Latest news with #AutumnBudget
Daily Mail
20-06-2025
- Business
- Daily Mail
Insolvencies jump as Rachel Reeves' labour costs hike hits businesses
Business insolvencies across England and Wales rose sharply last month as firms buckled under the pressure of higher labour costs associated with last year's Autumn Budget, official data suggests. Insolvencies jumped 8 per cent month-on-month to 2,238 in May, reflecting a 15 per cent increase on the same time last year, according to the Government's Insolvency Service. It follows hikes to employer national insurance contributions and the national living wage in the previous month, compounding the impact of lacklustre economic growth, high borrowing costs and fragile consumer confidence. Mark Ford, partner in the restructuring and recovery team at consultant S&W, said the 'challenging operating environment' had 'eroded cash reserves for businesses and left some in a perilous position'. He added: 'Businesses are now facing newer challenges that threaten their viability and this means we are likely to continue to see a steady stream of company insolvencies in the coming months.' Insolvency growth in May was driven by 1,734 creditors' voluntary liquidations, where company directors choose to shut a business down. The Insolvency Service recorded 354 compulsory liquidations, but this was down 7 per cent on April's 10-year high. Giuseppe Parla, restructuring and insolvency director at Menzies, identified construction, wholesale and retail trade, and hospitality as sectors that will continue to struggle against higher costs. He added: 'Whilst interest rates may come down further later in the year, stability for our economy seems to be what is required, but how easy will that be to achieve?' The Insolvency Service also recorded 136 company administrations, which are a recovery procedure often used by larger entities to ensure a better outcome for creditors. David Hudson, restructuring advisory partner at FRP, said the 'quiet, but steady' rise in administrations is 'particularly concerning'. He said: 'These usually involve the very largest businesses and so could prompt a significant knock-on impact in terms of jobs and supply chains if they continue to rise. 'It's also an early signal that financial distress is deepening – not just among smaller businesses, but at the top end of the market too.'
Fibre2Fashion
20-06-2025
- Business
- Fibre2Fashion
CBI revises down UK GDP growth to 1.2% for 2025
The UK's GDP growth is forecast at 1.2 per cent for 2025, down from an earlier estimate of 1.6 per cent, and 1 per cent for 2026, revised from 1.5 per cent, according to the Confederation of British Industry (CBI). The downgrade reflects increasing domestic cost pressures and continued global uncertainty. In its latest Economic Forecast, the CBI noted that while the year began with promising growth, momentum has slowed due to persistently weak demand, cautious business sentiment, and rising employment costs. Employment costs, driven by increases in National Insurance contributions, reduced thresholds, and a higher National Living Wage, have hit labour-intensive sectors like retail and hospitality particularly hard. These pressures are expected to reduce hiring, raise prices, squeeze profit margins, and limit wage growth. UK economy is facing slow growth, with the CBI downgrading GDP forecasts to 1.2 per cent for 2025 and 1 per cent for 2026 due to weak demand, rising employment costs, and global uncertainty. Business investment and hiring are subdued, while inflation remains elevated. The CBI urges government-business collaboration and a robust industrial strategy to address productivity, skills, and energy costs. Business investment, already dampened by the Autumn Budget, is forecast to grow only modestly due to temporary spikes in the first quarter (Q1) 2025. CBI survey revealed that capital expenditure intentions are at their weakest in nearly five years. International factors also pose risks. Higher US tariffs are expected to modestly reduce UK exports and investment, while overall global volatility continues to weigh on business sentiment. On the consumer front, household spending is expected to gradually strengthen in 2026, supported by rising real incomes, lower interest rates, and easing inflation. However, inflation is set to stay above 3 per cent through 2025 due to high energy and regulated prices before softening to 2.5 per cent next year. Labour market conditions are forecast to soften, with unemployment rising to 4.8 per cent and wage growth easing in 2026. Meanwhile, interest rates are projected to fall gradually, reaching 3.5 per cent by early 2026 as the Bank of England cautiously moves towards its 2 per cent inflation target. Despite these adjustments, the UK's long-term growth prospects remain constrained by poor productivity. Output per worker is expected to stay below pre-pandemic trends, posing a continued drag on economic progress and living standards. 'Our latest Economic Forecast underlines the challenges facing businesses and the wider economy as they're buffeted by domestic and global headwinds. The unpredictable global outlook combined with rising employment costs, gloomy business sentiment, and subdued investment intentions means it's more important than ever that government pulls all the levers it can to set the UK on a path to sustainable growth,' Louise Hellem, chief economist at CBI , said in a press release. 'The spending review signalled a downpayment on hardwiring the growth mission into government priorities, with targeted investment that will raise the long-term ceiling of the economy. But we know that the innovation, investment, and jobs necessary for growth will come from business, not Whitehall, and that government must work with business to create the right conditions to help shift the economy out of low gear.' 'With GDP set to remain modest in 2026, there is an important opportunity for the government to fire up the growth agenda in the forthcoming Industrial Strategy. With the cumulative burden of increased costs being felt by firms across the economy, it is vital the Industrial Strategy helps drive a thriving environment for all businesses. A missing part remains a joined-up people strategy to make sure our industries have the skills, and the labour needed to go after growth opportunities. Unlocking investment through a comprehensive skills strategy, funding the growth & skills levy, tackling high energy costs for UK firms, and setting out a national strategy on tech adoption could help to establish a reinvigorated partnership model for effective collaboration between both government and business,' added Hellem. Fibre2Fashion News Desk (SG)
The Herald Scotland
19-06-2025
- Business
- The Herald Scotland
Would many publicans have a drink with Sir Keir Starmer?
Hospitality has been in a serious huff with the UK Government since Ms Reeves announced whopping hikes in employer national insurance contributions, the national living wage, and the national minimum wage in the Autumn Budget. It warned at the time that the rise in labour costs, which according to UKHospitality will amount to a £3 billion rise in the industry's annual wage bill, would have a huge effect on jobs, growth, and investment. Now it appears those fears, which have been shared by other sectors such as retail, are beginning to be realised. Publicans are unlikely to glean any satisfaction from being able to say, 'I told you so'. A new analysis published by top 30 accountancy firm Price Bailey this week found that pub insolvencies surged in April - the month the increases in employer NICs and pay rates took effect - to the highest monthly total since last summer. The analysis found 67 pubs went out of business in April, the highest tally since July 2024 when 75 entered insolvency. The growing cost pressures on the industry have had an impact on consumers too, as the average price of a pint has steadily risen. The British Beer & Pub Association (BBPA) recently warned the average price of a pint would increase by as much as 21p as a result of the changes announced at the Autumn Budget, taking the average price from £4.80 to £5.01 (though in major cities the average price is significantly higher). The Office for National Statistics also tracks the average price of a draught pint and its most recent figures put the cost at 483p in January, following years of steady increases. After signs that the number of pubs entering insolvency had peaked in 2024 and was in decline by the end of that year and into the first quarter of 2025, Price Bailey said the number of pub insolvencies is ticking upwards again. 'The early signs are that the tax and minimum wage hikes which took effect in April are already tipping some struggling pubs over the edge,' said Matt Howard, head of the insolvency and recovery team at Price Bailey. 'It was widely believed that pub businesses would initially find ways to absorb the additional payroll costs and that the full impact would only be felt much later in the year. That the impact has been so immediate shows that many pubs had already exhausted their financial buffers.' Mr Howard added: 'April's sharp rise in inflation, driven in part by rising energy costs, is adding to the misery of many publicans. One in five pubs are technically insolvent, and while it is possible to keep trading and salvage the situation, being hit with sharp payroll and energy price rises will prove too much for many of them.' The Price Bailey report came shortly before a survey published by UKHospitality, The British Institute of Innkeeping, the BBPA, and Hospitality Ulster on June 2 revealed that one-third of hospitality businesses are now operating at a loss. This was an 11 percentage point increase on the previous quarter. The survey also found that six in 10 operators have had to cut jobs amid the "devastating" impact of April's cost hikes, while 63% have reduced the hours available to staff as the industry has taken steps to mitigate the higher overheads. But signs of distress in the economy are not limited to hospitality. New research from R3, the UK insolvency and restructuring trade body, found insolvency-related activity hit a 29-month high in May as businesses faced challenges on a raft of fronts. R3 highlighted the hikes in employer NICs and national living and minimum wage among a host of factors that are weighing on businesses as its analysis found there were 141 cases of insolvency-related activity – including administrator and liquidator appointments with creditors' meetings – in Scotland in May. This was the highest number since the December 2022 figure of 142, and 30.6% up on April's 108. 'We have seen a substantial rise in insolvency-related activity in Scotland since the start of the year, but last month's rise to the highest point in more than two years is a reminder of just how tough trading conditions are,' declared Tim Cooper, immediate past president of R3 and a partner at law firm Addleshaw Goddard. 'Levels are now higher than they were for much of 2023 and for 2024, when many businesses were grappling with the aftermath of Covid and the impact of the cost of living crisis. 'A number of factors are likely contributing to the increase we're seeing, including a rise in MVLs (members' voluntary liquidations) from directors choosing to close their businesses in response to recent tax and policy changes, such as the increases to employers' national insurance and the minimum wage. 'We are also seeing a rise in winding up petitions as creditors take the lead from HMRC, which has become increasingly more willing to chase the debts it is owed. HMRC's more assertive stance seems to be influencing other creditors to follow suit, particularly where there are signs of persistent non-payment. 'This increase in insolvency-related activity also reflects the wider economic picture in Scotland. Business activity remains subdued, and firms continue to face persistent cost pressures, higher tax obligations, and weak demand. For some, the combination of these pressures is tipping already fragile businesses into formal insolvency processes.' Clearly, these are worrying times for businesses across a range of sectors and, for a UK Government that has made growth its top priority, it is showing little sign of delivering the kind of conditions in which business can thrive. The latest UK labour market review by the ONS, published on June 10, found the number of payrolled employees for May decreased by 109,000 on the month before. This was reportedly the largest monthly fall since the same period in 2020, amid the first Covid lockdown. The rate of unemployment was found to have increased to 4.6% in the three months to April, from 4.5% in the three months to March, reaching the highest level since the three months to July 2021. Pay growth also eased, the ONS found. Moreover, official figures published last week found the UK economy went into reverse in April, as gross domestic product fell by 0.3% month on month. The decline was worse than the 0.1% expected by most economists, and Liz McKeown, director of economic statistics at the ONS, noted declining output in both the services and the manufacturing sectors in April. While a modest contraction in GDP over a single month offers a limited window into the health of the UK economy, there is no doubt it took a little wind out of the sails of the Chancellor, who received some praise from the Scottish business community for the Government's Spending Review which she announced the day before. That included a thumbs-up from Scottish Chambers of Commerce on a range of measures, including a commitment to fund the Acorn carbon capture and storage project in Aberdeenshire, held up as the kind of initiative that will be key to Scotland's energy transition hopes. Scottish Chambers' chief executive Liz Cameron said Acorn had the potential to create 15,000 jobs in its construction and attract billions of pounds of private sector investment as she also welcomed a commitment to increase defence spending. Although these funding commitments are clearly important, the Acorn Project and moves to hike defence expenditure will mean little to the many business owners who are struggling to keep the lights on as costs continue to rise and economic growth flatlines. The sense that the UK Government is struggling to address the issues facing many businesses was summed up by the Scottish Hospitality Group and the Federation of Small Businesses in their responses to the Spending Review. Stephen Montgomery, director of the Scottish Hospitality Group, declared the review did 'absolutely nothing' to support the sector. He said: 'Today we heard all about the spending plans, however nothing about helping those who will pay for it through taxes. 'To help the economy to grow, you need business to grow, so today we yet again see the sector let down by Rachel Reeves.' The reaction was not much better from the FSB, which said the review left its members 'wondering when they will feel the benefits'. If the business community were to write a report card for Sir Keir and Ms Reeves for the 11 months they have been in office, the verdict would surely not be anything more positive than 'could do better'.
Daily Record
17-06-2025
- Business
- Daily Record
Wishaw MP calls on SNP to improve frontline services after spending review
Pamela Nash says the buck now stops with the SNP Scottish Government – and called on Motherwell and Wishaw MSP Clare Adamson to explain to their constituents why they have yet to see any tangible improvements in their communities. Motherwell, Wishaw and Carluke MP Pamela Nash has welcomed the UK Labour Government's Spending Review as 'transformational for the country'. Overall, the settlement for the Scottish Government is the largest in real terms since devolution began. With £1.4 billion already confirmed by the Chancellor in last year's Autumn Budget, the UK Labour Government is now investing almost £1.7 billion in growth schemes across Scotland over the next decade. Pamela says the buck now stops with the SNP Scottish Government – and called on Motherwell and Wishaw MSP Clare Adamson to explain to their constituents why they have yet to see any tangible improvements in their communities. She said: 'While Labour has been building new homes in England, Scotland's housing crisis continues under the SNP. A year after declaring a housing emergency, 10,000 children are shamefully still living in temporary accommodation. 'Labour has been investing in regional transport across England, yet rail fares in Scotland continue to rise with three increases since March 2024, and 1,400 bus routes cut since the SNP came to power. '£1.7bn has also been invested by the UK Labour Government in local growth projects to improve Scotland's town centres, but the SNP has undermined public services with successive cuts to core council budgets. 'And despite more money than ever before, on the SNP's watch, the NHS is still on its knees – with one in six Scots on an NHS waiting list and record numbers of people being forced to turn to private healthcare. 'The Autumn Budget delivered a record-breaking sum for Scotland, but SNP economic failure and waste means it is failing to improve frontline services.' She continued: 'The people of Motherwell and Wishaw deserve better. 'The funding package for Scotland delivered by Labour is transformational, and the SNP has run out of excuses not to deliver. 'Clare Adamson needs to explain to our constituents why the effects of these record levels of funding for Scotland are not being felt in local GP surgeries, in our schools, and in our local streets, roads and parks.' Ms Adamson hit back saying it was 'alarming to see such delight at the Chancellor short-changing Scotland to the tune of £1.1 billion compared to spending on UK Government departments'. She continued: 'Ms Nash hasn't read any of the independent analysis of the Spending Review. She has bought into Labour's headlines hook, line, and sinker. 'The detail beyond the headlines is much more stark and we can expect dwindling budgets and belt tightening for years to come. 'It is because of the SNP that Scots have been shielded from the very worst of Westminster policy. 'Whether it's the baby box, the Scottish Child Payment, maintaining free tuition, bus passes, scrapping peak rail fares, mitigating the bedroom tax, or the best performing A&E services in the UK, people in this community and across Scotland know the SNP is on their side. 'The last Labour Government in Scotland built 6 council houses in total. The SNP has overseen completion of 136,000 affordable homes across Scotland - 6,000 in North Lanarkshire alone. 'And we will take action against the two child cap - a key driver of poverty - because Labour refuses to act. 'Labour has broken promise after promise after promise since getting into power: people are struggling with higher energy and grocery bills; stagnant growth; unsustainable UK debt; businesses and charities closing due to Labour's national insurance hike; and sick and disabled people are fearful for their future due to Labour's appalling welfare cuts. 'Brexit continues to wreak havoc on all of us and Pamela Nash gleefully supports all of this. 'I will always stand up for this community and demand better from this failing UK system. My team and I will get on with the job of helping people across Motherwell and Wishaw, from our office, electronically and in our regular community visits.'
Daily Record
17-06-2025
- Business
- Daily Record
National Insurance hikes could see more people lose their job this year
A new survey found a third of businesses are planning further job cuts following the April National Insurance change. Income tax rises for Scots in April - how the changes affect you A third of business owners have said they plan to cut more jobs after being hit by higher National Insurance Contributions (NICs) in April, according to new research. Many companies have also suggested they will cut back hours, freeze pay and hike prices in order to help cover increased tax payments. S&W's business owners sentiment survey revealed around 20 per cent of those quizzed said they have already reduced their staff numbers as a 'direct result' of the NIC changes which came into effect in April. At the Autumn Budget last year, Chancellor Rachel Reeves announced that employers' NICs would rise from 13.8 per cent to 15 per cent, while the threshold at which firms would start paying also increased. The increase came in at the same time as the jump in the National Living Wage and reduced business rates relief for some firms. The survey found 33 per cent of business owners said they were still planning further cuts to staff numbers after feeling the impact of the tax increase. Firms said they were also looking to a series of other measures in order to offset the jump in their operating costs. The survey of 500 UK business owners with turnovers of £5 million upwards also showed 46 per cent of those surveyed said they were planning further price increases as a result. Meanwhile, 35 per cent of business owners said they planned to reduce staff hours and 29 per cent said they were looking at freezing pay. It comes as firms highlighted higher commodity and energy costs, as well as disruption from wider macroeconomic uncertainty. Claire Burden, partner in consulting at S&W, said: 'Businesses face considerable challenges in the current economic climate and many owners are having to make difficult decisions to stay afloat. 'Given that salaries represent a considerable proportion of the overall cost base for most businesses, it is to be expected that many are looking closely at headcounts in response to the increased national insurance costs.' Alex Simpson, partner in employer solutions at S&W, said: 'For most businesses, the extent of the employers' NIC change was a surprise. 'We anticipated an increase in the employers' rate, but the additional reduction to the earnings threshold was not expected and is expected to have a dramatic impact over time.' A UK Government spokesman said: 'We are a pro-business government. We are protecting the smallest businesses from the employer national insurance rise, shielding 250,000 retail, hospitality and leisure business properties from paying full business rates and have capped corporation tax. 'We delivered a once-in-a-Parliament budget last year that took necessary decisions on tax to stabilise the public finances, including the NHS which has now seen waiting lists fall five months in a row. 'We are now focused on creating opportunities for businesses to compete and access the finance they need to scale, export and break into new markets.'
