It is not yet clear whether Jeremy Hunt will extend domestic energy support beyond the end of March but we are not as worried about this as we have previously been.
A mild winter across Europe has meant lower than expected demand which has led to wholesale gas prices falling significantly to circa 30% of their high last August. This means that most households should benefit from lower tariffs than previously forecast. We absolutely accept that these will still be high but not as bad as they might have been had we had a harsh winter and, frankly, we will grab at any straw of hope! Combine this with the fact that we are heading into spring, and hopefully will have less need for heating, should mean reduced pressure on household finances.
Government finances will also be better off in the short term due to the tax receipts on the record profits generated by the oil companies and the fact that the cost of the EPG for 2023/24 will be significantly lower than previously forecast by the OBR.
We are surprised that there was such relief in the latest GDP numbers showing that we are still avoiding a recession. Obviously zero growth is better than a recession but the fact is that an economy that isn’t growing is stagnating which is absolutely nothing to be happy about. We are also concerned about the impact the impending corporation tax increase from 19% to 25% will have on UK Plc. Why our government thinks that a stagnating economy fighting to recover from a global pandemic is capable of financing a significantly increased tax charge is beyond our comprehension.
With this in mind we were overjoyed to read comments from MPC member Silvana Tenreyro who, giving evidence to the Treasury Select committee, said that rates were “too high”, that policy was “already too tight” and that unless another big shock happened, “the fall in inflation is pretty much guaranteed”. Finally we have someone sharing our view! Her comments could not have been better timed, coming as they did just a few days before the latest inflation data was announced showing a fall from 10.5% to 10.1% in January.
Whilst Silvana is only one vote on the MPC hopefully, with the help of the other dove Swati Dhingra, the committee will look at the latest inflation numbers and wake up to what life is like for the great majority of us.
As we have said many times before – and will continue to say – we urge company directors worrying about their finances to seek professional advice.
If you are involved with, or know of any business or individuals that are struggling financially we suggest that you talk to us.
The directors of SKSi look at a formal insolvency process as the last resort – not the first. It is their long-held belief – borne out with proven experience – that seeking advice at the first sign of financial pressures will lead to a more favourable outcome. Conversely, doing nothing and hoping the problem will go away is far more likely to lead to a c all form the bank and an insolvency process.
We are always available for an initial zero cost assessment which can be arranged by contacting Alistair Dickson.