPC voted 9-0 to keep interest rates steady at the historic low of 0.1%.
The MPC also voted 8-1 (Andy Haldane, the Bank’s outgoing chief economist dissenting) to continue with the Bank’s existing asset purchase scheme, maintaining its bond-buying target at £895bn.
Several economists believe the Bank is being complacent about UK debt and that QE is no longer required to support the economy, warning of debt-fuelled asset price booms and abrupt corrections. Nils Pratley in the Guardian wonders why Threadneedle Street isn’t more worried amid rising commodity prices and 5% inflation in the US.
Consumer Confidence
UK Consumer Confidence remained resilient despite a delay to a lifting of the remaining lockdown restrictions in the UK, a closely watched survey has revealed. Data from GfK shows overall consumer confidence remained unchanged over the last month at minus nine in June 2021. But, this is up significantly from minus 30 in June last year.
UK court says Deliveroo couriers are self-employed
The Independent Workers Union of Great Britain (IWGB) has lost its appeal against a ruling that takeaway delivery company Deliveroo is entitled to consider its riders as self-employed. Deliveroo’s shares jumped by more than 9%, adding nearly £400m to its stock market value, following the verdict
Remote working has reduced worker satisfaction
A survey of workers carried out by Aviva reveals that remote working and uncertain relationships between workers and managers have led to a drop in life satisfaction and a rise in anxiety among Britain’s workforce. Employees are increasingly neglecting their physical health while spending more time outside working hours checking emails. The proportion of employees who are completely satisfied with life fell from 67% in February 2020 to 57% in March 2021 while the proportion of workers feeling anxious day-to-day has risen three points to 27%. Debbie Bullock, wellbeing lead at Aviva said: “We are living through an ‘age of ambiguity’ that is impacting society and workplaces across the UK.” She urged employers to “empower people to make informed and positive career and lifestyle choices.”
Crest Nicholson
Builder although Crest Nicholson posted revenue growth of 35% to £324.5 million in the six months to April 30, from £240.0 million a year earlier. It swung to a pre-tax profit of £36.3 million from a £51.2 million loss
Carnival
Carnival is starting to gain momentum with the cruise ship operator saying that future bookings are surging, while its loss begins to narrow.
Travel
The UK Government has announced that Malta, Madeira, Ibiza, Mallorca, and some Caribbean Islands including Barbados have been added to the green list for travel. The transport secretary Grant Shapps confirmed that as of 4am next Wednesday 30 June, people entering the UK from these countries will not have to quarantine. While Prime Minister Boris Johnson signaled the country will push ahead with plans to ease the rules on foreign travel for fully vaccinated people.
However, German Chancellor Angela Merkel and French President Emmanuel Macron signaled a potential for more travel curbs in the bloc ahead of the peak tourist season, with the pair blasting Greece and other tourism-dependent nations for taking a lax attitude to accepting visitors
Windows 11
Microsoft unveiled Windows 11, the biggest overhaul of its computer operating system since it released Windows 10 in 2015. The US software giant claims its “next generation” operating system will be better for remote work, more secure and more intuitive for users
US Infrastructure
The US Senate agreed on a $1.2 trillion infrastructure bill, which was watered down some $1.1 trillion from Biden’s original pitch. The deal, worth an eyewatering £860bn, accompanies an eight-year plan to fund roads, bridges, the power grid, public transport and the internet.
Pandemic debt mountain risks a new eurozone crisis
New analysis by Deutsche Bank asserts that ballooning pandemic debts, a relaxed attitude to heavy borrowing and a complacent view that interest rates will never rise risks leading the world into a new economic crisis. Senior economist Sebastian Becker fears eurozone countries risk repeating their mistakes of a decade ago by being careless with debt sustainability. Justifying ever more borrowing on the basis that interest rates are below the rate of economic growth ultimately looks like a “Ponzi game”, Mr Becker added.
Prime London property back in vogue
Wealthy Londoners are buying super luxury houses in the heart of the capital at record prices in the wake of three lockdowns, with £817.4m spent on top end homes in the six months to April. This is up by more than a fifth on the same period the year before. New data reveals that the number of buyers registering to purchase properties costing more than £10m was 150% higher in May than in January 2020, when the capital was in the middle of the pre-COVID-19 ‘Boris bounce’. The analysis by Knight Frank shows that £36.8bn of the world’s wealth is now targeting property in what is known as prime central London.
Insurers band together in climate fight
The bosses of 17 insurance firms have formed the Sustainable Market Initiative Insurance Taskforce. The sector-wide initiative is backing efforts by the Prince of Wales to tackle the climate crisis by expanding insurance coverage for green projects and partnering with governments to provide better disaster protection cover in countries facing serious climate-related risks. Bruce Carnegie-Brown, the chairman of insurance market Lloyd’s of London, which is chairing the taskforce, said. “So there is now increasing demand by customers for these kinds of protections and we need to respond to them.” He went on to say that the industry may have to take more drastic action such as pulling cover for carbon-intensive companies that fail to transition to more sustainable business models.
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