SMEs spend on business growth – business news 27 April 2021.
James Salmon, Operations Director.
SMEs to spend on business growth, UK growth forecasts boosted by vaccines rollout and extended state support, Johnson hopeful restrictions will lift on 21st June and more business news for our members and guests.
SMEs looking to spend £97,000 on business growth
New research from Aldermore Bank indicates signs of recovery for small and medium-sized enterprises (SMEs), as they reveal plans to invest in business growth in the next year, coinciding with the easing of lockdown restrictions. SMEs plan to spend an average of £97,000 to grow their business in 2021 and help kick-start their recovery from the COVID-19 pandemic. Over the next 12 months, one in four (25%) SMEs will invest in their online presence, with one in five (21%) advancing their digital marketing. A further one in four (21%) will spend on new equipment and 20% will invest in their staff through training. “It’s encouraging to see that SMEs are investing in their recovery from the COVID-19 pandemic”, said Tim Boag, group managing director, business finance at Aldermore. “Recent data reveals a vastly improved near term outlook for businesses, with the easing of restrictions. Confidence from SMEs is growing, and this is reflected in plans to invest in the growth of their businesses in order to recover effectively from the pandemic”. SME Business growth is essential if we are to put this pandemic behind us.
UK growth forecasts boosted by vaccines rollout and extended state support
Analysis by Consensus Economics puts UK growth at 5.4% this year, up from 4.2% predicted in February. Others believe this remains pessimistic, however, with Oxford Economics going as high as 7.2%. The EY ITEM Club has predicted growth of 6.8% while Goldman Sachs goes as high as 7.8%. A bounce-back is not unexpected considering the UK suffered a 9.8% slump in 2020 – the worst performance among the G7 group of major advanced nations but forecasters are upgrading predictions following the “innovative and flexible” response of UK businesses and consumers to the pandemic. Vaccinations and reaching herd immunity are essential to business growth.
Johnson hopeful restrictions will lift on 21st June
Boris Johnson has said Britain had built “some pretty robust fortifications” against another wave of Covid and there is now a “very good chance” of completely ending coronavirus restrictions in England on June 21st, as planned. The prime minister said lockdown had helped get the number of cases down considerably but that did not mean Covid was over. Only once lockdown is fully lifted can we see a return to business growth across all sectors.
One in six homes sell for more than asking price
Figures from NAEA Propertymark show one in six homes sold in March went for more than the asking price – a seven year high – with just a third selling for below the original price. Mark Hayward, chief policy adviser at Propertymark, said: “The imbalance of supply and demand means it’s an extremely strong sellers’ market; properties are selling quickly and for over the asking price, and this is something we expect will continue in the coming months.” Homeowners reconsidering their lifestyle and the stamp duty holiday are seen as the main drivers of the increased demand.
Investors may have to wait until 2025 for dividend recovery
According to Link Group’s Dividend Monitor, British companies paid out £12.7bn in dividends in the first quarter of 2021, down 27% on the same period last year. Reduced payouts from oil giants Shell and BP were responsible for most of the drop. Link said dividends were down 42% over the last 12 months and its “best-case” forecast for this year was a rise of just 5.6% on last year’s total. Ian Stokes of Link Group said there were signs of recovery but “2025 still looks like the most realistic moment for dividends to match their 2019 high point.” as firms look to invest in business growth out of the pandemic.
City bosses want payback after being left on Brexit sidelines
Many wonder what’s in store for the City post-Brexit as organisations including the Investment Association submit ideas to the Treasury for reform. The lobby group told ministers to consider a fully exempt tax regime for UK funds to keep them competitive with EU rivals. One banking executive who is in regular talks with ministers told the paper: “There will definitely be changes. Banking is completely exposed to politics and political changes – that’s always a huge risk – but I’ve never seen such commitment to change.” But although Rishi Sunak has told the City to brace itself for a “Big Bang 2.0” post-Brexit, TheCityUK’s CEO Miles Celic argues the sector is not chasing a “de-regulatory agenda”. He says: “Competitiveness is about much more than regulation – it’s got to look at issues such as access to talent and a stable, predictable, simplified tax regime.” Finally, Barnabas Reynolds at Shearman and Sterling believes big changes are on the way, but it could take three to five years for the rule book to look significantly different.
HSBC
HSBC reported a jump in first-quarter profit as lower expected credit losses helped offset a fall in revenue on lower interest rates. For the first quarter of the year, pre-tax profit rose 79% to $5.8 billion year-on-year, while revenue fell 5% to $13.0 billion.
BP
BP announced £500m worth of share buybacks this quarter after its profit jumped in the first three months of the year. The oil conglomerate said that reported profit for the first quarter came in at $4.7bn, up from $1.4bn in the last period of 2020.
Whitbread
Whitbread announced a massive loss for the year after the pandemic devastated the tourism sector. Pre-tax losses for the year through March amounted to £1 billion, compared to a year-on-year profit of £280 million, as revenue tumbled 72% to £589.4 million.
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