UK Interest Rates Fall in March

The UK economic recovery seems to be gaining momentum at the moment, as this month that rate of UK inflation fell. What does this mean for those of you are there who are thinking of putting your business up for sale right now?

Inflation is the rate that consumer prices for goods and services goes up against real wage rises. If there’s a rise in inflation, it means that customers have less purchasing power. A fall, therefore is advantageous to the business community, as it means that customers have more purchasing power to the pound, stimulating spending.

The Rate of Inflation

So what does this latest fall in the rate of inflation mean and what are the specifics? According to the Office of National Statistics (ONS), UK inflation, as measured on the Consumer Price Index, slipped from 1.7% in February to 1.6% in March.

This figure actually further establishes an ongoing statistical trend running through UK inflation right now; it’s fallen for the third month in a row. Furthermore, inflation is sitting well below the Bank of England’s 2% target and it has done so for some time.

This latest Consumer Price Index figure is the lowest recorded since October 2009 and it isn’t the only inflation news coming through right now, as the nation’s other significant measure of inflation, the Retail Price Index, slipped from 2.7% to 2.5%.

Specifically, experts are suggesting that the biggest reason for the fall of inflation across the board came from petrol prices. They actually (and quite unusually for petrol) stayed level between February and March. In contrast they rose 2.2p per litre the month before.

However Petrol Prices weren’t the only reason that inflation fell across the country, clothing prices also contributed and so did food prices. So what does this mean the business sales industry?

What This Means at RTA Business

Because this is the sixth consecutive time inflation rates have fallen rather than risen, the gap spanning average wage growth (they rose by 1.4% in three months to January) and price rises for consumer goods continues to shrink, it means that consumer purchasing power has strengthened.

That’s really good news if you’re looking to sell your business right now. This is because if consumers are spending more, there’s more money to go around. It means not only that you are earning more, which makes your business look more attractive to a potential buyer, but that this buyer is more likely going to want to expand their business by buying yours. RTA Business knows now is a good time to sell.

UK Growth Largest of the G7 in 2014

The International Monetary Fund (IMF) recently made British business owners week as they announced that of the G7 countries, the UK is set to record the largest rate of economic growth over the current year. What are the obvious benefits for those people looking to sell their business?

It’s no secret that we’re in the middle of an economic recovery; in fact at this point, it’s practically gospel truth. Every set of data we’re presented with right now, whether it be about manufacturing, business confidence, the property market, GDP etc. is positive and most financial experts have suggested that by summer 2014, we’ll be recording pre-recession levels of growth.

However these latest figures hammer home just how strong the UK is right now in relation to everybody else, and this means that if you’re looking to sell your business to an international buyer, then there is never a better time to do so. Let the RTA Business Consultants blog break it down for you.

The G7 countries are the world’s seven most wealthy economies. Between them they hold 63% ($241 trillion) of global net wealth. The countries are the UK, the US (the world’s largest economy), Canada, Japan, France, Germany and Italy.

The fact that the UK is forecasted to grow more than any of the world’s other wealthiest nations, especially the US, is a testament in and of itself to the power of British industry right now. The numbers speak for themselves here.

According to the IMF, the UK economy is set to grow by 2.9% this year. This figure has been revised form the initial prediction the Fund made in January. At that time they predicted that the UK economy would grow by 2.4%. It also predicted that the UK economy would grow by 2.5% in 2015.

In contrast, the IMF said that the US economy will grow by 2.8% over the current year and that the Canadian economy will grow by 2.3%. Basically, at this point there is more potential for expansion in the UK economy than anywhere else. Potential for expansion will make your business look very attractive to international buyers dealing with less favourable circumstances.

Finally, the IMF predicted that the global economy is set to grow by 3.6% this year and an impressive 3.9% next year. Again, at RTA Business, we see this as good news for people looking to sell their business. Basically, more global economic growth means more money to go around meaning more people will be looking to buy.

At RTA Business, we recognise that the writing really is on the wall here. If you are looking to sell your business there really has never been a better time to do so. 

Small Business Lending Scheme: Just What Your Business Needs?

Growing a business with the intention to eventually sell it off is a complex process and one of the most difficult parts of that process is raising the capital to get it off the ground. That may no longer be a concern if a new small business lending scheme comes to fruition.

This week officials representing the UK government have announced the creation of a new scheme that will offer to share the financial cost of losses on some small businesses loans. This scheme will take place through a concerted effort to convince banks to lend more to these borrowers.

This scheme has been designed to facilitate the growth of the small business sector – a pivotal part of UK industry – which would in turn boost economic growth, which would benefit everybody. It’s the brainchild of the British Business Bank.

The British Business Bank was launched last year by the Conservative led coalition government and since its creation it has focused efforts on improving lending rates to small and medium sized businesses, a sector of the market that has found it difficult to generally secure lines of credit in the wake of the economic crash. This is seen as the latest attempt to do so.

Marketed as a pilot “wholesale guarantee” scheme, the plan would offer a government backed assurance to lenders that would act to cover the burden of a degree of net credit losses they build up on their SME portfolio.

The government’s goal here is to lessen the amount of capital lenders have to hold against their SME loans, so they can provide loans to small and medium sized businesses in a way that will cost them less. Naturally this has been put in place so that banks are more willing to lend to those businesses, which will give said businesses funds to use to expand, which will in turn inspire economic growth.

Reinald de Monchy, managing director for wholesale solutions at the Business Bank said of the scheme that: “Our aim is to incentivise new SME lending by making it a more capital efficient activity for regulated banks, thereby enhancing its commercial attractiveness.” 

The potential benefits for business sales ere are obvious. It will be easier to secure a loan for a small business with this policy, which will make it easier to grow. This in turn will make your business look more attractive to potential buyers when the time is right to sell. At RTA Business we believe this will have positive effects for those who eventually want to sell their businesses. 

SSE Energy Prices Freeze Until 2016

Major energy firm SSE announced this week that it’s freezing energy prices until 2016. A big move by any measure of the imagination, it’s a move that could benefit businesses up and down the country that have their energy supplied by SSE.

Last year as a result of Labour leader Ed Miliband swearing to impose a 20 month energy price freeze should his party sweep next year’s election, the big six energy companies came under fire for just how high they were raising prices.

The amount of press it got last year was astounding, and future estimates showed that it somewhat hurt profit margins as customers abandoned the big suppliers in droves heading to smaller rivals for their energy needs.

It looks like SSE has now addressed this concern as they have come out saying this week that they have decided to freeze energy prices until 2016. It’s a move that been hailed by the company and customers alike.

Representatives of SSE said that the move, even though it would lower profit margins in the short term, would streamline its service to cover the shortfall, another move that is likely to benefit customers in the long term.

Streamlining plans are already under way and the energy company announced that among those plans will by the axing of 500 jobs across the board and the development of at least three offshore wind farm projects to promote greener energy. The company predicts that these plans will save them at least £100 million, which they can then pass on to customers.

Despite criticism from industry rivals, SSE chief executive Alistair Phillips-Davies hit back, saying that "delivering the lowest possible energy prices" to customers was "central to everything we do". He further claimed that "we're looking to do whatever we can to bring down prices for consumers."

He also called the government to remove energy taxes out of bills and collect them through general taxation instead. This is most likely a reference to ECO Funding, a green energy initiative that the government funds through the taxation of the major energy companies.

This is bound to have an effect on any business that gets their energy from SSE, lowering bills significantly considering the amount of energy used on a daily basis. It’s also likely that it will further boost the recovery UK economy, which will have benefits for businesses across the board.

This money can then be fed into ensuring the company is primed and ready to sell when the time is right. At RTA Business Consultants, we believe that this could help you sell your business.

A Stabilisation: The UK Unemployment Rate Holds Steady

The latest employment figures from the Office of National Statistics (ONS) have revealed that the UK unemployment rate has held steady at 7.2%. What do these figures indicate about the business sales industry and how might they effect it going forward?

According to the national statistics agency, the national unemployment rate has slipped even further, falling to 7.2% from 7.4% a few months ago. This means that the rate has generally held steady with some decreases since the ONS last discussed unemployment figures.

Specifically, the number of those in this country who are now in full time employment rose to 30.19 million; this is a record total for national employment figures. The unemployment rate fell by roughly 63,000 and now stands at 2.33 million people in the UK.

This isn’t the only good news for the UK economy coming from the ONS this week, as the agency revealed that there has been a rise in average earnings. Pay in the three months up to January 2014 was up, on average by 1.4% from the same time the previous year.

When honing in on one of the country’s major employment issues, young people, there was also good news this week from the ONS. The agency revealed that the number of unemployed people between the ages of 16 and 24 measured 912,000 in the quarter to January; this is a fall of 29,000 and brings the total number to the lowest recorded since January 2011.

The BBC reported Employment Minister Esther McVey talking on what these figures mean. McVey pointed out that "the growing economy is helping record numbers of people to find a job".

McVey went on to elaborate, saying that: "The rise in employment is being fuelled by businesses and entrepreneurs across the country who are feeling increasingly confident with the improving economy." Furthermore, these figures will inspire further confidence in the economy from business leaders, which will lower unemployment even further; it’s cyclical.

As far as the business sales industry goes, RTABusiness sees several relevant points from these figures. First, they act as an indicator of how strong the business sector is right now; they are further proof that it is a good time to sell your business as buyers are looking to expand.

They also illustrate the fact that unemployment is proving less of a drain on the national economy; which will in turn benefit businesses and give them another reason to expand and gives those looking to sell more resources to utilise to make their business more attractive to potential buyers. It’s a good time for the business acquisition industry. 

Summer Should Signal Pre-Recession Levels for UK Economy

Experts across the nation have told everybody this week that by the summer the UK economy should be back to pre-recession levels. At the RTA Business blog we ask what exactly this means and what it could mean for the business sales industry.

Business lobby group The British Chamber of Commerce (BCC) has gone on record this week stating that the overall size of the UK economy will return to pre-recession levels by the time we hit the summer. Specifically, they said that the largest measure of economic size, GDP, will exceed the level it was measured at when 2008 began, before the financial crash.

The BCC has now actually upgraded its economic growth forecast for the UK economy for 2014. Whilst it originally stood at 2.7%, it has now risen to 2.8% on the back of a slew of strong data about the trajectory of UK business.

Furthermore the BCC has predicted a strong year for the finance industry in 2015. They have upgraded their 2015 growth forecast from 2.4% to 2.5% and have also predicted that the end of 2015 will see the end of the Bank of England scrap their policy of keeping interest rates unusually low. The BCC predicts that the Bank will raise interest rates from 0.5% to 0.75%.

BCC director general John Longworth commented on these figures. Longworth said that "our economic recovery is gaining momentum." He then elaborated by saying that: "Businesses across the UK are expanding and creating jobs, and our increasingly sunny predictions for growth are a testament to their drive and ambition."

It’s also notable that back in December, when the BCC made its original forecasts on UK growth, they said that the nation would reach pre-recession levels of growth by autumn; now they’re saying it’ll be by summer.

However it’s not all good news. The BCC also warned of unacceptably high levels of youth unemployment. Longworth said in the  issue that: "We urge the chancellor to use this month's Budget wisely by incentivising businesses to hire young people so that the next generation of workers are not left behind."

So it’s quite clear from these figures that the economy is only set to expand in 2014; this in turn will help businesses grow which can only benefit the business acquisition industry. More business owners will be looking to buy due to stronger economic prospects, and those looking to sell will be in a better position to do so. It really might be a record summer this year in the UK!

UK Service Sector Holds Steady

Reports released this week suggest that the UK service sector has continued to expand by strong margins in the second month of 2014. Considering the role the service sector holds in the overall national economy, what could these figures mean for the business sales industry?

The numbers were strong; the Markit/CIPS Purchasing Managers Index (PMI), the primary source for measuring real economic activity in the UK, for the industry held at 58.2. This was slightly down from the 58.3 figure for January.

However when you consider the fact that anything above 50 on the scale means that the sector has expanded, we see that the service sector is still in growth mode. Furthermore the Markit Survey concluded that confidence in general economic outlook for the nation was at its strongest since September 2009, the height of the recession. It has been growing for the past four months.

The survey was part of a slew of surveys regularly conducted by market experts over the progress of both the service and manufacturing sectors. This month figure generally pointed towards a trend of the service sector outperforming the manufacturing sector. In fact experts have used this to suggest that the service sector is the main driver of British economic growth.

Chris Williamson, Markit's chief economist spoke on the issue. William said that “alongside vibrant growth in manufacturing and construction, the upbeat picture of the services economy points to the country enjoying another quarter of robust economic growth of approximately 0.7%." 

Williamson expanded on this point, explaining that "there's no end in sight to the good news: with business confidence in the services economy rising further in February, growth should pick up again in March, adding conviction to the growing consensus that the economy is set for its best year of growth since 2007, with the rate easily surpassing the 1.8% expansion seen last year."

 So it’s clear here that growing confidence from business leaders is enabling expansion in the service sector. This is further evidenced by the fact that expansion in the sector has resulted in its strongest levels of new staff hire since October last year. Markit has made it clear that it sees these figures as further proof that the British economy is now in sustained recovery.

At RTA Business, this not only assures us that business leaders are ready to aid growth, meaning that they are more likely to look at acquiring new business, but that this activity will be particularly heightened in Britain’s booming service industry.