Why Most Entrepreneurs Fail – The Survival Phase of Business
Why Most Entrepreneurs Fail – The Survival Phase of Business
(qlmbusinessnews.com via bbc.co.uk – – Wed, 20 Sept 2017) London, Uk – –
Entrepreneurs are looking to downsize, sell or close their firms at a rate not seen in years, a survey has suggested.
The Federation of Small Business (FSB) found that 13% of respondents were looking for ways out of their business, the highest percentage since it began measuring in 2012.
The survey also indicated that optimism among small firms had tumbled.
The FSB blamed the fall in optimism on rising costs and a weaker UK economy.
“A record proportion of business owners currently expect to downsize, sell or shut up shop, while rent and taxation are frequently mentioned as causes of increased costs. We need to see more support in this space – that includes ending enforcement of the ridiculous ‘staircase tax’,” said Mike Cherry, FSB National Chairman.
The term “staircase tax” emerged when some firms found they were paying extra business rates because they had an office divided by a staircase.
The FSB’s Small Business Index is based on a survey of 1,230 of its members and was last conducted in July – the responses were used to create a weighted index.
In July, the confidence index fell to 1 from 15 in the previous quarter. The lowest levels of confidence were seen in retail and entertainment firms, according to the FSB.
However, the FSB noted that confidence has been rising among exporters, with 40% reporting an increase in overseas sales.
Exporters have been boosted by the weakened pound, which helps make their products more competitively priced overseas.
The report also indicated that, overall, small firms are looking to increase their workforce.
“Employment intentions are up, but so too are labour costs. This is causing significant problems in a number of sectors, not least hospitality and retail,” Mr Cherry said.
“With conference season and the Autumn Budget approaching, policymakers have an opportunity to restore optimism.”
(qlmbusinessnews.com via bbc.co.uk – – Tue, 19 Sept 2017) London, Uk – –
The number of people on zero hours contracts in the UK has fallen slightly, according to the latest official figures.
Between April and June 2017, the Office for National Statistics (ONS) said that 883,000 people were on contracts that do not guarantee work.
This is 2.2% lower than the figure from the same period in 2016.
However, the proportion of British workers on zero-hours contracts remained broadly flat at 2.8%.
In July, a government review of employment practices said too many employers and businesses were relying on zero-hours, short-hours or agency contracts, when they could be more forward-thinking in their scheduling.
It did not call for a ban, but did suggest reforms such as reclassifying workers for platform-based firms such as Uber as “dependent contractors” and improving in-work training.
The prime minister said the government would take the report’s recommendations seriously.
(qlmbusinessnews.com via uk.reuters.com — Fri, 1 Sept 2017) London, UK —
LONDON (Reuters) – Britain’s factories grew a lot more strongly than expected in August as work flowed in from home and abroad, a survey showed on Friday, suggesting the economy might be picking up speed after a slow first half of 2017.
The Markit/CIPS UK Manufacturing Purchasing Managers’ Index (PMI) jumped to 56.9 from 55.3 in July, higher than any forecasts in a Reuters poll of economists.
Manufacturing accounts for only around 10 percent of the British economy. But Rob Dobson, a director at IHS Markit, said the strong performance last month, after a good July, should help support overall growth in the third quarter.
That could “add fuel to hawkish (Bank of England) policymakers’ calls for higher interest rates,” he said. The BoE’s rate-setters voted 6-2 against a rate hike in August with most policymakers expressing concern about the impact of last year’s Brexit vote on the economy.
Dobson said it looked likely that manufacturing would keep up its growth in the near term because the pick-up was being felt across the sector and among small and large firms alike.
While there were some signs of shortages of workers and material, “at the moment, the survey data suggest that the manufacturing economy remains in good health despite Brexit uncertainty,” he said.
However, there has been a marked discrepancy in recent months between the PMI readings of the manufacturing sector and official data which has painted a weaker picture.
IHS Markit said manufacturing output growth in August hit a seven-month high and new orders rose at the fastest pace in three months.
Growth in exports eased off only slightly from a seven-year high in July, helped by stronger demand from key markets in Europe, the United States and elsewhere and by the fall in the value of the pound since the Brexit vote.
(qlmbusinessnews.com via Irishtimes.com – – Wed, 30 Aug, 2017) London, Uk – –
Competition open to agricultural, manufacturing, life sciences and renewables sectors
A fund worth up to €750,000 has been made available for start-ups by Enterprise Ireland.
The “competitive start fund competition” will open for applications to early stage companies in manufacturing and internationally traded services on September 13th.
The competition is open to all sectors with a focus on agricultural, manufacturing, life sciences and renewables subsectors.
Up to 15 successful applicants will receive high-level business development support and an investment of up to €50,000 each. The fund is designed to “accelerate the growth of start-ups and enable companies to reach key commercial and technical milestones”.
Joe Healy, divisional manager of high potential start-ups with Enterprise Ireland, said a key priority was “supporting start-ups with global ambition”.
“We do this through funding to help get businesses off the ground while also offering valuable business support and networking opportunities,” he said.
“The Enterprise Ireland start-up team is looking for applications from start-ups working in all sectors. In particular, the areas of agritech, agribusiness, agricultural machinery, eHealth, digital health, medical devices, diagnostics and cleantech.
“Since the start of the year, we’ve seen an increased number of applications to our competitive start funds and we are anticipating more great, innovative ideas with global market appeal in this call.”
Minister for Enterprise Frances Fitzgerald said start-ups offering innovative products and services were “the lifeblood of the economy”.
“Enterprise Ireland’s competitive start fund injects vital early stage funding into companies who have the potential to thrive in international markets,” he said.
“Now that the rates of early stage entrepreneurship in Ireland have returned to pre-recession levels, the success of start-up activity will depend on this kind of funding as well as the crucial advice, training and business introductions offered by Enterprise Ireland to successful CSF applicants.”
Applications are invited from companies that are active in the relevant industrial sectors or individuals who, prior to Enterprise Ireland’s investment, are based in the Republic and have a headquarters registered here.
In addition to written online applications, companies will be asked to prepare an online video pitch. The fund will close for applications at 3pm on September 27th.
By Colin Gleeson
“If you’re launching an online-only food business, you’re competing with hundreds of thousands of stores; if you want to create a high street chain, you’re up against Pret and McDonald’s,” says Steven Novick, founder of health food business Farmstand. Faced with this conundrum, Novick has eschewed more traditional business models.
After launching a restaurant in Covent Garden, London, Novick took a nimble approach to growth. Over the past 18 months, he’s opened 17 pop-ups across the capital in office canteens, a stand in Planet Organic and corporate catering and delivery services.
Due to London’s high commercial rents, and the doubling of business rates in some areas, it’s not economical for a small firm to rent lots of property, so Farmstand has streamlined operations. All of its food is prepared in a 2,000 sq ft kitchen in south London, from where it is delivered to pop-ups and business customers (around 30 subscribe to a daily delivery) across the city. Its deliveries are outsourced to an experienced courier.
Headcount is also kept to the minimum: 16 full-time staff, with 11 working in the central kitchen and five serving in the Covent Garden restaurant. Farmstand’s in-office pop-ups are staffed by the customer. With this approach, Farmstand’s revenue has grown by an average of 26% month-on-month since opening in February 2016.
Another business with a canny growth strategy is Chester-based, AM Custom Clothing, which provides personalised, printed garments (from T-shirts to lanyards) to universities and businesses. Co-founder Alex Franklin says: “A lot of fashion companies will have have warehouses filled with stock, but we have a unique relationship with our suppliers.” Franklin doesn’t store stock. Instead he calls on his network of 15-20 suppliers of plain clothing when an order comes in. Altogether, Franklin’s suppliers have around 12m items in stock.
However, getting to this point has not come without difficulty. In the past, the business has experienced much greater demand than anticipated, which put pressure on its supply chain. “Since then we have adapted our business model, to make it as scalable as possible, most of this was achieved through automation,” Franklin says. While stock shortages can still occur, the amount of stock at hand now allows the business to find alternatives when needed.
Automating orders and deliveries, and using a computer bot to follow-up on customer enquires, has also smoothed operations. But, Franklin adds, all clients have a dedicated account manager to ensure strong customer service.
While some businesses can handle most operations online, others do require a physical space. So how can entrepreneurs in this situation cut costs? Market stalls and pop-ups, which have been made more accessible thanks to apps such as Appear Here, are one way to trial locations without committing to long-term leases. Meanwhile, some small food businesses might opt for a service such as Deliveroo’s purpose-built kitchens, called Deliveroo Editions. Initially designed as overflow kitchens for established companies, now smaller firms are using these spaces to reach customers outside of their delivery area.
“They are very cheap to set up, so we decided to use them to bring new types of cuisines to areas where we found a gap,” says Rohan Pradhan, vice president of Deliveroo. Deliveroo sometimes takes a higher commission from the sale of small firms using its kitchens. This, Pradhan says, is in order to buffer the risk of the businesses not working out.
Pradhan cites Crust Bros pizza company as a successful example of this relationship. Crust Bros’ founder, Joseph Moore, started his business in 2014 as a stall on Southbank market, originally named Dough Bros. Using Deliveroo’s kitchen service, he has doubled sales. Moore says: “It’s been a good testbed for opening our first restaurant this summer, there were some teething issues at the start [such as pizzas not arriving with customers piping hot]. But now we’ve got the process down.”
Rapid expansion can also occur when entrepreneurs add a subscription element to their businesses – and it can be overwhelming. Vanessa McDermott, founder of creative startup Vee McDee, which delivers craft sets to customers, discovered this while crowdfunding on Kickstarter.
McDermott was raising money to launch a creative studio in Bolton. Through Kickstarter’s crowdfunding model, backers of her idea were offered craft sets as a reward. The sets proved a hit, word spread and people were soon asking where they could buy the packs. Then orders mushroomed. “I [quickly] went from selling 30 packs a month to 700,” says McDermott. “It was hard because keeping the quality up is so important to me, I didn’t want to lose that [as custom grew].”
To avoid this, McDermott outsourced the delivery of the kits to a subscription service that works with startups. “My advice would be to anyone in this position to partner with people who have the infrastructure in place to help with the technical and logistical side [of a subscription service],” she says.
Expanding a business while keeping outgoings lean can be a challenge, but these approaches offer food for thought. Some might still argue that a physical space is key to building a business. However, a more flexible approach has its benefits, says Ian Roberts, an SME adviser with Business Doctors consultancy. “To me, high levels of service and product quality are still a better way to build a strong and positive brand identity, than physical presence.”
Peter Kelly, a senior finance partner with PwC’s small business service MyFinance, agrees. He says that one of the hardest things when expanding is finding the right people to work with and identifying gaps in your expertise. He adds: “It’s hard because [your business] is your baby, but to expand efficiently while keeping up quality you should outsource if you can […] Use spare to money to invest in the areas that will help make [your business] profitable.”
By Helen Lock
Budding entrepreneurs get the chance to bring their dreams to fruition in this reality show from executive producer Mark Burnett. They present their ideas to the sharks in the tank, here are the 10 most successful sharktank businesses to date.
(qlmbusinessnews.com via bbc.co.uk – – Thur, 24 Aug 2017) London, Uk – –
The UK food industry has warned that a Brexit workforce shortage could leave a third of its businesses unviable.
The Food and Drink Federation said: “Our sector faces a rapidly approaching workforce shortage and skills gap.”
Its survey of the “farm-to-fork” supply chain said 31% of businesses had already seen EU workers leave the UK.
The FDA’s survey was conducted across a wide range of respected trade bodies, including the British Retail Consortium and the National Famers Union.
It added that almost half of those businesses surveyed said EU nationals working in the UK were considering leaving.
Big net migration fall since Brexit vote, latest estimates show
The federation is calling on the government to guarantee the rights of nationals from across the European Economic Area.
Ian Wright, its director-general, said: “It is only a matter of time before the uncertainty reported by businesses results in an irreversible exit of EU workers from these shores.
“Without our dedicated and valued workforce we would be unable to feed the nation.”
In April a report by the Commons Environment Food and Rural Affairs Committee said: “Evidence… suggests the current problem is in danger of becoming a crisis if urgent measures are not taken to fill the gaps in labour supply.”
A government spokesperson said: “In June we published our offer to protect the rights of EU citizens in the UK, confirming no-one living here lawfully will be asked to leave when we exit the EU and they will have a grace period to regularise their status.”
The federation said it had welcomed the government’s announcement. However, of the businesses it surveyed:
47% said EU nationals were considering leaving the UK
36% said they would become unviable if they had no access to EU workers
31% reported EU nationals leaving since the referendum
17% said they may relocate overseas if they had no access to EU nationals
The federation is calling on the government to ensure there is no abrupt reduction in the number of EU workers in the UK the day the country leaves the EU.
Mr Wright told the BBC: “What we don’t want is a sudden switch-off of the availability of EU workers who are part of the lifeblood of our industry.”
He added that there were a lot of practicalities in the government’s plans for EU workers “that we don’t know yet”.
“We don’t know how much it’s going to cost. We don’t know how dependents will be treated,” he told BBC Radio 4’s Today Programme.
“And crucially, in order to believe the scheme is going to work, you have to believe the Home Office can register two and a half million Europeans in a year. That defies some level of belief.”
Last month the National Farmers Union deputy president Minette Batters said: “The NFU cannot emphasise enough the urgent need for clarity and certainty on access to a competent and reliable workforce and all other issues relating to Brexit.
“The industry needs commitments that there will be sufficient numbers of permanent and seasonal workers from outside the UK post-Brexit.”
The government said in a statement: “After we leave the EU we must have an immigration system which works in the best interests of the UK.
“Crucial to the development of this will be the views from a range of businesses, including the agricultural, food, drink and manufacturing sectors.
“We will be setting out our initial proposals for this system in the autumn but we have already been clear there will be an implementation period after we leave the EU to avoid a cliff edge for businesses.”
In the longer term, the federation accepts it will have to adjust to the reduction in the number of EU workers.
“Over time [training local workers] is something that will have to happen as a result of the Brexit vote. We recognise that immigration was a big factor in the Brexit vote,” Mr Wright said.
To deal with fewer foreign workers, the federation will have a strong emphasis on building skills through apprenticeships and investment in technology to support automation, it said.
The survey was co-ordinated by the FDA, and as well as the BRC and the NFU, it gathered results from trade bodies the Association of Labour Providers, the British Beer and Pub Association, the British Hospitality Association, the Food and Drink Federation, and the Fresh Produce Consortium.
It said that across the various workforce surveys there were 627 responses, collectively representing almost a quarter of the food chain’s total employment of four million people.
(qlmbusinessnews.com via Irishtimes.com – – Fri, 18 Aug, 2017) London, Uk – –
It could happen in March 2019 when the UK leaves the customs union. Or it could be two or three years later if the proposed transitionary period is adopted. Nobody knows until it is settled at the Brexit talks. But the return of duty-free shopping on travel to and from the UK appears to be only a matter of time. After two decades docked in port, the booze cruise is set for a comeback.
The abolition of intra-European Union duty free on July 1st, 1999, was a landmark for the single market. It was one of those tangible moments that punctured the pall of Brussels bureaucracy for citizens, reaching into their everyday lives. No more cheap Superkings on the ferry back from Holyhead.
The abolition was originally pencilled in for 1993, when the single market was established, but European governments gave duty free a six-year reprieve after howls of protest from airports and airlines, ferry operators and the trade unions whose members staffed their duty-free shops.
Intra-EU duty free was an estimated €5 billion market back then, when the bloc had just 15 members. In the current age of high-frequency, low-cost air travel, who knows what the pot might reach this time on travel in and out of Britain?
Ireland-UK air passenger traffic is now approaching 12.8 million annually, with another 2.2 million on ferries. For Irish and British travel companies, that’s a new, 15 million-strong retail market that will soon be ripe for tapping.
But when? As soon as possible, if the industry gets its way.
Kevin Toland, the outgoing chief executive of airport operator DAA, told an Oireachtas committee in June that duty free on UK flights should commence “immediately” upon Brexit in 2019, “regardless of any transitional arrangements”.
The DAA said this week that, overall, “Brexit is a negative” but the potential reintroduction of duty free is “clearly a potential benefit” for Dublin and Cork airports.
“The exact relationship between the UK and the European Union post Brexit still remains unclear, but our hope would be that duty-free sales on travel between EU states and the UK would resume as soon as the UK leaves the EU rather than having to wait for the end of any transitional period,” it said.
The UK Chamber of Shipping, whose members include Irish Ferries, P&O and Stena, also wants the British government to push for the “automatic” reintroduction of duty free in 2019. Politicians on both sides have so far remained coy.
Kenny Jacobs, Ryanair’s chief marketing officer, says it is too early to speculate on the reintroduction of duty free on its flights to and from the UK. But the airline, ever alert for opportunities to boost ancillary revenues, has a plan.
“We have contingency plans in place for all eventualities,” Jacobs said.
For Irish travellers to the UK, a cursory examination indicates that the potential savings on alcohol and cigarettes – the most common duty-free fare – will be significant: up to 60 per cent on cigarettes and more on many spirits.
But given the fact that not even the most senior Brexit negotiators in London and Brussels have a clue what it will look like, we must make a few assumptions.
Let’s assume that, post Brexit, duty free returns at the pre-1999 allowances, which still exist for travel to all areas outside the EU. This means passengers returning to Ireland from the UK should each be able to bring in 200 cigarettes or 50 cigars, one litre of spirts, four litres of wine, 16 litres of beer, and €430 worth of other goods.
Duty free must be carried across a customs border under the rules. So Irish passengers flying to Britain from Dublin, for example, will not be able to use the airport’s intra-EU “shop and collect” service, which allows them buy goods on the way out and pick up on the way home. Irish shoppers will have to buy their inbound duty free aboard the ferry or aircraft home, or airside in a British airport.
World Duty Free is the biggest UK operator, operating at airports such as Heathrow. This week, it was advertising duty-free one-litre bottles of Jameson whiskey for £15.89 (€17.40). The same bottle was this week listed in Tesco Ireland for €36, and €47 in SuperValu, a saving of up to 62 per cent.
A one-litre bottle of Bombay Sapphire gin in Heathrow’s duty free currently costs €23.47. In Tesco Ireland, the same gin is priced at €42.85 per litre (based upon the €29.99 cost of a 70cl bottle), or 82 per cent more expensive.
One litre of Absolut Elyx top-shelf vodka is €51.56 at World of Duty Free in Heathrow, but currently €64 in SuperValu for 70cl (€91.42 a litre). That is a saving of 43 per cent on the Irish price. Another Cosmopolitan, please!
World of Duty Free doesn’t list cigarette prices online, but British Airways lists 200 Benson & Hedges on its “high-life” shop (where you purchase online and collect on the aircraft) for £41 (€45.04). It would cost €115 to buy 200 B&H in an Irish shop, a saving (for your wallet, if not your blackened lungs) of 60 per cent.Duty free means no VAT, customs or excise taxes. As excise is a volume-based tax, regardless of the product’s value, its effect is more pronounced on cheaper items. For example, excise adds the exact same cash cost to an €8 bottle of plonk as a €1,000 of the finest Bordeaux, but proportionally more.
Therefore, the savings can be less stark when buying high-end wines on duty free, and sometimes there is no saving at all. A bottle of 2011 Chateau Lynch-Bages, a fine Pauillac, is £165 (€180) at World of Duty Free in the UK. You can pick up the exact same wine in Le Caveau in Kilkenny for €119.
But overall, Irish travellers to the UK are in line for cheaper prices on booze and drink on the way home. The alcohol retail industry in Ireland is worried about the impact of the reintroduction of duty free on sales here, especially at peak times. The manufacturing industry should be broadly unaffected.
“It will be quite damaging at key holiday periods, such as Christmas,” said Evelyn Jones, public affairs director of off-licence lobby group Noffla and the owner of the Vintry in Rathgar, south Dublin.
“Lots of Irish emigrants would be travelling home at Christmas, and you can be sure they’d use their allowance to bring a bottle. It will have a particular impact on premium spirits.”
Noffla is signed up to the wider drink industry’s campaign for a budget cut in excise taxes, which in Ireland are among the highest in Europe. The industry wants an across-the-board cut of 15 per cent, which seems unlikely as it would cost the exchequer €223 million. Try selling the cost of that policy to the public when there’s an acute homelessness crisis.
But Jones says a cut would help offset the effects of a reintroduction of duty free to the UK: “Duty free will also encourage more illicit trade.”
Britain’s departure from the EU is, overall, likely to be huge negative for the aviation industry. The possible reintroduction of duty free will not be enough of a silver lining to make the Brexit more bearable. Analysts have not built any potential boon into the forecasts for listed airlines, such as Ryanair.
“It might help airlines at the margins,” said Stephen Furlong of Davy stockbrokers. “This is probably something that will be bigger for the ferry operators, where onboard spending and the historical capture of duty-free sales was more material to their performance.”
Gerard Moore, an analyst with Investec, says Irish Continental Group, the stock-market owner of Irish Ferries, generated as much as “roughly half” its net profits from onboard duty-free sales in the late 1990s. That old rythmical clinkety-clink of the duty-free shop rolling on the waves was the sound of philharmonic profitability for ICG and its boss, Eamonn Rothwell.
“It would be a big silver lining once again for ICG,” said Moore. “The company’s view now is, if duty free came back, they’d do a much better job of retailing it this time round. But it might not make up such a significant slice of profits.”
He agrees that airlines would have less to gain, but “if anyone can do it, Ryanair can do it”.
Datalex, the stock market-listed travel software company backed by Dermot Desmond, helps airlines design digital systems to boost their ancillary earnings from activities such as retail.
Ornagh Hoban, its chief marketing officer, said Ireland-UK airlines could “invent a digital marketplace for duty free” by pushing sales on passengers at the booking stage or on the airline’s website, allowing travellers to pick up their goods at the airport or on the aircraft.
“Duty free as an opportunity could evolve to a greater stage. It might be an even bigger opportunity than before,” she says.
The return of duty free is often conflated with customs and the issue of Ireland’s border with the six counties of Northern Ireland, which upon Brexit will become the EU’s only supra-national frontier with the UK.
But there is unlikely to be any duty free between the North and the republic. Duty-free sales happen in transit or at ports of exit. There are currently no direct flights between the Republic and the North. Duty free is unlikely to be much of a factor, unless someone opens a drive-through facility on the M1.
There has always been smuggling across the Border, however. Here’s a potential scenario to finish up that might help illustrate the unintended consequences of the Brexit vote, and the spaghetti bowl of problems facing the negotiators.
This summer, a new car ferry began operating across Carlingford Lough from Co Louth to Co Down. Its owners have said the reintroduction of duty free to UK travel could create an opportunity for the business.
It is only a 15-minute crossing, however. That wouldn’t leave much time to ditch the car on the ferry and leg it up to duty free for a carton of Marlboro and a few bottles of Campo Viejo.
But let’s assume duty free is allowed on the short crossing. What will there be to stop some enterprising soul spending all day, every day, crossing over and back from each side of the lough on the ferry, maxing out their duty free allowance on each journey, and “gifting” the haul to accomplices on either bank?
(qlmbusinessnews.com via telegraph.co.uk – – Fri, 18 Aug, 2017) London, Uk – –
Britain’s factories benefited from a surge in sales to the EU in the first half of this year as export growth outstripped import growth.
The UK still imports far more than it exports leaving the country with a goods deficit amounting to €53bn (£48bn) for the six months to June in its trade with the EU, but that is down from €57.8bn in the same period of 2016.
A weaker pound means British-made goods are more competitive abroad, while imports are more expensive to UK companies and consumers.
Britain exports €104bn of goods to the rest of the world, outweighing the €94.7bn of goods it sends to EU customers. But UK imports from the EU amount to €147.7bn, while those from elsewhere come in at €134.7bn.
The UK’s total trade deficit has shrunk from €102.2bn in the first half of 2016 to €83.7bn this year.
The annual snapshot of international trade, published by Eurostat, lends weight to arguments that the EU depends heavily on Britain’s market for its products but also showed that British business relies on trade with the bloc.
The British trade deficit could give leverage to British Brexit negotiators who travel to Brussels for the third round of talks next month. This week the government published a position paper calling for UK-EU trade to remain as frictionless as possible.
In June Germany exported almost twice as much to Britain as it imported – €6.8bn to €3.6bn – leaving the UK with a €3.2bn deficit in the month.
France, the other member state with the most influence on the Brexit talks, sold €2.9bn-worth of goods to Britain and imported just over €2.7bn, leaving a more modest gap of €178m.
But Britain sold more goods to Ireland (€1.9bn) than it imported (€1.2bn). Preserving the “invisible border” between Northern Ireland and Ireland will be discussed by British and EU Brexit negotiators in the week of August 28.
At the same time the Food and Drinks Federation said exports from Britain soared 8.5pc to a record high of £10.2bn in the first half of the year.
“It is great to see such strong growth in our exports to EU Member States,” said the group’s director general Ian Wright.
“The EU remains an essential market for UK exports as well as for supplies of key ingredients and raw materials used by our industry. We believe there are significant opportunities to grow our sector’s exports further still.”
By James Crisp Tim Wallace
(qlmbusinessnews.com via uk.reuters.com — Thur, 10 Aug, 2017) London, UK —
LONDON (Reuters) – British firms are keeping a lid on pay and automating more production while some shoppers, faced with rising prices, are switching to cheaper products, the Bank of England said on Wednesday.
The findings came in a report from around the country that showed Brexit is hurting households, mainly though the weaker pound.
Businesses serving British consumers are suffering compared with export-focused manufacturers, as the weaker exchange rate and higher inflation following last year’s vote to leave the European Union feeds through the economy.
Last week BoE Governor Mark Carney said Britain’s economy was suffering from uncertainty and higher prices caused by the referendum decision in June 2016, and the central bank cut its forecasts for future growth and wages.
Wednesday’s report by the BoE’s regional staff — which fed into last week’s forecasts — showed businesses planned to offer pay awards of between 2 and 3 percent, despite growing recruitment difficulties.
“Overall employment intentions remained modest,” the BoE said. “Growth in manufacturing (employment) intentions was stable and was dampened by a stronger focus on productivity improvements and automation over job creation,” it added.
The BoE forecast last week that economic growth would slow to 1.7 percent this year and 1.6 percent in 2018, while wages are seen rising by 2 percent and then 3 percent.
After unexpectedly outperforming other big advanced economies last year, in 2017 Britain had its slowest first half of the year since 2012.
Firms reported prices for goods and services rose at the fastest pace in four years, in line with official measures of inflation, and consumer spending growth slowed.
“Some contacts ascribed this to increased caution among consumers, and to consumers trading down to cheaper products or brands,” the BoE said.
Sales at consumer services businesses grew at their slowest pace in over four years, while manufacturing exports saw their fastest expansion since 2011.
Business investment – which the BoE hopes will offset some of the damage to consumer spending – remained modest, with unspecified “uncertainty” weighing on longer-term plans.
The agents’ report on contacts with businesses in June and the first half of July, which includes the period when Prime Minister Theresa May unexpectedly failed to win a parliamentary majority, as well as the start of Brexit talks in Brussels.
Reporting by David Milliken; Editing by William Schomberg and Jeremy Gaunt
By David Milliken
QLM Business News Digital Media Channel for offering the latest business news as well as market analyses. Thanks to the fast-paced life people lead, most busy business people prefer to browse the Net on the go in order to keep up with the latest business news.
Theresa May will fail to secure a comprehensive free trade agreement with the rest of the EU by 2019 in a development that would mean a destructive “cliff-edge” Brexit for the UK, the OECD has predicted.
In its latest Global Economic Outlook report, the Paris-based multilateral economic organisation has upgraded its 2017 GDP growth forecast for the UK to 1.6 per cent, up from 1.2 per cent last November.
But it is still anticipating a sharp slowdown in UK growth to just 1 per cent in 2018.
“This projection critically assumes that ‘most favoured nation’ treatment will govern UK trade after the United Kingdom leaves the European Union in 2019,” the OECD says, referencing a description of the way that countries must trade with each other under minimal World Trade Organisation rules.
In her Lancaster House speech in January, Theresa May said that she wanted to conclude a “a new, comprehensive, bold and ambitious free trade agreement” with the rest of the EU.
The Prime Minister also signalled her willingness to agree a “transitional” deal post 2019, which would allow trade to carry on unimpeded while such an overarching free trade agreement was concluded.
But she also warned that “no deal is better than a bad deal”, implying that she could also walk away from the negotiating deal and that the UK could crash out of the EU’s single market and customs union with no new agreement in place.
That latter threat was also contained in the Conservative manifesto.
The WTO outcome would imply, among many other things, 10 per cent tariffs on UK car exports to the EU, tight quotas on agricultural exports and an abrupt end to the right of UK financial firms to operate in Europe.
The OECD’s baseline assumption is that this is what materialises – and also that the UK has no other new free trade deals with other non-EU countries in place by 2019.
It said that the channels through which this would likely adversely impact the UK economy next year were through weaker household consumption, confidence and investment.
“The major risk for the economy is the uncertainty surrounding the exit process from the European Union. Higher uncertainty could hamper domestic and foreign investment more than projected,” the OECD writes.
Catherine Mann, the OECD’s chief economist, told The Independent that it was sticking with the same WTO Brexit outcome it used in previous UK forecasts made since last June’s referendum.
“Discussions regarding the nature of trade modalities, the time table for any deal, as well as interim agreements are on-going between the UK and the EU. We continue with the same assumption of WTO ‘Most Favoured Nation’ basis, as in our previous projections.” she said.
The overwhelming majority of economists expect that a cliff-edge Brexit would be highly damaging for the UK economy.
Researchers from the London School of Economics estimate that it would cost 2.6 per cent of GDP by 2020, rising to 9.5 per cent by 2030.
The one detailed study that argues trading on WTO rules post 2019 would boost the UK economy has been severely criticised as methodologically flawed and making wildly implausible assumptions.
Business groups have warned loudly about the catastrophic impact of a “no deal” Brexit, with the CBI president Paul Dreschler saying it would “open Pandora’s box” for firms.
In its latest report, the OECD also argues that Britain needs a major increase in infrastructure spending, something more in line with Labour’s manifesto pledges than the Conservatives’.
“Higher investment in transport infrastructure, in particular in less productive regions, would improve connectivity and the diffusion of knowledge,” the OECD says.
Labour’s manifesto also promises a free trade agreement with the EU and explicitly rejects “no deal” as a viable option.
The UK’s GDP growth slowed to just 0.2 per cent in the first quarter of 2017, well down from the 0.7 per cent expansion in the final quarter of 2016.
This was the joint slowest quarterly expansion of any G7 country, alongside Italy, although growth is expected to pick up somewhat in the following quarter.
Responding to the OECD report Vince Cable, the Liberal Democrat shadow Chancellor, said: “Voters should listen to this eve of poll warning on the major economic risk posed by Theresa May’s reckless approach to Brexit.”
“The hardline approach [she] has taken, insisting that no deal is better than a bad deal and planning to take us out of the single market, will seriously damage opportunities and jobs for years to come. The Liberal Democrats will fight to keep Britain in the single market and customs union, and to ensure the people have the final say on the Brexit deal.”
Bu Ben Chu
(qlmbusinessnews.com via uk.reuters.com — Mon, 22 May, 2017) London, UK —
Royal Bank of Scotland (RBS) (RBS.L) pursued last-minute settlement talks with a group of investors on Monday to avoid a potentially embarrassing trial over allegations the lender misled them about a 2008 capital increase.
A successful settlement would save former RBS Chief Executive Fred Goodwin from facing scrutiny in the courts over his decision-making and leadership at the time the lender almost collapsed.
RBS has doubled its offer to the remaining claimants as it seeks to settle the case, two people close to the matter told Reuters on Monday.
The civil trial brought by thousands of RBS investors was due to open at the High Court in London on Monday but was adjourned for a day to allow the settlement talks to continue.
The plaintiffs allege former executives gave a misleading picture of the bank’s financial health ahead of a 12 billion pound ($15.5 billion) cash call in 2008. Months after the cash call, RBS had to be rescued by the government with a 45.8 billion pound bailout.
RBS, which remains more than 70 percent state-owned, denies any wrongdoing over the 2008 rights issue and says its former bosses did not act illegally.
Jonathan Nash, a lawyer representing the claimants, appealed in court for an adjournment saying the two parties were in settlement talks and wanted longer to strike a deal.
“We are involved in settlement discussions and we are hopeful of making progress,” Nash said.
The sources said RBS Chief Executive Ross McEwan was directly involved in talks over the weekend and that the bank had offered more than 80 pence for each RBS share held, though it was not clear if any investors have accepted the offer.
A settlement at that price would cost RBS “in the tens of millions of pounds”, a third source familiar with the matter said.
The bank has settled with 87 percent of the investors who originally brought the case but the others have so far rejected its offers and say they were determined to go to court.
By doubling the amount on offer, RBS is close to a sum the remaining investors would accept, one of the sources said, indicating that they might settle if RBS raises its offer to 100 pence per share.
That represents half of the 200 pence per share investors paid at the time of the rights issue.
The outstanding group represents about 9,000 retail shareholders and 20 institutional investors. The large investors include U.S. bank Wells Fargo (WFC.N), the Boeing (BA.N) pension fund, Bank of America Merrill Lynch (BAC.N) and local British council pension funds.
RBS declined to comment on the settlement offer.
By Andrew MacAskill and Lawrence White
Engineer Toby McCartney explains how his Scottish start-up MacRebur is persuading councils to use local waste plastic to build roads. Two English councils have already started building roads this way. A smartphone film for BBC World Hacks by Dougal Shaw.
Mark Lack interviews Beate Chelette – CEO and Founder of The Women’s Code, a revolutionary system to help women cope, collaborate and lead in their careers! Beate talks about why she decided to start this business and her aha moment! She tells the story about of reaching out to the President of the United States and how that led her to where she is today!
(qlmbusinessnews.com via uk.reuters.com — Thur, 27 Apr 2017) London, UK —
British retailers reported the biggest increase in sales volumes since mid-2015 during April, according to an industry survey on Thursday that may help to allay fears of a worsening consumer-led slowdown.
The Confederation of British Industry’s monthly retail sales balance spiked to +38 from +9 in March, confounding expectations for a decline to +6 in a Reuters poll of economists.
The upbeat figure contrasted with official data that showed retail sales posted their biggest quarterly fall in seven years in the first quarter of 2017, reinforcing economists’ view that household spending, the main driver of the economy, is now slowing sharply.
The CBI said the strength during April was notable because the survey of 57 retailers did not cover the Easter holidays, one of the most important shopping periods of the year.
However, the CBI’s retail balance has been volatile from month to month recently.
“Retailers are still cautious over the outlook, expecting slower growth over the year to May, as higher inflation eats into household spending,” CBI economist Ben Jones said.
“With price competition remaining fierce and rising costs squeezing margins, retailers face mounting pressures in the months ahead.”
The CBI said retailers expected sales growth to slow next month, with the index falling back to +16.
By Andy Bruce
(qlmbusinessnews.com via bbc.co.uk – – Wed, 26 Apr, 2017) London, Uk – –
The £20.3bn spent bailing out Lloyds Banking Group during the financial crash has been repaid in full, UK chancellor Philip Hammond has said.
Nine years after the government bought 43.4% of Lloyds, the taxpayer has now got slightly more – £20.4bn – back.
The government began selling off its stake to investors in 2013, with the final 2% likely to be sold this year.
Earlier this week, Mr Hammond hinted that the 72% stake in Royal Bank of Scotland may be sold at a loss.
The vast bulk of the money returned to taxpayers has come from selling tranches of Lloyds shares, which began in September 2013 with the offloading of a £3.2bn stake.
However, the government has also received £400m in share dividends from Lloyds as the group returned to health.
In February, Lloyds reported its highest annual profit in a decade, helped by a reduction in payment protection insurance provisions.
Mr Hammond, speaking in Washington on Friday, said: “Recovering all of the money taxpayers injected into Lloyds marks a significant milestone in our plan to build an economy that works for everyone.
“While it was right to step in with support during the financial crisis, the government should not be in the business of owning banks in the long term.
“The right place for them is in the private sector and I’m pleased to be able to say we are approaching the point at which we will sell our final shares in Lloyds Bank.”
There were plans to sell off a large tranche of shares to the public rather than institutional investors, but this was scrapped last year, with then chancellor George Osborne blaming turmoil in global financial markets.
‘Elephant in the room’
Hargreaves Lansdown senior analyst Laith Khalaf said that although the share sell-off has taken far longer than expected, the remaining stake “can now be sold off as pure profit for the government”.
He added: “Of the UK banks, Lloyds has cleaned up its act fastest since the financial crisis.
“For the Treasury, the elephant in the room is, of course, RBS, which required twice as much financial support from the taxpayer as Lloyds.”
The bailout of RBS was worth 502p a share – or £45bn in total. On Friday, RBS shares were trading at about 239.8p.
Mr Hammond said on Wednesday that the government would return RBS to private hands “as soon as we can”, but this might be at a price below what was paid.
“We have to live in the real world,” he said.
By Russell Hotten
UK in Spain/flickr.com
(qlmbusinessnews.com via theguardian.com – – Tue, 25 Apr, 2017) London, Uk – –
The government appears to have performed a weekend U-turn on business rates and says a £300m relief fund to help small businesses worst hit by the shakeup is now available for councils to share out.
On Friday the Guardian was told by the Department for Communities and Local Government that although the consultation on how to distribute the money was complete it would require the approval of the new government – signalling a hiatus of several months until after the 8 June general election.
However, speaking in the House of Commons on Monday the communities secretary, Sajid Javid, insisted there would be “absolutely no delay because of the general election”. “It’s going ahead, exactly as planned. Councils are free to start using the scheme and helping local businesses.”
The business rates revaluation triggered a furious political row in February with the government coming under fire from its own MPs over the impact of the changes in their constituencies. Many of the affected businesses are in Conservative heartlands and the pressure saw the chancellor Philip Hammond announce a £435m relief package in the budget.
Half a million shopkeepers, pubs and restaurants saw their rates bills – the commercial equivalent of council tax – increase at the start of this month after a revaluation of property hit parts of the country where prices have surged.
For example, a property boom in the Suffolk coastal town of Southwold forced rateable values up by 152%, with some shop owners saying the resulting hike in their rates bill threatened the viability of their businesses.
Rachael Maskell, the Labour MP for York Central, described the situation created by the revaluation as “totally unfair” as although more small businesses were exempt from rates in her constituency others had seen their rateable value increase by 600%. “No one knows how the new relief funds will be distributed,” she said. “Total chaos.”
The DCLG website was updated over the weekend with the following statement added to the relevant homepage: “The government has considered the responses to the consultation on the scheme announced at spring budget 2017 for discretionary business rates relief and determined that final allocations to local authorities will be made according to the draft allocations published as part of the consultation.”
A DCLG spokeswoman confirmed the relief fund was now being rolled out. “Councils should establish their own schemes to distribute funds to local firms and can claim the funding from DCLG as soon as their schemes are up and running,” she said.
The revaluation, which is revenue neutral for the government, is supposed to make the system fairer by ensuring business rates reflect the property market with rates bills actually coming down in some parts of the country.
A revaluation is supposed to take place every five years but the previous review was controversially delayed by two years with high street campaigners accusing the government of postponing the process as it would be vote loser in Tory-held seats in the south-east ahead of the 2015 general election. The last revaluation, which came into effect in 2010, was based on rental values from 2008 which explains why some firms have seen a sharp rise in their bills.
Hammond’s relief package comprised the £300m discretionary fund, which is spread over four years, and a £1,000 discount on this year’s rates bill for pubs with a rateable value of less than £100,000.
It is now up to local councils, who receive funds quarterly, to decide the local businesses that need help. Local authorities have already been developing their schemes with London’s Haringey, for example, where the rates of most high street shops have increased by 20% to 30%, considering giving preference to small, medium and independent firms.
Mark Rigby, chief executive of business rent and rates specialists CVS, said it was important that councils acted quickly as businesses were already paying higher rates. “I would now urge councils across England to expedite the distribution of this relief to those firms hardest hit by the revaluation with business rates bills having already been sent out and the first tax instalment having been collected,” he said.
By Zoe Wood
(qlmbusinessnews.com via bbc.co.uk – – Mon, 24 Apr, 2017) London, Uk – –
Plans by the Conservative Party for a cap on household energy bills will lead to fewer benefits for consumers, says one of the UK's biggest providers.
A cabinet minister said the Tories planned to intervene in the energy sector "to make markets work better".
But Scottish Power, one of the "Big Six" energy firms, told the BBC that the move would "stop competition" and "damage customers in the long run".
Shares in energy firms were hit by the proposed price cap.
British Gas owner Centrica fell about 5% and SSE was down more than 3% in early trading.
The energy industry has reacted with scepticism to the plan, saying it could lead to higher prices.
Labour said the proposal should be taken with "a pinch of salt", adding that energy bills had "soared" under a Conservative government.
'Dangerous' energy idea finds its time
Tories to promise cap on energy bills
Speaking to the BBC, Scottish Power's chief corporate officer, Keith Anderson, said: "If you put a cap on prices, you actually stop competition. That's the danger of price intervention."
When companies do not compete as much, that tends to lead to fewer benefits for customers, he said.
He added that if the Conservatives did intervene, it would be better to abolish standard variable tariffs.
About 800,000 of the poorest pensioners and 1.5 million low-income families with children are on standard variable tariffs, according to Citizens Advice.
These households are paying an average of £141 more a year for a dual-fuel gas and electricity bill than if they were on the cheapest deal, it said.
Defence Secretary Sir Michael Fallon defended the Conservative's intention to impose a cap on energy prices.
"We wanted to see more competition, we wanted to see more people able to switch between energy users," Sir Michael told the BBC.
"That over the last three or four years has not happened. This is a market that is not working perfectly and therefore we are intervening to make markets work better," he added.
Co-leader of the Green Party Jonathan Bartley said the policy did not go far enough and he wanted more local choices of supplier for consumers.
But trade association body Energy UK said a cap could risk "billions in investment and jobs".
British Gas parent firm Centrica and fellow supplier E.On have both said market competition is essential.
Price comparison site uSwitch.com said that previous interventions in the energy sector had led to lower switching rates and higher prices.