Work from home productivity boost – business news 29 March 2021.
James Salmon, Operations Director.
Work from home productivity boost, warning over a halt to lending, economic data confounding forecasters, paye taxes a threat to small business cashflow, SMEs halt exports, retail rebound and lots more.
Work from home could boost output
The covid pandemic’s silver lining could be the increased UK productivity resulting from those that work from home.
Bank of England policymaker Michael Saunders has said remote working could boost productivity by saving companies money on office space, increasing staff satisfaction and providing access to a wider pool of workers.
“While a shift to widespread compulsory full working from home probably is not optimal, working from home offers a range of possible advantages for some firms,” he said.
Separately, Rishi Sunak, the Chancellor, is urging businesses to open up their offices and end remote working because young people need to convening with colleagues and seek out mentors as they embark on their career development.
BoE warns banks against sudden halt to Covid related lending
Lenders have been urged by the Bank of England to keep credit flowing to businesses once the state-backed COVID-19 loan schemes come to an end, warning that withdrawing funding would prove self-defeating.
UK economic data confound forecasters and beat expectations
The FT reports that policymakers and analysts are revising up their Q1 GDP forecasts as economic data continues to surprise them. Analysts now believe contraction for the quarter will be 1- 2.5% less deep than feared.
Accelerating tax receipts poses risk to cash flow
The Sunday Times considers the impact of Rishi Sunak’s plan to require individuals and small businesses to pay tax as they earn. The changes mean that millions of high earners, investors and self-employed people may have to pay two years’ tax in one year after 2024, the paper explains. George Bull at RSM warns that when “dramatically accelerating the collection of taxes, the Government must take care not to damage small businesses’ cash flow. There’s no sense in killing the goose that lays the golden egg.” Nimesh Shah, the chief executive of Blick Rothenberg, agreed. “The cash flow impact could cause severe pressure and should be phased in over four years. HMRC really needs to start communicating now, so people can plan.”
Small businesses halt exports to EU
A study from the Federation of Small Businesses has found that more than a quarter of small exporters have stopped selling to EU customers three months on from the Brexit transition. The survey of nearly 1,500 small firms found that 23% had temporarily stopped selling to the EU and 4% had halted sales permanently.
The FSB added that about 11% had set up, or were considering, a presence in an EU country to make the process easier. The survey also found that majority – 70% – of importers and exporters said that they had suffered shipment delays when moving goods around the EU in recent weeks. More than 30% have lost goods in transit and a slightly higher proportion have had goods held indefinitely at EU border crossings.
Mike Cherry, chairman of the FSB, said: “Those that do business internationally are being hit with some incredibly demanding, unfamiliar paperwork. Three months on from the end of the transition period, what we hoped would prove to be teething problems are in danger of becoming permanent, systemic ones. While larger firms have the resources and bandwidth to overcome them regardless, smaller traders are struggling, and are considering whether exports are worth the effort anymore.”
Retail rebounds from January slump
Data from the Office for National Statistics show a bounce back in sales last month following a sharp fall at the beginning of the year. Sales rose by 2.1% in February, up from an 8.2% fall in January, when the country went into its third lockdown.
Non-essential retail in England is expected to reopen on April 12 and retailers “will be hoping that the wave of optimism sweeping consumers as a result of the successful vaccine rollout will translate into increased sales”, said Lisa Hooker, consumer markets leader at the consultancy PwC.
Elsewhere, Howard Archer, chief economic adviser at the EY Item Club, said: “The modest rebound in retail sales adds to the evidence that the economy came off its January lows in February.”
Separately, High Street Stores will be allowed to stay open until 10pm when they reopen next month. Non-essential retailers should be given the opportunity to extend opening hours to trade between 7am and 10pm every day except for Sunday, the government has said.
Pandemic persuades bosses they should fly less
A year of lock-downs and Zoom meetings has convinced UK corporations they can help limit pollution by restricting business travel after restrictions ease. With ever more companies committing to reach net zero emissions many are revising their corporate travel strategies. PwC’s UK chairman Kevin Ellis tells the Sunday Times that although corporate travel will spike once restrictions are lifted, and this will be “an important signal for business about recovery and the return to normality”, in the long term “there will be more of a pragmatic level of business travel.”
UK and EU reach financial regulation deal in breakthrough on co-operation
The United Kingdom and the European Union have reached a deal to create a forum for cooperation on financial services regulation. The memorandum of understanding (MoU) sets the terms of engagement between the two parties but does not yet grant the City of London access to the EU’s Single Market. “Formal steps need to be undertaken on both sides before the MoU can be signed but it is expected that this can be done expeditiously,” the UK said in a statement, adding that the MoU created a “framework for voluntary regulatory co-operation in financial services” rather than any binding system.
Jessops files for administration
Jessops has filed a notice to appoint administrators. The camera retailer, bought by Peter Jones’s PJ Investment Group in 2013, has hired insolvency specialists FRP and is considering a Company’s Voluntary Arrangement in a bid to survive after it was severely impacted by lockdown restrictions. Geoff Rowley, partner at FRP, said: “Jessops is a long-established British brand, but like many others, it has faced growing online competition, as well as the challenges faced by all high street retailers in operating through the restrictions imposed during the pandemic. We are working closely with PJ Investment Group and the wider Jessops management team to consider all options to secure a future for the retailer.”
NCP plans to force through rent cuts
Car parks operator NCP is utilising a change in insolvency law to push through a controversial restructuring, the Sunday Times reports. Advised by Deloitte, the Japanese-owned company has told landlords that unless it can write off rent and potentially walk away from some sites it will go bust. The plans will save NCP up to £27m over the next two years.
Scotland’s recovery forecast to outpace UK’s
A best-case analysis from KPMG shows Scotland’s economy could grow by up to 5.5% this year providing there is a successful vaccine rollout and subsequent consumer boost. This compares with an expected 4.6% GDP growth for the whole UK. Next year, Scotland could see 5.8% growth against 5.6% UK-wide. Catherine Burnet, KPMG’s regional chairwoman in Scotland, said: “Our latest economic forecasting undoubtedly offers some optimism, but with a big slice of caution.”
Suez
Egypt’s Suez Canal Authority said the Ever Given container ship, which has been blocking the crucial waterway for nearly a week, has been turned in the “right direction”. The statement said “The position of the ship has been reorientated 80% in the right direction,” . At last count, 450 ships were stuck, waiting or headed to the waterway. Others have diverted to the longer route around the southern tip of Africa.
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