Investment expert: PM faces an unenviable challenge

Most of the people we meet say “I never expected my business to fail” or “I did not consider the consequences of insolvency” when making a particular business decision.

Cashflow is difficult for many businesses to manage and maintain, especially during these challenging and uncertain times and so some business owners may consider providing an unsecured loan to their company to help.

If you are considering providing a loan to your limited company or limited liability partnership, the bestcase scenario is that your loan will be repaid by an agreed date in the future in accordance with any agreed repayment terms. However, the worst-case scenario is that your business fails and enters into an insolvency process, meaning that any unsecured loan will not be repaid in full or at all.

This is why it is important to plan and make decisions with the worst-case scenario in mind in order to try to mitigate potential future losses.

A number of directors whom we have advised have loaned considerable amounts to their business - and in some cases, their life savings. However, if that business subsequently fails and enters into an insolvency process, the loan, unless secured in some way, will be considered an unsecured debt and the director will be classed an unsecured creditor. In that scenario, after the costs of an insolvency process, and depending on level of secured and preferential creditors, unsecured creditors usually receive little or no return.

There are ways to protect a new loan. A charge over the assets can be registered, which is what most financial institutions will do when providing a loan or overdraft facility, or assets can be purchased providing that market value is paid. However, if there is any uncertainty about whether or not a business is solvent, before providing a loan and considering security, seek professional insolvency advice from BRI in order to ensure that the correct steps are followed to avoid any criticism or risk.

Hope for the best... but plan for the worst

In times of uncertainty it is the only sensible course of action, says Lauren Auburn, director at business recovery specialist BRI.

Lauren Auburn

n The team at BRI are happy to provide free, confidential advice and guidance. To find out more, call 01604 754352.

Revive an ailing economy:

After six long weeks of campaigning, the Conservative leadership battle culminated in Liz Truss being appointed as the UK’s Prime Minister. While there was no shortage of candidates vying to succeed her predecessor Boris Johnson, the new PM is now tasked with the unenviable undertaking of reviving the UK’s ailing economy.

Facing soaring inflation and a looming economic recession, OCM Wealth Management’s deputy chief investment officer Gina Stone assesses the potential impact that the policies of Number 10’s newest resident will have on the UK economy.

Plans to tackle the UK’s ongoing cost of living crisis remained the focal point throughout the campaigning process, as the UK consumer faces the deepest living standards squeeze for 60 years. Liz Truss’s campaign centred around a significant fiscal policy support package thought to contain tax cuts, handouts to those on lower incomes and a freeze in utility costs.

In her first week as Prime Minister, Truss announced a package worth £130 billion for households to supersede the Ofgem energy price cap raise in October, capping prices at £2,500 per household for the next two years - £1,000 below the expected increase and halving the forecasted £5,000 rise expected next year as natural gas prices continue to soar.

For businesses, a further £40 billion has been pledged to cap prices. As a result, economists have been quick to Liz Truss: The new Prime Minister’s measures must prioritise control of inflation

revise down their expectations for peak UK inflation.

As a key driving force behind soaring headline inflation in the UK, the latest cap on energy prices has reduced peak inflation expectations to between ten and 11 per cent, down from the 14 per cent previously forecast. A lower headline inflation figure is expected to support growth and reduce some of the pressures on consumers and businesses in the near term.

While the measures are

Money Matters New Prime Minister faces an unenviable challenge

Gina Stone

‘So far we are encouraged by the early actions of the Truss government’

unlikely to be enough to see the UK avoid a recession, they are expected to limit the depth of the recession, allowing the UK economy to recover at a faster pace than previously anticipated. As I write, Truss is yet to announce more detailed plans to stimulate the economy through this challenging period and the devil will be in the detail. However, it is clear that measures must be carefully targeted to avoid stoking inflation.

With UK debt levels recently crossing 100 per cent of GDP following stimulus throughout the pandemic, concerns are being raised as to how the new PM’s plans will be funded.

The PM has ruled out a

Elsby & Co partners Leona Bateman and Claire Emery (right) flanked by Bill Warfield and Rita Bull

Accountancy firm completes acquisition

Business advice firm Elsby & Co has completed its acquisition of chartered accountancy practice The RJB Partnership.

As part of the deal, RJB partners Bill Warfield and Rita Bull and most of the existing staff have moved to Elsby & Co’s office in Rushden. The current RJB office in the town have been retained and have helped Elsby to manage their expansion, with the office now fully rebranded and housing the Elsby payroll team.

Elsby & Co partner Claire Emery stressed the importance of the shared values and the opportunities the deal is likely to create. “It came about quite by chance, following a meeting with Bill in our Rushden office,” she said.

“It was warming to find the owner of

another local practice who shared our values of going the extra mile for our clients and our people. I have no doubt our expertise and range of complimentary services will add further value to the clients of RJB.” The purchase of The RJB Partnership is one of a series of small acquisitions made by Elsby in the past few years. “Acquisitions are a key element of our five-year plan and have been made possible by building a business and brand that is recognised and respected by clients and the local business community,” said Ms Emery. “We continue to be acquisitive and remain open to discussions with those who share our values and where opportunities in accounting or complimentary product areas can add value to stakeholders, our clients being the most important of all.”

To feature or comment email: news@business-times.co.uk

OUR VIEW: OCM WEALTH MANAGEMENT

Opportunities will come... just give it some time

From an investment perspective, headwinds clearly remain for the UK economy in the near term, with quick action required to address the cost of living squeeze and targeted measures to revive economic growth while keeping a close eye on inflationary pressures.

So far, we are encouraged by the early actions of the Truss government, contributing to a cautiously optimistic approach on the medium- to long-term outlook for UK equities.

Overall, despite rising interest rates remaining a headwind for markets in the short term, it is our view that following a rerating of risks, UK assets are becoming more attractive, with opportunities arising as the medium- to long-term outlook improves.

further windfall tax on energy company profits, stating that this would go against her government’s plans to spur investment in growth. Instead, the plans look to be funded by further borrowing, which, although is acceptable during a crisis, suggests that some fiscal discipline will be required in the longer term, tempering the UK’s growth expectations for 2023 and onwards.

Another key issue which must be considered if the UK is to revive its growth hopes in the future is the nation’s productivity issue, with ONS data observing UK productivity figures among the lowest of the G7 owing to years of low investment.

The PM has campaigned to spur economic growth by a variety of tax cuts to promote investment in technology and business. As the nearterm focus remains on the immediate cost of living crisis, there has been little development on Truss’s proposed tax cuts at this stage.

However, as it is currently understood, the Prime Minister may look to reverse the National Insurance hike that took effect this year, as well as next year’s planned Corporation Tax hike in a bid to stimulate investment. It has also been reported that the PM may be looking into research and development tax incentives to encourage growth in the years ahead.

n Gina Stone is deputy chief investment officer at OCM Wealth Management in Northampton. www.ocmwealthmanagement. co.uk

LOOKING FOR HELP WITH ACCOUNTING SOFTWARE?

Moore can help you choose the right cloud or desktop accounting software package for your business. We will guide you through the set up process and can provide training and ongoing support as and when you need it. We are Sage, Xero and QuickBooks accredited.

www.moore.co.uk