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February Business Newsletter

Your round-up of this month's business news and developments

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Welcome to the monthly news round-up from Commercial Experts, where we tell you about the news that matters most to your business. We know you lead a busy life and aren't glued to the news. That's why we are; to help you keep on top of what's changing in the world of business.

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 January 2024 saw the year off to an uncertain start. In many ways, starting where 2023 left off. 

Rumours of tax cuts, disruption in the Red Sea threatening inflation rises, and a holding of base interest rates all set the scene for an unpredictable year. This is a quick round-up of the business headlines that matter most to you and your business. 

Chancellor Warned Against Further Tax Cuts

This month saw the Chancellor, Jeremy Hunt, hint that he wants to cut taxes in the spring Budget but also saw the IMF warn the UK Government against such a move as to do so would damage public services.  New tax cuts would be an extension of the cuts already made in the recent Autumn Statement.

Speaking during his visit to the World Economic Forum in Switzerland, Mr Hunt said: "I believe fundamentally that low-tax economies are more dynamic, more competitive and generate more money for public services like the NHS."

However, the IMF has warned that tax cuts would take too much money out of the public purse and cause a decline in the quality of public services. Following the IMF's warning, Mr Hunt is yet to rule out tax cuts and says he still believes they can boost the economy's growth. The news comes at a sensitive time with both consumers and businesses continuing to struggle with cost of living pressures. 

Red Sea Disruption Poses Inflation Risk

Inflation could be at risk of rising again following attacks on ships using a vital trade route through the Red Sea. Several shipping firms have stopped using the Red Sea route after attacks by Houthi rebels in Yemen, who are attacking ships in response to Israel's military operation in Gaza. 

The alternative route means ships must travel to Europe via Africa's southern coast, which means delays in shipping times and increased costs for those buying the goods on board the ships. The increase in costs could have a knock-on effect on inflation, and cause it to rise.  

The US and UK have launched military strikes against the Houthis in recent weeks to ensure the safety of the ships passing through the shipping lane, but there's no clear end of the attacks in sight and, if the attacks continue, it could mean more pressure is applied to European economies, including the UK's.

When Will the Bank of England Cut Interest Rates?

This is the question on everybody's lips. Both businesses and consumers across the country are awaiting news on this issue as they deal with high costs and expensive borrowing. Although the fall in inflation in recent months has given some journalists reason to predict that interest rates will begin to fall too, it remains unclear when that might happen. 

The Bank of England is an independent organisation, so even if a cut in rates is wanted by the Government, it doesn't mean there will be one. It's not just inflation that the bank will be considering; they also have to assess things like the size of the workforce and the impact of supply chain challenges (as we're seeing in the Red Sea). 

The 1st day of February saw UK interest rates held at 5.25%, which is the fourth time in a row the Bank has held rates. The good news is that there wasn't another rise, and the Bank is now talking more positively about possible rate cuts in the summer, as inflation is predicted to fall to the target of 2% in the spring. 

Openreach Continues Rollout of New National VOIP System

Openreach, which is owned by BT, has announced the next areas across the UK where it will block the sale of analogue landline services. It has named 46 exchanges that cover roughly 344,000 premises, starting a 12-month countdown until traditional copper-based landlines are no longer available.

The announcement will encourage the adoption of new broadband-based landlines, which provide improved call quality and better protection against spam calls.

If your business has recently upgraded to a full-fibre broadband plan with your landline, it already uses the latest Voice Over IP (VoIP) technology. As such, there's no need to worry about the forthcoming deadline. If you're still on an old system though, you need to consider upgrading your system. 

Number of Companies Going Bust Hits 30-Year High

According to the latest figures, the number of companies that went bust in 2023 hit a 30-year high in England and Wales.  

Last year saw more than 25,000 company insolvencies registered, as firms struggled with rising costs and record-high interest rates. With customers being forced to squeeze their budgets, and businesses having to pay more to keep the lights on, it's meant a myriad of factors have pushed businesses over the edge and into insolvency. 

Some experts in the field have said this year could be yet another difficult one for UK businesses, and many business owners will be hoping the Bank of England cut interest rates soon. Still, other factors like the increase in national living wage could mean the hardship is here to stay for many.

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