Company insolvencies rise across England and Wales; interest rate cuts less likely after UK pay growth accelerates – business live
Bank of England interest rate cuts now less likely
City traders are scrambling to readjust their expectations for UK interest rate cuts, following this morning’s acceleration in UK wage growth.
The money markets now indicate there’s just a 7% chance that the Bank of England cuts interest rates on Thursday, down from around 15% yesterday.
The markets no longer expect three cuts next year either. Bank rate, which is currently 4.75%, is now seen falling to around 4.1% in December 2025, meaning only two quarter-point rate cuts are fully priced in.
Yesterday it was expected to fall nearer to 4%, which had implied three quarter-point rate cuts next year.
UK RATE FUTURES POINT TO ABOUT 61 BASIS POINTS OF BANK OF ENGLAND RATE CUTS BY END OF 2025 VS 69 BPS BEFORE UK LABOUR MARKET DATA
— First Squawk (@FirstSquawk) December 17, 2024
Ashley Webb, UK economist at Capital Economics, says today’s wage data will do little to shift the Bank’s focus away from worrying about high inflation, explaining:
The increase in regular private sector pay growth in October will increase the Bank of England’s concerns about a resurgence in inflation despite the weak news on activity.
Key events
Here’s Benjamin Wiles, UK Head of Restructuring at Kroll, on today’s insolvency statistics:
“In terms of company administrations, while our data shows we expect to see a small increase compared to last year, what today’s figures don’t reflect is a bigger pick up in restructuring activity. There of course are many companies experiencing distress, where an insolvency is the only way to save the business. However, I’d say the majority of companies we have advised have come away with a solvent solution. Whether that’s refinancing, restructuring debt or capital injections.
“Following the Budget, there is understandable interest in sectors like hospitality, leisure and care homes. The new measures won’t take effect until the Spring, so it’s unlikely we will see an immediate uptick in insolvencies post-Christmas, however, these businesses are beginning to plan now in anticipation.”
There was also an increase in personal insolvencies last month, highlighting the financial pressure on households.
The Insolvency Service reports that 10,012 individuals entered insolvency in England and Wales in November 2024. This was 12% higher than in October 2024 and 25% higher than in November 2023.
Here’s a chart showing how company insolvencies in England and Wales rose last month, but were lower than a year ago:
Barclays car finance appeal fails
Anna Isaac
Barclays has lost a key court appeal which could have ramifications for the wider car finance sector.
It comes after the supreme court granted permission for two car lenders to appeal against a separate landmark ruling on motor finance commission payments that left firms fearing a potential £30bn compensation bill last week.
Tuesday’s decision to uphold a ruling that Barclays did not treat a customer fairly when she was sold a used-car could inform future decisions on complaints about car loans, lawyers have claimed.
Company insolvencies rise across England and Wales
A worrying rise in companies collapsing last month shows that many UK firms were in a “perilous” position as 2024 drew to an end.
New data from the Insolvency Service this morning shows there was a 13% increase in registered company insolvencies in England and Wales in November, to 1,966.
That may intensify concerns that the economy is weakening, following data yesterday showing firms are cutting staff this month.
On an annual basis, though, that’s 12% lower than in November 2023 when 2,243 firms went under.
The Insolvency Service reports that there were 254 compulsory liquidations last month, plus 1,565 creditors’ voluntary liquidations (CVLs), 132 administrations, 14 company voluntary arrangements (CVAs) and one receivership appointment.
David Hudson, restructuring advisory partner at business advisory firm FRP, says:
“Despite a year-on-year fall, a shorter-term ramping up of insolvencies amid the festive season is a stark reminder of the perilous financial position many firms find themselves in.
“Insolvency levels have remained high throughout the course of the year and, despite improving economic conditions – including lower levels of inflation and rate cuts – we anticipate them remaining so in 2025 as firms continue to carry unsustainable levels of debt.
“Increased National Insurance contributions will add to firms’ costs next year, and businesses in consumer-led sectors like retail, leisure and hospitality are likely to be at risk should Christmas trading prove underwhelming.
“The volume of administration processes – which are more likely to involve large employers than general company winding ups, and have been in flux in recent months – will be an important barometer of business health over the next 12 months.”
The economic picture in Germany remains grim this morning.
German business expectations sank in December, according to new data from the Ifo institute.
Ifo’s measure of economic expectations in Germany has fallen to 84.4 from 87, worse than expected.
Ifo president Clemens Fuest told Bloomberg TV that the next German government must prioritise economic growth, warning:
“This weakness in the German economy is becoming chronic.”
The data shows that German businesses have become more worried about the country’s growth outlook, explains Carsten Brzeski of ING, who told clients:
The only good thing about Germany’s just-released Ifo index is that it is the final major macro indicator released this year.
Time to take a breather and to end a year that will go down as the second consecutive year of economic stagnation. Even worse, on average, the German economy has been in stagnation since 2020 and is currently hardly any larger than at the start of the pandemic.
A rescue deal for Harland & Wolff, the Belfast-based shipbuilder that produced the Titanic, could come this week – three months after it collapsed into administration.
Sky News’s Mark Kleinman is reporting that Spanish state-owned shipbuilder Navantia could announce an agreement last this week, saving over 1,000 jobs.
Exclusive: The stricken Titanic shipbuilder Harland & Wolff is close to being rescued by Spain’s Navantia in a deal worth a headline price of about £70m; a deal could be announced as soon as Thursday, and will include a guarantee to preserve more than 1000 UK jobs. More soon.
— Mark Kleinman (@MarkKleinmanSky) December 17, 2024
Navantia and Harland & Wolff were recently awarded a £1.6bn contract to build three Navy support ships at H&W’s Belfast yard for the UK government.
This morning’s UK jobs report shows a 173,000 increase in people in work, in the August-October quarter, to 33.77 million, putting the employment rate at 74.9%.
But unemployment rose too, by 31,000, to 1.508m people.
The number of 16 to 64 year olds economically inactive dipped by 67,000, to 9.337m.
Stephen Evans, chief executive of Learning and Work Institute, say:
On most measures the labour market looks flat, with employment little changed and vacancies down. Employment growth seems to have driven most by rises in health and social care, with the latest HMRC data showing falls in sectors like hospitality. This suggests an underlying weakness in the economy.
Progress toward the Government’s 80% employment rate target depends on getting the economy going and providing more help for people outside the labour market to find jobs.
The Resolution Foundation have analysed today’s UK labour force data, and concluded that the jobs market continues to cool amidst a wider economic slowdown.
Hannah Slaughter, senior economist at the Resolution Foundation, says:
The number of people in work is starting to fall, and business confidence is weak.
“But there are also signs of resilience. Firms are still hiring at a respectable rate and pay packets are still growing. The big living standards question for 2025 will be whether hiring and wage growth can continue to boost household incomes, or if they’ll tail off with the rest of the economy.”
This morning’s report from the ONS shows that the number of people on UK payrolls fell by 35,000 to 30.4 million between October and November.
FTSE 100 hits three-week low as Bunzl suffers deflation
Stocks are in retreat in London this morning, pulling the FTSE 100 share index down to its lowest level since 22 November.
The FTSE 100 is down 57 points, or 0.7%, at 8,205 points.
Bunzl, the distribution and outsourcing company, are the top faller, down 4.6% after warning that its operating profits will be hit by stickier than anticipated deflation, particularly in continental Europe.
Other European markets are also in the red, with Italy’s FTSE Mib down 0.5% and small losses in Paris and Frankfurt.
Matt Britzman, senior equity analyst at Hargreaves Lansdown, says:
“The FTSE 100 has opened down 0.7% this morning, following a broader trend lower across European markets. Investors are digesting key UK wage data and bracing for interest rate decisions from major central banks, including the Bank of England and the US Federal Reserve.
Rates are expected to hold firm in the UK later in the week, while the US looks all but certain to cut on Wednesday.
Billionaire Guy Hands’s property firm sells military homes to MoD for £6bn
Julia Kollewe
A property company linked to Guy Hands has agreed to sell 36,000 military homes to the UK’s Ministry of Defence for almost £6bn, signalling an end to a long-running battle between the billionaire and the government.
Annington will hand over its 999-year lease on the Married Quarters Estate to the MoD and receive £5.99bn in return – almost twice as much as Hands’s company Terra Firma paid for Annington more than a decade ago, but less than the £8bn the homes were valued at last year.
The sale ends court proceedings brought by Annington over planned housing reforms.
In September, the company took a legal fight with the UK government to the European court of human rights over fears it could lose significant sums as a result of the new Leasehold and Freehold Reform Act. It also launched a challenge in the high court on the same grounds.
