Weekly Digest – 27 November 2024
Welcome to our Weekly Digest – stay in the know with some recent news updates relevant to business and the economy.
UK inflation jumps to 2.3%, underscoring BoE’s stance for gradual rate cuts
British inflation jumped by more than expected last month to rise back above the Bank of England’s 2% target and underlying price growth gathered speed too, showing why the BoE is moving cautiously on interest rate cuts
More than 72% of UK SME owners ‘believe business is becoming more difficult’
A survey of more than 450 SME owners carried out by The Allica Bank Great British Entrepreneur Awards headline sponsor Allica Bank reveals that despite inflation and interest rates having stabilised in recent months, 72% of SMEs believe running a business has become more difficult over the past 12 months.
UK business confidence slumped post-Budget
The UK’s business optimism “slumped” in a downturn after the Autumn Budget, according to a closely watched survey of the private sector. S&P’s ‘flash’ purchasing managers’ index (PMI) came in at 49.9 in November, now below the neutral 50.0 threshold, down from 51.8 last month, and the lowest since October 2023.
How the Chancellor can further encourage business investment
Within the Corporate Tax Roadmap, the government has committed to retaining not only 50% and 100% reliefs for capital incentives (the Annual Investment Allowance [AIA] and First Year Allowance [FYA], but also the principle of writing down allowances. Additionally, it intends to explore extending the 50% and 100% reliefs to assets that are leased out. Here are three further opportunities for the Chancellor to consider.
Plan to renationalise UK railways gets green light
Legislation put forward by the UK’s new Labour government to renationalise the country’s rail services, most of which are privately owned, was on Wednesday given the go-ahead by Parliament. The bill will bring rail operators into public ownership when the private companies’ contracts expire, or sooner in the event of poor management, and will be managed by “Great British Railways”.
MPC unlikely to lower rates in December as inflation moves up
Commenting on the data from the Office for National Statistics, that showed the annual rate of CPI inflation rising to 2.3% in October 2024, Anna Leach, Chief Economist at the Institute of Directors, said: “Inflation has moved up pretty much as expected, reflecting movements in the OfGem price cap. Elsewhere recent official data on wages has also come in in-line with the Bank of England’s forecasts. But economic conditions are evolving rapidly following a painful Budget for business, that significantly increases the costs of employment and injects inflationary pressure into a constrained economy.”
The importance of supporting local business
We all live in communities and neighbourhoods where local businesses are intrinsic to our daily lives. Our UK market is a shining example of the role played by local business in the community, and it only takes a brief look at the economic impact to understand why, as it’s quite significant when looking at the overall UK economy.
GDP wasn’t as bad as it looked
Looking at the latest economic growth figures is a bit depressing. The economy contracted by 0.1% month-on-month (m/m) in September, which dragged down overall growth in Q3 to just 0.1%. That’s a far cry from the average of 0.6% quarter-on-quarter (q/q) in the first half of the year. What’s more, the economy has only grown in two out of the last six months. It also means Kier Starmer has his work cut out for him to keep his pledge to make Britain the fastest growing economy in the G7. But dig a little deeper and things aren’t nearly as bad as Friday’s figures made out.
56% of business owners eye exit amid tax hikes and economic uncertainty
A new report by Arbuthnot Latham (due to be released in full in January 2025) has revealed some interesting statistics, focusing on UK business owners’ taxation concerns. Arbuthnot Latham’s survey reveals: 65% of those who have recently exited a business said the fear of tax rises accelerated their decision; 56% of those still in business said the same concern would lead them to sell sooner.
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