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NewBusiness Magazine offers business advice and the latest business news for small to medium size businesses and enterpreneurs.
- Small firms forecast tough times
Small firms are less confident about their business prospects now than three months ago, according to the Bank of Scotland’s confidence index.
The survey revealed that 33% of small business owners said it was a good time to own a small company in the UK, compared to 38% who thought the opposite was the case.
The majority (60%) of small business owners questioned thought economic conditions would get worse in the year ahead – a 24% increase on last year – while just 7% thought the business climate would improve.
“We can expect recruitment to be measured and growth to be steady but slowing,” said Ivan Matviak, head of the bank’s business banking division, who added that increasing tax demands and red tape would add to the pressure small business owners already face.
- CBI reduces growth forecast
The CBI has reduced its forecast for the UK economy in 2008 amid growing concerns of the impact the credit crunch and a cooling in the housing market could have.
The business group had predicted growth of 2.2% as recently as September but has now downgraded that forecast to just 2%, its third consecutive downgrade.
It also believes inflation will continue to rise next year due to higher food and oil prices, hitting 2.6% by the end of 2008 and making further interest rate cuts unlikely.
But the body rejected talk of a full-on recession. “While the 2008 slowdown may appear dramatic set against this year’s strong growth, the fundamentals of our economy remain sound and talk of a full-blown recession is overstated,” said chief economic adviser Ian McCafferty.
- Bodies criticise CGT delay
The chancellor Alistair Darling has said he will not announce any revisions to the controversial capital gains tax reforms until 2008.
The move has been criticised by the Federation of Small Businesses, which had been expected the issue to be resolved in December, although the body welcomed the news that Darling would again meet the FSB and other business organisations.
“We are still no clearer on what will happen with the tax arrangements for millions of small business owners and entrepreneurs come April next year,” said John Wright, FSB national chairman. “This is not a good situation to be in.”
The Chartered Institute of Taxation (CIOT) has recommended that any changes to the current capital gains tax regime do not come into force until April 2009 to allow time for a full consultation.
“The CIOT is deeply concerned that this puts many small businesses and individuals in an extremely difficult position, said CIOT president Rob Ellerby.
“All businesses and individuals want to be able to plan their tax affairs with a degree of certainty. Any entrepreneur considering disposing of their business now has scant idea of the tax implications if the sale is after 5 April 2008.”
- Employment figures still rising
The amount of people claiming jobless benefits has sunk to a 32-year low despite growing concerns over companies’ long-term recruitment plans.
The number of people claiming jobseeker’s allowance dropped by 11,100 in November to a total of 813,000, making it the lowest on record since June 1975.
The data from the Office for National Statistics also revealed that year-on-year average earnings rose by 4% in November, down from the rate of 4.1% seen in October.
A combination of a slight reduction in salary increases and a strong recruitment market may act to keep inflation under control.
The Bank of England cut interest rates in December for the first time since August 2005 but remains wary of the threat posed by inflation.
- Sales slump in November
Retail sales in the UK saw their biggest monthly fall since the start of the year in November, normally one of the strongest months of the year.
Figures from Mastercard suggest retail sales growth fell to 4% in the 12-month period from last November from 4.5% in October.
Clothing and discount retailers and department stores were hit hard, with a reluctance to cut prices seen as partly to blame, while sales for electronic goods, food, music, books and personal care items saw stronger sales.
With consumers feeling the impact of the credit crunch and higher prices for fuel and food, retailers could face a tough year in 2008.
- Hiring outlook lowest for six years
UK companies expect to take on staff at the slowest rate in six years following the economic downturn, recruitment company Manpower claims.
The balance of those looking to hire rather than fire over the next quarter was down by almost half on the same period in 2007, with financial and business services firms the most pessimistic.
“People are a bit concerned with what they are seeing from the financial market and the outlook for the economy,” said Mark Cahill, managing director of Manpower UK.
“Most people are still looking to employ more people,” he added. “It’s just not as high or as optimistic as it has been.”
Many companies in the investment banking sector have already started trimming jobs, with Bank of America, UBS and Dresdner Kleinwort leading the way.
The Centre for Economics and Business Research predicts a total of 6,500 City jobs will go in 2008.
- One-third of staff paid late
Over a third of UK workers are regularly paid late by their employer, according to new research.
The survey found 36% of staff are paid late at least five times a year and 68% claim they have been paid the wrong amount on more than one occasion.
“These figures are surprising and demonstrate the unreliability that employees are facing,” said Nick Williams-Howes, chief executive of Smartflow, which carried out the research.
“Most individuals revolve all their monthly payments around their payday and without a guaranteed payment, many can be left without the cash they need to pay regular outgoings, such as utility bills, council tax and rent.”
Many companies had cut back on staff in their payroll departments and were suffering from cashflow problems as a result, he added.
- Firms warned on festive theft
Business crime saw a 20% increase in the three months from July to September compared to the same period last year, according to figures released by Axa.
The research suggests most of this is down to increasing levels of theft, which rose by 27% in the third quarter of 2007 compared to 2006, and 45% in the second quarter.
Against this backdrop, the insurance company is warning businesses to be extra vigilant over the Christmas period.
“With many people taking holidays and some businesses closing entirely, premises will be left empty and under-staffed,” said Doug Barnett, risk manager at AXA.
“We are urging business owners of all types of business to review their security precautions ahead of the festive period so they don’t give criminals a Christmas present this year”.
- Firms unaware of carbon footprint
Only a tiny minority of British businesses know how big their carbon footprint is, according to a survey by the Carbon Trust.
While a quarter of companies said they were affected by climate change, only 1% had actually measured their emissions.
“The picture is mixed as businesses are still yet to move in some key areas,” said Tom Delay, chief executive of the Carbon Trust.
“By measuring and assessing a business’s impact through undertaking a carbon footprinting exercise, a company can better understand where carbon reductions can