UK economy grew by 0.7% in first quarter, statistics office says
(Writing by William Schomberg; Editing by Sachin Ravikumar)
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SMEs gain only brief relief as borrowing costs ease but inflation climbs
For the UK's small and medium-sized enterprises (SMEs), July's surprise inflation rise to 3.8 per cent is another reminder of how fragile the recovery remains. Costs are still rising faster than expected, with transport and food prices leading the surge, leaving many firms caught between higher outgoings and weaker consumer demand. Mike Randall, chief executive of Simply Asset Finance, called the increase 'unwelcome for many,' noting how it squeezes supply chains at a time when businesses are still absorbing April's National Insurance hike. Douglas Grant, group chief executive of Manx Financial Group, warned that the uptick 'will weigh heavily on SMEs' already grappling with expensive borrowing and constrained credit access. These pressures have been building for some time. SMEs endured soaring input costs through the energy crisis, while customers reined in discretionary spending. Many businesses, particularly in retail, hospitality and logistics, now find themselves with narrowing profit margins just as the economy demands they reinvest to grow. Some positive news came from Threadneedle Steet on 7 August though, the Bank of England cut its base rate from 4.25 per cent to 4 per cent – the lowest level since March 2023. According to Trade Direct Insurance, this 25 basis point move should modestly ease loan repayments and encourage firms to revisit delayed investments. With challenger and specialist banks now accounting for 60 per cent of SME lending, the expectation is that competition could bring borrowing costs down from an average of 7.65 per cent to around 7.4 per cent. It is a step in the right direction, but not a game-changer. Approval rates on SME loans still hover at 56 per cent, well below pre-pandemic levels. And while a small reduction in borrowing costs may offer some breathing room, the broader economic picture remains unsettled. One looming risk lies beyond the UK's borders. Recent US tariff measures still threaten to ripple through global supply chains in the coming weeks and months, unless averted. The US (TACO) President has been known to follow-up his strong stance on trade by softening his position. These moves, even if ultimately unrealised, could potentially feed into higher import prices and renewed inflationary pressure. If those effects filter into UK markets, SMEs could face a fresh round of cost increases just as they begin to feel the benefit of lower interest rates. For now, SMEs find themselves in a holding pattern – waiting to see whether the modest relief from lower interest rates can outweigh the headwinds of stubborn inflation, fragile consumer confidence, and global economic volatility. The next few months will be decisive in determining whether small businesses can move from survival mode into a more sustainable recovery. "SMEs gain only brief relief as borrowing costs ease but inflation climbs" was originally created and published by Leasing Life, a GlobalData owned brand. The information on this site has been included in good faith for general informational purposes only. It is not intended to amount to advice on which you should rely, and we give no representation, warranty or guarantee, whether express or implied as to its accuracy or completeness. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content on our site. Sign in to access your portfolio
Yahoo
4 minutes ago
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Exclusive-How US alcohol tariffs may hurt some businesses, hike prices for Americans
By Emma Rumney LONDON (Reuters) -Americans keen on a stiff drink at a bar should brace for a sobering rise in prices, with Scotch whisky connoisseurs potentially stomaching an extra $1 on average per drink, thanks to U.S. tariffs on UK and European goods, according to an industry analysis shared exclusively with Reuters. Other EU alcohol, like French champagne, Irish whiskey and Italian prosecco, may see price rises, with the tariffs impacting some $10 billion worth of such imports each year. Brands affected include Diageo's Guinness beer and Pernod Ricard's Jameson Irish whiskey. U.S. President Donald Trump's 15% tariff on European Union imports could raise wholesale prices of wine and spirits by more than 80 cents per gallon on average, with a smaller 3 cent increase for beer, the analysis, commissioned by trade association the Wine & Spirits Wholesalers of America, showed. The levies could rake in $987.1 million in federal revenue, once lost sales are taken into account, it said, with the costs likely passed on to U.S. businesses and consumers over time, causing sales and job losses. The U.S. is, by far, the biggest market for the top spirit makers among Western countries and most European wine and spirit producers. IMPACT ON CONSUMERS The analysis assessed the impact of tariffs if the levies are passed on in full. Spirit imports previously enjoyed zero tariffs. It found that U.S. tariffs, including a 10% levy on UK products like Scotch whisky at the port, could significantly raise the price per bottle at a bar or other venue once additional costs from margins and taxes are added. For a 750 millilitre bottle of Scotch, an average $1.92 tariff at the port could translate to a price increase of more than $12 per bottle at the bar, said the analysis, produced for WSWA by New York economic research firm John Dunham & Associates. Assuming just over 12 two-ounce drinks per bottle, that would mean an additional $1 per drink at the bar on average. Cutter Smith, who takes up the post of WSWA chairman in September, said that in some cases, wholesale prices were already on the rise. "It is a company-by-company and, in some cases, brand-by-brand decision, but one thing is certain, if these tariffs stay in place, they will make their way to the consumer," he said. The tariffs have hit just as the U.S. prepares for the holiday season starting in October, when alcohol sales surge due to celebrations and gifting. Pernod Ricard and Diageo declined to comment on the analysis. SALES ALREADY DECLINING Relatively small tariffs on Irish whiskey and Polish vodka also spiral upward as they make their way to bars or other venues, the analysis found, leading to an average price increase of 26 or 52 cents, respectively, per two-ounce drink. The wine and spirits industries had hoped to win an exemption from EU tariffs, but found no relief in a framework trade deal secured on Thursday. U.S. sales are already in decline as inflation-weary or health conscious consumers cut back. A Gallup survey in August found that reported U.S. alcohol consumption hit its lowest on record, and competition from alternatives and other threats have also raised concerns over longer-term growth. Analysts say higher-end brands preferred by wealthier consumers should be less sensitive to price changes, with cheaper and mid-range labels more likely to see demand decline as prices rise. Some domestic producers may benefit if their wine and spirits are cheaper than those of imported rivals, but others are unsure or worry about retaliatory tariffs. The analysis found that European wine would be hardest hit by the 15% levy, with wholesale prices rising by 86 cents per gallon on average, followed by spirits at 82 cents and beer at 3 cents. Some alcohol producers ramped up U.S. shipments ahead of the tariffs, creating a stockpile of goods to sell tariff-free. And some spirit makers like Campari and Diageo have said they would not raise prices or would take other mitigation measures to prevent tariff costs being passed on for now. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
4 minutes ago
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The cheapest and most expensive supermarket meal deals
As Tesco hikes its prices, how do the supermarkets' meal deal prices compare? Tesco has announced a 25p price increase for its lunchtime meal deal for all customers from today (21 August). Prices for the meal deal - consisting of a main (such as a sandwich or wrap), a snack and a drink - have risen from £3.60 to £3.85 for Clubcard members, while non-Clubcard members will now have to pay £4.25. It comes after prices were hiked just a year ago, as well as in 2022. A Tesco spokesperson defended the move, saying the meal deal "remains great value". Why is Tesco increasing the cost of its meal deal? Tesco has not specifically said why it is increasing the price of its meal deal, but it comes following years of high food inflation, pushing prices up for both consumers and retailers. Grocery prices are 5% higher than a year ago and Tesco is among dozens of retailers who have written to chancellor Rachel Reeves, warning that new taxes in the autumn budget would push prices up even higher. Other supermarkets - including Sainsbury's - have also put the price of their meal deals up during the cost of living crisis, reflecting the economic challenges. Tesco highlighted its broad range of lunch choices when announcing the news of the price rise. However, it also comes off the back of recent figures that showed Tesco enjoying its largest monthly share gain since December 2024, as its hold of the market rose by 0.8 percentage points to 28.4%, driven by sales growth of 7.4% compared to last year. Which meal deals are the cheapest? For Co-op members, it will cost £3.50 for a lunch meal deal, and £4 for non-members. Their website states that these prices will remain in place until at least the end of the year. For a cold sandwich and a regular hot or cold drink, Greggs charges £3.75. The bakery chain offers a variety of other lunchtime deals for their pastries and savoury snacks - the most expensive being £4.95 for a hot sandwich and wedges with a regular hot/cold drink. A main, snack and a drink will cost £4 for Boots customers, or £3.75 for anyone with a Boots Advantage Card. Prices are higher in London - £5 for customers and £4.75 for those with with Advantage Card. Tesco's new meal deals price is £3.85 for Clubcard members and £4.25 for everyone else. Their meal deals were priced at £3 for 10 years - before prices rose in October 2022 as food prices shot up. Sainsbury's offer their meal deals for £3.95 - and in a marked difference from other supermarkets, the price is the same for customers without loyalty cards. However, Sainsbury's increased the price from £3.75 in June this year, having already increased it from £3.50 in July 2024. Morrisons customers with loyalty cards will pay £3.50 for their meal deal, while it costs £4 for everyone else. The supermarket increased the cost of its meal deal by 50p from £3 to £3.50 in 2022. Upmarket supermarket Waitrose charges £5 for everyone for their lunchtime meal deal. It was introduced in 2023 and the price has stayed the same since then. Asda does not have a meal deal that offers a set price for three lunch items. However, customers are able to mix and match three selected items and get the cheapest one free. Food inflation keeps rising Recently released figures have shows that supermarket inflation is actually falling - but retail experts say it remains "well past the point at which price rises really start to bite". Grocery prices were 5% higher than a year ago in the four weeks to 10 August, according to market research firm Worldpanel by Numerator, which was recently renamed from Kantar. However, this was down from July's 5.2%, which represented a rise from inflation of 4.7% a month earlier and marked the highest level since January 2024. Fraser McKevitt, head of retail and consumer insight at Worldpanel, said: "What people pay for their supermarket shopping often impacts their spending across other parts of the high street too, including their eating and drinking habits out of the home." While Tesco enjoyed its largest monthly share gain since December 2024, both Asda and Co-op saw sales down on a year ago, by 2.6% and 3.2% respectively.
