Industry news round-up

Industry News

1. Small firms to cut jobs ahead of NI hike

The Federation of Small Businesses (FSB) has warned that one in seven small firms plans to cut staff ahead of the 1.25% increase in National Insurance that comes into force next year, meaning 50,000 jobs could be lost. The FSB also revealed that eight in ten SMEs do not plan to take on extra staff this quarter. FSB national chair Mike Cherry said: “Tax rises will hit at the same time as a rise in the living wage, and against a backdrop of surging inflation and supply disruption.”

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2. Shoppers spend more with firms online than in-person

People commonly spend more if they shop with a small business online than they would if they were to spend with them in-person, according to a new study. The research from TalkTalk Business also reveals that 65% of SMEs say their customers started their festive shopping early. Meanwhile, 70% of SMEs say that their regular customers are finishing up their Christmas shopping with them online rather than in-person.

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3. UK economy grew 1.3% in the third quarter

Weak consumer spending and supply chain issues drove economic growth down in the third quarter, figures from the ONS show. Growth between July and September came in at just 1.3%, from a 5.5% rise recorded between April and June. This means the economy is 2.1% smaller than in the final three months of 2019. The latest growth figures were weaker than many economists had expected, and Paul Dales, chief UK economist at Capital Economics, said the data suggested “the best of the recovery is now behind us.”

4. Furlough fraud estimated at £1 billion

Analysis of official data by The Times shows that 7,000 companies registered to only five addresses in London claimed up to £473 million from the Government’s furlough scheme between last December and June this year. The paper says HMRC will likely be scrutinising such “off-the-shelf” companies as it seeks to recover an estimated £1 billion in fraudulent or mistaken claims. One alleged fraudster is understood to have claimed £27.4 million over 14 months despite little evidence that their businesses had any staff or any substantial trade.

5. UK audit reforms and governance to be watered down

The UK’s long-awaited overhaul to auditing and corporate governance is to be scaled back after intense lobbying from business. One proposal set to be dropped is new legislation holding company directors personally liable for accounting failures with the threat of fines and bans. Instead, a provision is expected to be included in the UK corporate governance code, which only applies to companies with a premium listing and can be ignored by companies providing they explain why.

6. NIESR warns of stagnation risk from supply-chain problems

The National Institute of Economic and Social Research (NIESR) has warned that persistent supply-chain bottlenecks risk stagnating Britain’s economy in the years ahead. The think tank predicts that inflation will reach around 5% next year and last longer than the Bank of England expects. Britain’s economy was set to grow by 6.9% in 2021 and by 4.7% in 2022, as it recovers from the COVID-19 pandemic, before slowing sharply to 1.7% in 2023 and 1.3% in 2024, NIESR said.

7. FCA accused of changing rules to avoid paying compensation

The Financial Conduct Authority (FCA) has been accused of changing its complaints scheme in an attempt to avoid paying compensation to victims of failed funds or investment scams. The FCA reportedly changed its complaints scheme ahead of a wave of claims from savers who had lost more than £200 million in the collapse of investment firm London Capital & Finance in 2019. The financial watchdog denies acting unlawfully, saying it was “clarifying” the scheme’s guidelines.