Business News Round Up (16/10/2024)
UK small business growth forecasts hold at two-year high
The percentage of UK small business predicting growth for the final three-months of 2024 remains at the two-year high of last quarter (35%) – with significant upturns in growth forecasts across the North, the Midlands and among younger businesses – according to research from Novuna Business Finance. Novuna’s findings follow reports that the UK economy returned to growth in August, with inflation falling back to the Bank of England’s 2% target. The quarterly tracking research from Novuna goes beyond an attitudinal snapshot of business confidence and tracks the percentage of business owners that forecast actual business growth each quarter. The last quarterly cycle of research revealed a two-year high for the percentage of enterprises that predicted growth (35%). The new Q4 figures – 35% again – suggest this summer bounce-back was not a flash in the plan but could be the start of a new, sustainable, period of growth outlook for UK small businesses.
UK inflation falls more than expected to 1.7% in September
UK inflation fell more than expected to a three-year low of 1.7 per cent in September, prompting traders to increase bets on further rate cuts from the Bank of England this year. Wednesday’s data release by the Office for National Statistics shows that inflation has come back under the BoE’s 2 per cent target for the first time since April 2021. The annual increase in consumer prices is less than the 1.9 per cent forecast in a Reuters survey of economists and compares with August’s figure of 2.2 per cent. The retreat was driven by lower airfares and petrol prices. The numbers will come as a boost to Sir Keir Starmer’s government just two weeks before what promises to be a tough Budget containing steep tax rises. Chancellor Rachel Reeves is looking to close a funding shortfall of £40bn, according to officials close to the Budget process.
https://www.ft.com/content/18df43a2-ac5d-47e0-b315-651a2233a631
North West administrations keep pace with 2023 – business services sector a ‘hot spot’ for distress
The number of North West-based businesses filing for administration for the first nine months of the year has kept pace with last year’s figures, according to Interpath Advisory, despite some “improving economic metrics”. Analysis of notices in The Gazette shows there have been 186 administrations across the North West in the first nine months of 2024, up slightly from last year’s figure of 184. There was also a small increase in the third quarter, compared to the same period last year. Additionally, the region remained most prominent for administrations outside of London, accounting for nearly a fifth of all cases in the UK. In terms of sectors, business services were the most impacted, followed by industrial manufacturing and business and construction.
Rachel Reeves hints at employer NI hike amidst £22 billion Budget shortfall
Labour’s 2024 election manifesto pledged not to increase National Insurance, Income Tax, or VAT for working people. However, a debate has emerged over whether this extends to employers’ National Insurance contributions. Chancellor Rachel Reeves has warned of a “tough” Budget on October 30, signalling that businesses may face a hike in National Insurance contributions. She clarified that the manifesto pledge specifically relates to the employee element of National Insurance, not employer contributions. The government faces a £22 billion “black hole” in its finances, persisting throughout the forecast period. Reeves emphasised the need to pay for day-to-day spending through tax receipts, which is currently not on track. A potential increase in employers’ National Insurance contributions could generate approximately £16 billion for the Treasury. Prime Minister Sir Keir Starmer has insisted the government will keep its manifesto promises, stating they wouldn’t increase tax on working people, including income tax and NICs.