Resource Type: Podcast

The UK government is failing to tackle economic crime. Money laundering and other forms of financial crime are made easy by the UK’s relatively lax approach to checking companies. Companies House infamously acknowledges at the top of its website that it “does not verify the accuracy of the information filed”…

Jo and Nick shine the light on Companies House and discuss why major reform is needed. The failures in tackling fraud have been brought into focus by the dramatic resignation of Lord Agnew in the House of Lords last week. A key piece of legislation, the economic crime bill, had been rejected for consideration during the next parliamentary year which prompted the resignation. The bill was expected to bring forward measures, among others, to improve almost non-existent oversight of the UK’s business register, Companies House and to increase business confidence in the UK.

Also covered in the episode are insolvency statistics for 2021. A record number of companies in England and Wales agreed with their creditors to cease trading during the final quarter of 2021, after the government tapered back its pandemic-support measures for businesses. Company insolvencies for England and Wales jumped up 11.2% to 14,048 from the previous year. The number of CVLs in the fourth quarter reached the highest since records began in 1960.

Inflation. Is it transitory? Or, are we inching ever nearer to stagflation?

This week, Jo and Nick put inflation ‘On the Spot’. It’s been the word on everybody’s lips for some time, but as we begin 2022 and the numbers are running ever hotter we need to dig deeper and understand the bigger picture…

The cost of living is already at its highest rate in over a decade, with UK CPI hitting 5.1% in November 2021, according to the Office for National Statistics. This is up from 4.2% in October 2021. A key driver in the rise in energy costs, which have been climbing steeply, along with ongoing supply chain problems at a time of increased demand for energy and products as the economy tries to rebuild. 

December figures have not yet been released, however, they are widely expected to be higher again as they were in the Eurozone where inflation hit a record high of 5%, and the US, which CPI reached a 40 year high of 7%.

On the spot this week is Peter Smith, ex-president of CIPS and former procurement director at Dun & Bradstreet. Peter has extensive experience in procurement and credit management, having been involved in the industry for most of his working life. Peter is now an author and his latest book, Procurement with Purpose, explores how organisations can change the way they spend money to protect the planet and its people. 

The beginning of 2022 is a challenging time for procurement teams right now. Inflation is a huge worry, supply chain issues rage on and geopolitical risk factors are becoming ever greater. In this episode, Peter explains how he would mitigate risk if he was still working in procurement and what he believes those risks are. He also highlights why procurement is the driving force behind the commercial capability of a company and why company-wide buy-in is the key to procurement success.

The final episode of the year is here! Nick and Jo re-cap what has been a challenging year for all. They look back on the success of the furlough scheme and, why the surprisingly low unemployment rate is a big positive to carry forward.

There have been plenty of negatives along the way too and many businesses have suffered as a result. 2022 is just around the corner, inflation is high and interest rates are undoubtedly about to increase. The reality is businesses are now going to have to manage risk without the cushion of government support schemes… 

The UK unemployment rate dropped to 4.3% for the past quarter, as businesses continue to recruit after the removal of Covid restrictions, this rate is 0.5 percentage points lower than the previous quarter. However, vacancies at UK companies hit a record level in August to October, rising to 1.17m – that’s an increase of 388,000 from the pre-pandemic January to March 2020 level, with 15 of the UK 18 industry sectors showing record highs.

The ONS also estimates that underlying regular pay growth is around 3.4%, but says that this should be interpreted with caution given the uncertainty on inflation. Inflation continues to be the word on everyone’s lips – the year on year increase on gas is 28%, electricity 19% and fuel 22%.

The HMRC faces a significant challenge in clearing the backlog of debt owed, with some £42bn still owed to HMRC in September 2021 (up £16bn from January 2020).

Commercial landlords are being encouraged to waive ‘some or all’ rent arrears where possible where tenants are unable to pay in full and were forced to close in response to the Covid-19 pandemic, under a new code of practice published by the UK government. The code sets out to help commercial landlords and their tenants resolve any remaining commercial rent disputes which arose during periods of forced closures during the pandemic.

Today’s Q3 GDP report shows that the UK economy is lagging behind its G7 rivals in recovering from the pandemic. On a quarterly basis, the UK economy is still 2.1% below its pre-pandemic level in Q4 2019 after growth slowed to 1.3% in the period July-September.

Hundreds of companies set up after the government’s furlough scheme was established have fraudulently claimed millions from the taxpayer. The use of these companies to claim emergency pandemic funds will be scrutinised by the HMRC who seek to recover £1 billion in fraudulent or mistaken claims.

Last week many were left scratching their head when the Bank of England announced they were not going to raise interest rates even though inflation is forecasted at 5% next year. Leading up to the announcement there were plenty of signals coming from various policymakers that we would see a rise from the current lowest-ever base rate of 0.1 percent to 0.25 percent, however, we still saw no change.

Nick and Jo look at the surprising announcement in more detail and, draw reference from another podcast that talks about a time in the 1970s when the U.S. economy was truly threatened by inflation and Paul Volcker, former Chair of the Federal Reserve, had to take extraordinary measures to defeat it.

Last week the chancellor, Rishi Sunak, unveiled his budget. He says his budget delivers a brighter economy for the UK: stronger growth, public finances, and employment.

The chancellor says he will give people the support they need to cope with the cost of living. Inflationary pressures are adversely affecting the UK economy, with the Office for Budget Responsibility (OBR) forecasting that inflation will be above 4% next year.

Nick and Jo review the budget and address the key takeaways. They also look ahead to the Bank of England’s Monetary Policy Committee’s (MPC) announcement this coming Thursday on interest rates.

There are various signals coming from the Bank of England’s Monetary Policy Committee (MPC), which has fired up talk that a rise in UK base interest rates could come as early as next month. The MPC is due to announce its next decision on rates on November 4th.

The Bank of England’s new chief economist, Huw Pill, has warned that UK inflation is likely to hit or surpass 5% by early next year, with rises in transport costs being a key upward driver. Insolvency numbers continue to rise and the number of businesses choosing to go into liquidation has now reached the highest level since the onset of the Covid crisis.

Nick and Jo pick apart these heavy topics and help you make sense of the numbers.

The UK economy picked up in August as GDP grew 0.4%. This latest snapshot showed activity in the accommodation and food service sectors, as well as arts and entertainment, contributed the most to growth.

Official data published on Tuesday showed that the UK unemployment rate edged down 0.1% to 4.5% in the three months to August – a welcome figure and one that is lower than analysts had predicted.

Credit insurers Atradius and Euler Hermes have been looking ahead and announced their predictions for UK insolvencies. Both are predicting that 2022 will see a rise in the number of insolvencies by around 32% (compared to pre-pandemic). There are fears that numbers could be even higher if the vast number of zombie companies operating in the UK begin to fail quicker than anticipated.

Nick Hood has also written an article on the the role of insolvency professionals in saving jobs and businesses as the pandemic wanes. Read the article here.