More businesses will go bust because of the Budget, insolvency specialist Begbies Traynor is warning, saying Chancellor Rachel Reeves’ £25bn increase in employer National Insurance contributions (NICs) will “likely to extend the period of elevated insolvency levels” as bosses continue to face interest rates that could stay “higher for longer”. Begbies Traynor executive chairman Ric Traynor said: “Additional headwinds for UK business from increased employment costs and the prospect of higher for longer interest rates are likely to extend the period of elevated insolvency levels, increasing the need for advice and support from our insolvency and business recovery professionals.” Its own finances will suffer a £1. 5m hit because of the Budget, it said in a trading update, while reassuring investors it would still hit its full-year earnings expectations.

Meanwhile, Reeves’ Budget has pushed up mortgage costs, because the consensus is it is likely to increase or at least prevent a fall in inflation. Despite two cuts to interest rates by the BoE, a string of lenders, including Barclays, HSBC, NatWest and Nationwide, have increased the rates charged on new fixed deals in recent days, taking the average rate of a two-year fixed deal to 5.5%.  Analysts are also expecting UK inflation to have risen above the Bank of England’s 2% target in October: economists forecast the consumer price index (CPI) data, due out on Wednesday this week, to hit 2.2%, up from 1.7 per cent in September. Higher energy prices are expected to drive the increase. Last month, Ofgem put up the energy price cap for household bills by 9.5%.

Deutsche Bank has estimated that the hike to employers’ NICs in last month’s Budget could end up costing the economy over 100,000 jobs. “Higher employer NICs could further strain the labour market by around the turn of the year,” Sanjay Raja, the bank’s chief UK economist said, adding: “Ultimately, whether it’s through cutting existing payrolls or trimming hiring plans, the increase to NICs will hit employment/employment growth”. While these job losses will not happen all at once, there is likely to be a decline in “hiring and employment growth, with some firms adjusting more immediately to the increase in tax,” he warned. Alongside job losses, Raja further suggested that wage growth will be lower; prices slightly higher; and businesses will hold back from investment decisions. In last month’s Budget, Chancellor Rachel Reeves increased the amount employers have to pay in NICs by 1.2 per cent, and lowered the wage threshold at which employers must start paying the tax from £9,100 to £5,000.

The Association of Indoor Play, (AIP) which represents 1,100 firms including laser parks, leisure centres and “baby sensory” companies, is warning it faces a “severe financial crisis” because of the Chancellor’s Budget tax raids. Her fiscal plans threaten “the very core of our industry” and have put many indoor play centres “at risk,” the AIP said in a statement, because of the rising costs associated with increasing minimum wages, employers National Insurance contributions, and the reduction in business rates relief. Taken as a package, this threatens “the survival of many family-run businesses” still recovering from Covid-19, it said. Ken Lunn, director of Jack in the Box and finance director of the AIP, said the cost increase from the budget alone would erase 75 % of his firm’s net pre-tax profit, “leaving us with almost no capacity to reinvest.” “The government says it’s protecting working people, yet as a small business owner working 80 hours a week, I’m left questioning where I fit in,” he said.

Despite her Mansion House speech pledging to rip up red tape last week, Chancellor Rachel Reeves has written to City regulators and the Bank of England (BoE) to tell them they must do more to prioritise net zero policies, the Telegraph reports. The letters warn that “the climate and nature crisis is the greatest long-term global challenge that we face”. In her letter to BoE Governor Andrew Bailey, she said the bank’s Financial Policy Committee (FPC), which Bailey chairs, should “continue to regard the risks posed by climate change, including physical and transition risks, as relevant to its primary objective.” She also told the FPC to help turn the City into a hub of global climate finance: “The committee should also seek to support the following Government priorities: Leading the world in sustainable finance,” she wrote, adding: “The Government is committed to leading the world in sustainable finance by making the UK a global hub for green and transition finance activity, and delivering a world-leading sustainable finance regulatory framework. The Government will unlock the full potential of the financial services sector to fund the green transition.” Reeves has also updated the remit for the interest rate-setting Monetary Policy Committee to include more mentions of net zero and climate change. The Financial Conduct Authority is also under orders to “have regard” for the drive towards more sustainable finance.

Pensions’ Minister Emma Reynolds has slapped down demands by civil servants for a four-day working week, telling them we’re “not living in the 1970s”. Reynolds made the comment in an interview with Times Radio on Friday, in response to an article in The Times reporting that staff at the Department for Environment, Food and Rural Affairs (Defra) said a four-day week on full-time pay could save the Government £21.4m a year, by cutting staff turnover and sickness. The Public and Commercial Services (PCS) civil service union also claimed in a research document that working a four-day week was “essential for a happy and healthy life”. However, Reynolds was clear that “they won’t get one.” Questioned about the possible savings, Reynolds said: “I don’t believe them. I’m giving you some very clear answers.” She did, however, say she saw “benefit for those who want to have the flexibility to be able to work part time”. Civil servants at the Ministry of Housing, Communities and Local Government (MHCLG), the Office for National Statistics (ONS), the civilian Metropolitan Police staff, and Transport for London (TfL) are all involved in negotiations with their bosses over a shorter working week, City AM says.

US President Elect Donald Trump’s plans to impose tariffs on goods entering the US could cost the UK £20bn, according to the Centre for Economics and Business Research (CEBR). Trump has said he will levy tariffs of 60% on Chinese products sold to American businesses, and 20% tariffs on all other imports. If he goes ahead, the CEBR says, that will “pose challenges” for the British Government and reduce UK gross domestic product (GDP) by 0.9% by the end of the Trump administration, if the UK does not retaliate, equivalent to around £20bn, based on the size of the 2023 economy. The CEBR noted this scenario could be avoided with a UK-US trade deal, however on Saturday, The Times quoted Trump advisor Stephen Moore as warning that a trade deal with the UK would be of less interest to the US if Britain moved into closer alignment with the European Union. Both Prime Minister Sir Keir Starmer and BoE Governor Andrew Bailey said last week they wanted to forge closer ties with the EU on trade.

Lloyds Bank has been by law firm Courmacs Legal of “swamping” lawyers with post to stop them claiming compensation for drivers in the car finance mis-selling scandal. Courmacs Legal represents 1.3m consumers who are seeking compensation for mis-sold car loans, operating on a “no win, no fee” basis. The firm has told The Telegraph ii is receiving “tens of thousands” of legal letters every day from the bank’s finance arm, Black Horse, letters which other lenders send electronically. Courmacs Legal MD Darren Smith said: “We receive cages of post. We’ve gone from having the conventional post van that arrives at your house to a large transit van. “We now get our post delivered by a truck from the Post Office because they are trying to swamp us out with post.” Last week, he said, about 200,000 letters were received from Black Horse, at what he estimated to be a £250,000 cost in postage, envelope, printing and legal costs.  He claimed this is “clearly a tactic” to deter its lawyers from taking on new mis-selling cases because of how long it takes to physically open and file each letter. “It seems their mindset is: if we can swamp them out with post, well, that’ll keep them quiet,” he alleged. Smith also questioned how Black Horse’s decision to barrage clients with “a mountain of unnecessary paper” was consistent with Lloyds Banking Group’s green pledge to become a zero-waste firm by 2030. Lloyds has set aside £450m to cover potential compensation claims stemming from commission deals with car dealerships that were not disclosed to customers. It is believed to now be working with Courmacs Legal to find a way to send correspondence electronically. Meanwhile, the Blackburn-based law firm has invested in new machines to open and scan the letters, assign them to the correct file and notify the lawyer handling the case, the newspaper says.

HSBC is poised to sack hundreds of its top bankers, it is claimed by Bloomberg this morning.  Hundreds more managers will also be asked to reapply for their jobs in its newly formed corporate and institutional banking division, the news agency says.

Segro’s planned takeover of warehouse investor Tritax Eurobox has collapsed: the commercial property group has been outbid by Canadian asset manager Brookfield which will, however, sell around €470m (£392.5m) of former Tritax property assets to Segro.

Ryanair boss Michael O’Leary has called NATS, the UK’s air traffic control body, “hopeless” and called for its CEO to be sacked. His call comes after publication of a Civil Aviation Authority (CAA)report on Thursday into the air traffic control meltdown on 28^th August last year which led to 300,000 people having their flight cancelled and a further 400,000 affected by delays, 95,000 of whom were kept waiting at airports for more than three hours. The resulting backlog lasted a week. The CAA report outlined a litany of failures which led to and followed the technical glitch relating to a single Los Angeles to Paris flight which caused the meltdown, failures which O’Leary said proved Martin Rolfe was “overpaid and underperforming”. It took an engineer unable to resolve the issue while working from home three hours to arrive to sort out the problem, Johan Lundgren, the CEO of Easyjet, agreed the report made it clear that airlines and passengers were “severely let down by NATS due to its failure of resilience and lack of planning,” City AM said. “Airlines were then left picking up the pieces and costs which ran into millions,” he said, adding that a failure of this scale must “never be allowed to happen again.” In response to the report, Transport Secretary Louise Haigh said: “The NATS IT failure last year was an unprecedented event that we all hope never happens again, so I welcome the final report and its recommendations to strengthen the sector and restore passenger confidence. I’ve said before that I will be the passenger-in-chief and my priority is to ensure all passengers feel confident when they fly – that’s why my department will look to introduce reforms, when we can, to provide air travellers with the highest level of protection possible.” A NATS spokesman told the BBC: "We would like to apologise again for the inconvenience passengers suffered because of this very unusual technical incident. Our own internal investigation made 48 recommendations, most of which we have already implemented; these include improving our engagement with our airline and airport customers, our wider contingency and crisis response, and our engineering support processes. We fixed the specific issue that caused the problem last year as our first priority and it cannot reoccur."

A former Thomson Reuters business has lost a court battle with HMRC involving a £167m tax bill.  An entity of the London Stock Exchange Group (LSEG) was the subject of the hefty bill after it bought a data company from Swiss-based Thomson Reuters for $27bn (£19.3bn) in 2019. Previously known as Refintiv, the data unit’s name was changed to LSEG Data & Analytics. HMRC issued the bill after it decided to issue diverted profits tax (DPT) notices, a regime was introduced in 2015 to “address the situation where multi-national groups deploy arrangements to divert profits away from the UK to lower tax jurisdictions,” City AM explains. Thomson Reuters filed a judicial review against HMRC’s bill, arguing that the DPT notices were unlawful in public law terms. Last October, the Upper Tax Tribunal dismissed LSEG case, and Thompson Reuters took it to the Court of Appeal last month. However the Judges have now ruled there is no objection in public law to the relevant assessments to DPT raised by HMRC.

Hargreaves Lansdown (HL), the UK’s biggest retail investment platform, is being sued by more than 5,000 investors who claim it kept recommending Neil Woodford’s UK Equity Income Fund (WEIF) equity fund even as it ran into problems. Claims management firm RGL Management, which is working with law firm Wallace LLP, said the average individual claim was around £20,000, including interest. Hargreaves Lansdown declined to comment when approached by City AM. It rejected all of RGL’s claims in 2022 “for lack of a substantive basis of claim”. Almost 300,000 people invested in Woodford’s UK Equity Income Fund (WEIF) through Hargreaves Lansdown after it launched in 2014, accounting for £1.6bn of its total £3.7bn. The fund was frozen in June 2019 and closed in October 2019, leaving thousands of investors out of pocket.

Mike Ashley’s Frasers Group has again upped its stake in Boohoo. Despite the London AIM-listed online fashion firm making it clear it does not want Ashley to take charge, the Sports Direct and House of Fraser owner now has a 28% stake in the Manchester-headquartered group, which features brands such as Debenhams and Prettylittlething, up from 27%. The Boohoo has urged its shareholders to reject Mike Ashley’s demand to run the firm, saying billionaire is “not suitable” and subject to conflicts of interest due to his role at Frasers.

Meanwhile, Boohoo is under fire for re-using manufacturer GN Euro, which it axed amid a modern slavery scandal. A Telegraph investigation has established the Leicester-based clothing manufacturer is once again selling womenswear to Boohoo despite being “disengaged” in 2021 following allegations of poor working conditions and low pay at Boohoo factories. In all, Boohoo cut ties with more than 400 suppliers in a bid to restore faith in its supply chain following a Sunday Times investigation which discovered staff were being paid less than minimum wage. However, Boohoo insists that all the goods it now sources from GN Euro come from its factory in Tangier, Morocco, where it is trading under the name Euro Touch.  A spokesman said: “Boohoo is open and transparent about its entire supply base, with all our suppliers listed and regularly updated on the company’s website. We do not work with suppliers which cannot adhere to our highest standards... Every supplier signs our code of conduct, has a valid third-party social compliance audit and is visited regularly by our ethical teams on the ground for an audit.”

The Telegraph says it has learned that a second consortium of investors has written to the board of Guardian Media Group (GMG) expressing an interest in acquiring The Observer. However, the newspaper also says the identity of the new bidders remained unclear over the weekend, although they are believed to be a UK-based consortium. A separate group of wealthy Labour party figures has already written to GMG about a potential approach. Staff at the Guardian are threatening to go on strike if the Observer is sold to loss-making media startup Tortoise Media, which was founded by former BBC News boss James Harding,.

Pharmaceutical and biotech stocks slumped worldwide last week in response to US President elect Donald Trump appointing Robert F Kennedy Jr to head up the US Department of Health and Human Services (HHS). Kennedy has been a vocal critic of the drug industry, and has been especially critical of covid vaccines, hence why US vaccine makers Pfizer, Moderna and BioNTech have been particularly badly hit: Pfizer dropped 2.62% on Thursday and 4.69% on Friday; Moderna was down 7.1% and 3.53%. In the UK, GSK was down 3.88% at close onm Friday, while AstraZeneca was 3.05% off. Hardest hit was Denmark's Bavarian Nordic, a maker of smallpox and mpox vaccines, which had plunged 17.43% by close on Friday. Explaining his decision, Trump said on X: “For too long, Americans have been crushed by the industrial food complex and drug companies who have engaged in deception, misinformation, and disinformation when it comes to Public Health. The Safety and Health of all Americans is the most important role of any Administration, and HHS will play a big role in helping ensure that everybody will be protected from harmful chemicals, pollutants, pesticides, pharmaceutical products, and food additives that have contributed to the overwhelming Health Crisis in this Country. Mr. Kennedy will restore these Agencies to the traditions of Gold Standard Scientific Research, and beacons of Transparency, to end the Chronic Disease epidemic, and to Make America Great and Healthy Again!”

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