UK entertainment and media boom – business news 14 July 2021.
James Salmon, Operations Director.
Boom expected for UK entertainment and media industry, inflation, firms not planning to rush back to offices, planned redundancies at six year low and more business news.
Boom expected for UK entertainment and media industry
Despite the pandemic driving a 5% fall in revenue in 2020, the UK’s entertainment and media industry is forecast to become the largest in western Europe by 2025.
PwC analysis suggests that growth is expected to rebound 9% this year followed by a compound annual growth rate of 5% over the next four years.
By 2025 the UK will overtake Germany as western Europe’s largest entertainment and media market by revenue, with a forecast value of £88bn set to place the UK as the world’s fourth largest market behind the US, China and Japan.
Mark Maitland, UK head of entertainment and media at PwC, said: “UK consumers’ rapid migration to digital behaviours in the pandemic has now become embedded in their day-to-day lives, helping to sustain overall growth across entertainment and media for the coming five years”.
Inflation
UK Inflation jumped again in June, outpacing economists’ expectations to accelerate away from the Bank of England’s target, the Office of National Statistics (ONS) revealed this morning. The Consumer Price Index rose to 2.5 per cent last month, its highest level since August 2018, up from 2.1 per cent in May. Analysts had forecast a rise of 2.2 per cent.
US Inflation rose at the fastest pace in over a decade last month as severe supply constraints and shortages of key raw materials drove prices up sharply, according to new figures released on Tuesday. The US consumer price index rose 5.4 per cent annually in June, the largest increase since August 2008.
Firms not planning to rush back to offices
A number of large businesses plan to maintain a cautious approach to bringing staff back to the office despite England’s final coronavirus restrictions being lifted on July 19, with many opting for a staggered approach to getting staff back to their desks.
Deloitte, which currently operates its offices at 30% capacity, will increase the number of staff allowed to work in its offices to 50% capacity from next week but expects that level to stay in place until September. The firm said it had always intended to take a “gradual approach” to bringing staff back to its offices.
KPMG, which has allowed people to work from its offices if they made a request to their manager, says that as of next week, staff will no longer need permission to attend. The firm has introduced a “four-day fortnight” hybrid model that sees employees spend four days a fortnight in the office and the rest of the time at home or at client sites.
Confederation of British Industry policy director Michael Fell said it “makes sense that the order to work from home if possible is removed at this stage”, adding: “The reality is that many firms are well-advanced in their plans and are proceeding with hybrid working models, just as the government advises.”
Roger Barker, policy director of the Institute of Directors, said: “Businesses across the country will welcome the opportunity to begin to return to relative normality from next week.”
Planned redundancies at six year low
Employers are planning the lowest number of job cuts for over six years, with redundancy figures from the Insolvency Service showing 15,661 positions were at risk in June.
This marks the lowest monthly total since February 2015 and comes after June 2020 saw nearly ten times last month’s figure and delivered the worst rate on record.
The data is based on the HR1 form employers planning 20 or more redundancies have to file to notify the Government at the start of the process. Xiaowei Xu, senior research economist at the Institute for Fiscal Studies, said: “The data suggest that there is no spike in redundancies coming in July or August”. She added: “The labour market is in a much better position than anyone expected at the start of the pandemic, and it shows how well the furlough scheme has worked.”
Barratt
Barratt Developments expects profits to be at the “top end” of market expectations, it announced this morning, amid a boom in home completions. The housebuilder delivered 17,243 homes in the year ended 30 June 2021 – 5,000 more than the year before, according to the company’s trading update.
Dunelm
Dunelm reported that sales more than doubled in fourth quarter of the year compared to a year earlier following the reopening of stores. For the 13-week period ended 26 June 2021, total sales rose 107.7% to £380.1 million year-on-year, and was up 26.3% for the full year.
Kier
Kier Group said it expected its full year results to be ‘moderately’ ahead of the board’s expectations amid ‘strong’ operational performance. The company said it was confident that it now had the platform to achieve its medium-term targets including revenue of £4-to-£4.5 billion and adjusted operating profit of about 3.5%.
Retail chocolate
Hotel Chocolat upgraded its annual profit forecast after sales grew 34% in the 10 weeks through 27 June, compared with the same pre-pandemic period, following the reopening of stores. For the 52 weeks ended 27 June 2021, the company now anticipated underlying pre-tax profit would be higher than its previous expectations, with revenue expected to be 24% higher than the same pre-pandemic period in 2019, and 21% higher than in 2020.
Ransomware
Websites owned by REvil, the Russian ransomware gang accused of a string of recent cyber-attacks, have vanished from the “dark web”. It is not known whether the sites, including a payment portal and a blog, were removed by authorities or by the perpetrators themselves. Joe Biden had demanded action from Putin against the hackers during a phone call on Friday.
Commercial Property
Commercial Property is recovering. London-based property investor British Land reported a “strong operational performance” yesterday, with rent collection rising and retail demand reviving in its quarter since June . The firm said its office campus lettings and retail portfolio performed well, both during and since its quarter from March to June . The firm noted 183,000 square feet of London-focused office campus lettings in the earlier quarter, with an additional 419,000 square feet now under offer.
Howdens
Kitchen products provider Howden Joinery said its first half revenue topped expectations and expects a sharp rise in annual profit. In the first half of 2021, revenue surged 69% annually to £785 million from 465 million. Revenue also rose 20% from 652.6 million from two years earlier, so before the onset of the pandemic. In its Howden Joinery UK depot, revenue jumped 19% from two years earlier to 764 million.
HMRC callers face long waits
Taxpayers seeking advice spent an average of 20 minutes on hold before getting through to the HMRC helpdesk in March, with this the longest waiting time recorded during the entire pandemic and almost three times that seen in March 2020. Almost two in five callers – around 1.3m people – waited more than 20 minutes before they got through, while half waited more than 10 minutes. While HMRC previously had a target of connecting callers within 5 minutes, it has scrapped targets for this year as the coronavirus crisis stretches services. Average waiting times for the year currently stand at more than 12 minutes. There has also been a delay in replying to post. HMRC received 1.3m postal items that required a reply in the last month of 2020/21, returning a third within 15 days. It previously aimed to deal with 80% of postal correspondence within three working weeks. Chris Etherington of RSM says HMRC needs to “get a grip” and suggested there is a correlation between tax office staff working from home and declining standards. The tax office received more than 7,500 complaints in March, the highest number since June of last year.
EU unlikely to open doors for UK financial services
Bank of England governor Andrew Bailey does not expect the EU to open the doors to UK financial services exports following Brexit, telling a news conference: “On equivalence, I think it’s fair to say that nothing really has moved forwards”. Chancellor Rishi Sunak recently made similar comments, noting that a financial services deal between the UK and EU “has not happened” despite the Brexit transition period ending over six months ago. City firms are unable to access the European market unless the EU declares that rules governing Britain’s financial services sector are equivalent to the bloc’s regulations. While Britain has recognised equivalence for the EU in several financial service activities, these have not been reciprocated by Brussels.
Bank of England gives dividends, bonuses and buybacks the green light
Banks will be able to start paying normal dividends after the Prudential Regulation Authority (PRA) deemed them financially resilient. A nine-month ban on dividends rolled out amid the pandemic was eased in December, with the regulator saying pay-outs could resume but with limitations. These restrictions have been removed with “immediate effect”, the PRA said yesterday, announcing: “Extraordinary guardrails on shareholder distributions are no longer necessary”. The announcement came as the Bank of England’s Financial Stability Report found that banks were “resilient to outcomes for the economy that are much more severe than the Monetary Policy Committee’s central forecast”. This came after a stress test by the Bank’s Financial Policy Committee (FPC) found that Britain’s biggest lenders could withstand £70bn of losses on top of the £20bn they took last year in impairments. The FPC also said that while businesses and individuals have emerged largely stable from the pandemic, there are areas of concern. It said that SME debt has risen by about a quarter, although much of it is in low-interest government guaranteed loans. It also noted that while property prices are surging, the number of high risk mortgages is still lower than before the pandemic – with around one in 20 home loans above 90% loan to value compared with one in five in 2019. The FPC said it is in banks’ “collective interest” to continue to lend to support customers rather than trying to conserve their own capital.
Why should you become a CPA member!
The Credit Protection Association (CPA) has been assisting thousands of UK businesses to get paid since 1914. We have seen many financial crises, this one will be particularly deadly for suppliers for some time to come.
CPA eases cash from tardy debtors – Efficiently, Effectively, Economically and Ethically. And we provide credit information so you can monitor and assess your key customers.
Unlike other credit management companies, we charge our members a fixed annual subscription irrespective of how high the debt value is!
It takes less than 17 minutes to see how you would benefit, do you have the time now?
No face-to-face meeting required – just call Peter Uwins, CPA’s National Sales Manager, on 020 8846 0000 (business hours) or email nsm@cpa.co.uk today.
When you see your money come in, you will be so glad you used CPA.
The Credit Protection Association – Prompting Punctual Payments – Ethical, Effective, Efficient, Economical collections
Get compensated for previous late payments
Have you been paid late by business customers in the last six years?
Maybe you no longer work with them. Under legislation, you are entitled to compensation you for those late payments you have suffered.
You put up with the PAIN – now claim the GAIN!
Claim late payment compensation (LPC) from former business customers who paid you late in the last six years!
CPA (LPC) Recoveries is using our bespoke software and decades of experience to do just that for our clients
The Credit Protection Association – Prompting Punctual Payments – Ethical, Effective, Efficient, Economical collections.