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Compliance costs rise THE cost of compliance continues to soar for small firms, a report claimed today. The study by the Forum of Private Business said that despite government promises to reduce the amount of time and money businesses spend on compliance, the average SME in 2013 pays substantially more than two years ago. It put the cost of compliance at more than £18.2bn – an increase of 8.5% compared to 2011. The research also showed firms are paying 11% more to external providers of payroll and tax support compared with two years ago. The Forum said this was most likely due to the introduction of Real Time Information (RTI) – a new HMRC payroll process introduced in April which all firms with employees have to use. Taxation compliance remained the single biggest outlay for small firms, followed by employment law, with health and safety third. Forum policy adviser Robert Downes said: “Our research shows little has changed in terms of what’s costing small business the most for compliance costs. “The stand-out surprise though has to be the huge increase in spend on external contractors.”
KIRKLEES BUSINESS NEWS
Markets ready for more challenges
UNE proved to be a challenJ ging month for virtually all asset classes.
The key driver of asset prices over the last few weeks (and arguably over the last four years) has been the US Federal Reserve. Perhaps earlier than anticipated by financial markets, the US Central Bank have indicated that the end of Quantitative Easing (QE) could now be in sight, with a winding down of the programme expected to begin later this year and complete cessation potentially due by the middle of 2014. Given that QE has been so successful in inflating nearly all asset prices – from equities to bonds to commodities – it should perhaps have come as no surprise that the prospect of QE ending should lead to a simultaneous fall across all asset markets. We would highlight that the Emerging Markets, for so long the destination of cheap money from the West, have particularly suffered. The Bank of England’s QE programme is currently on hold, although the appointment of Mark Carney as the new Central Bank Governor brings some hope of easier monetary policy going forwards. The potential impact of further QE and the newly modified Funding for
CITY TALK Nick Gartland
Lending scheme (which involves lending money to financial institutions at very competitive rates for specified lending) may, however, be somewhat limited, given that demand for credit remains subdued – total bank lending fell in Q1 for the second consecutive quarter. Developments in China over the last month have been an added concern for investors. Interbank lending rates have risen significantly (although they are currently some way off their highs), in what appears to have been a policy engineered by the ruling authorities to stamp down on excessive credit growth. Although fears of a debt crisis emerging may be overdone, a message has been sent by the Chinese authorities that they are clearly committed to rebalancing and restructuring the economic and financial system, at the expense of near
Nick Gartland, Senior Financial Planning Director, Investec Wealth & Investment
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term growth. Meanwhile, Europe has ensured that it has not remained too far away from the headlines. The ruling coalition in Greece has fractured and political risk in Italy remains high. The economy has now suffered six consecutive quarters of contraction, bank credit continues to decline and unemployment is at a record high. The recent increase in US Treasury yields has also fed through into European bond markets, particularly those in the periphery. After a strong run, the prospect of diminishing monetary support in the US and heightened uncertainty in China are likely to make near-term i nve s t m e n t m a rke t s d i ff i c u l t . However, we do not think that a policy mistake is likely in the US or indeed China. Weak commodity prices and the normal “summer lull”
in an already uninspiring Europe may increase the challenges in the near-term, but as we head into the end of the year, the growth picture should become more positive with diminishing fiscal headwinds, reducing the negative weight on global growth from Europe in 2014. The months ahead will also present a number of political obstacles, including the debt ceiling debate in the US, a decision on Greece’s finance position and national polls in Germany. The situation in Japan also requires close monitoring, given that the Bank of Japan has also recently embarked on its own extensive QE programme. Happily, the corporate sector appears to be in a fairly strong financial position, with record amounts of cash to deploy through M&A and investment. Q2 earnings season will be crucial to assess whether current valuations are justified and whether corporates can continue to deliver profits growth in what remains a difficult global economic environment. Provided that they can, we are optimistic that so called “risk assets” can stage a recovery over the long-term investment horizon and successfully navigate through the various obstacles in their path.
Vigilance is the key RISKY BUSINESS Mark Weeks
HE number of workers killed in BriT tain last year has fallen, official statistics show.
Provisional data released by the Health and Safety Executive (HSE) reveals that 148 workers were fatally injured between April, 2012, and March, 2013, compared with 172 in the previous year. The overall rate of fatal injury has dropped to 0.5 per 100,000 workers, below the five-year average of 0.6. Britain has had one of the lowest rates of fatal injuries to workers in leading industrial nations in Europe consistently for the last eight years. While this fall is obviously positive news, it’s important to recognise that 148 workers still lost their lives last year which highlights the need for companies to continue to take a
proactive approach to risk management and safety, particularly in high risk industries. The statistics show that 39 construction workers were fatally injured last year, nine fewer than the previous 12 months. However, as highlighted in our previous column, in recent inspections one in five construction sites received enforcement action from the HSE after failing safety checks – showing that companies can still do more to ensure the safety of their employees. At Wilby Risk Management, we specialise in providing health and safety assistance and guidance to businesses in the construction industry and can provide services from risk assessments to construction health and safety management systems to CDM co-ordinator services.
Mark Weeks is a risk management consultant at Wilby Ltd
Firms are in a sunny mood BUSINESS confidence has hit a 13-month high, according to a report. The latest Optimism Index from accountancy firm BDO, which predicts business
performance two quarters ahead, rose for the fifth month running to 94.3 in June from 93.6 in May – the highest since May, 2012. Optimism in the services
sector, which makes up roughly 75% of the economy, was particularly strong and moved up to 95.5 – above the crucial 95.0 mark that indicates growth.