Skip to main content

UK Growth challenges

Its economists are predicting 6.9 per cent growth in GDP this year and 5.1 per cent next, down from its June forecasts of 8.2 per cent and 6.1 per cent, respectively. 

Tony Danker, director-general of the CBI, said that "pro-investment and pro-innovation regulation to help build new markets, a competitive tax regime that incentivises business investment across the board and new market-making interventions, for example on clean energy" could jump-start productivity. 

The Organisation for Economic Co-operation and Development has lowered its prediction for UK growth next year to 4.7 per cent, from 5.2 per cent three months ago. Their growth forecast for 2022 has been cut from 5.4 per cent six months ago to between 1.8 per cent and 4.3 per cent. The CBI said that the "foundations" for economic recovery were firm despite global supply challenges, with continued employment growth supporting household spending over the next couple of years. However, companies fear a brutal end to 2021, with 80 per cent of the 500 mid-sized businesses questioned last month by BDO, the accountancy firm, saying that they expected their performance to be hit by rising fuel prices, disrupted supplies or higher energy costs. 

Yael Selfin, a chief economist at KPMG UK, said that "the potential reintroduction of social distancing measures could see output fall this month and during the first quarter of 2022". 

Rain Newton-Smith, the CBI's chief economist, said: "UK exports are being outpaced by our global peers, which, if allowed to continue, will negatively impact our economy in the long term." In addition, the CBI said that the recovery in exports was likely to be "lacklustre" after disappointing growth this year. 

KPMG'sKPMG's economists said that GDP growth could more than halve next year if restrictions were introduced. 

The CBI said that short-term headwinds, such as supply chain disruptions and inflation, intensified since June'sJune's last forecast. 

Ed Dwan, a partner at BDO, said: "Many businesses will have been hoping for a solid finish to 2021 and a fresh start for 2022. 

    Economists have cut their growth forecasts for next year because of concerns about rising costs, shortages and the possibility of more Covid restrictions. As a result of inflation, almost a third planned to cut the number of products or services they offered and 31 per cent planned to put up prices. Without government intervention, poor productivity persists in the CBI'sCBI's forecast, with output per worker remaining 17 per cent below its pre-2008 trend at the end of 2023. Moreover, it believes that a recovery in business investment appetite will be brief, with capital spending falling from mid-2023 as the super-deduction incentive comes to an end and as the rise in corporation tax kicks in. The harsh reality is that ongoing supply chain issues, rising energy prices and increasing costs mean that many take drastic measures to stay afloat. As a result, it lifted its inflation forecasts to 4.9 per cent in the first half of next year.

Summarised www.sba.tax
Labels:

Comments

Post a Comment

Cloud Bookkeeping

HS2 cost cuts new routes and add delays.

 Trans­port depart­ment offi­cials have begun work on «Project Sil­ver­light» sug­gest­ing the high­speed rail scheme might face four addi­tional years of delay. The planned High Speed 2 rail line faces fur­ther delays of up to four years and more cuts to the project under plans being drawn up by min­is­ters to rein in its bal­loon­ing costs. The extra delays to the coun­try’s biggest infra­struc­ture project would mean that it would not be com­pleted until as late as 2045 — 12 years after ori­gin­ally planned. «This is a func­tion of infla­tion; we are hav­ing to find huge sav­ings because the cost of everything the depart­ment is already doing will have become so much more expens­ive by then,» said one gov­ern­ment offi­cial. In Octo­ber, the FT repor­ted that the Treas­ury had asked HS2’s man­age­ment team to identify poten­tial cuts or «scope reduc­tions» to the high-speed line. Trans­port depart­ment offi­cials have sub­sequently begun work on Project Sil­ver­light aimed at fi...
4 comments
Read more

Small business will be excluded from fraud law.

  Min­is­ters are plan­ning to exclude small busi­nesses from anti-fraud legis­la­tion by nar­row­ing the scope of a crim­inal offence tar­get­ing com­pan­ies that fail to pre­vent eco­nomic crimes. MPs and anti-cor­rup­tion cam­paign­ers had hoped the gov­ern­ment would seek to amend the eco­nomic crime and cor­por­ate trans­par­ency bill to ensure the new offence covered all com­pan­ies. The plans to limit the scope of the amend­ments will also dis­ap­point those who had hoped the legis­la­tion would remove key hurdles to the pro­sec­u­tion of white-col­lar crime. A new «fail­ure to pre­vent» offence for fraud would bring it in line with exist­ing sim­ilar cor­por­ate offences for bribery and tax eva­sion. At present, pro­sec­utors need only prove that organ­isa­tions lacked «reas­on­able» or «adequate» con­trols to pur­sue the offence in bribery and tax eva­sion cases. «It would be much more sens­ible for the gov­ern­ment to provide strong guid­ance for SMEs on what these pro­ce...
3 comments
Read more

Doubt on CS's collateral.

  Credit Suisse provided an emergency $140mn loan to Greensill Capital based partly on invoices to companies that deny ever doing the business stated on the documents. The Swiss bank provided the loan in October 2020, less than five months before the collapse of Greensill, a supply chain finance firm that counted former British prime minister David Cameron as a senior adviser. Invoices issued by metals magnate Sanjeev Gupta’s Liberty Commodities and sold to Greensill formed part of the collateral for the loan, according to documents seen by the Financial Times and people familiar with the transaction. Yet several of the parties named on the invoices have told the FT they did no business with Liberty. GFG has consistently denied any wrongdoing. Credit Suisse’s loan had a clause dictating that the collateral value had to be equal to or greater than the $140mn borrowed. The terms of the debt agreement only allowed invoices on Green-sill’s balance sheet to count towards this tally if t...
2 comments
Read more