2020 saw 12% increase in start-ups
Companies House records showed 84,758 more new firms established in 2020 in comparison with 2019. Against the grim economic backdrop caused by the Covid 19 Pandemic, the 12.3% increase was the highest such rise since 2011. History of course shows that start-ups and economic downturns go hand in hand as entrepreneurs identify opportunities to capitalise upon however it should be noted that a small number of these new businesses will have been set up fraudulently. Such entities will have been incorporated to take advantage of the government financial support available.
Britain re-establishes itself as the worlds 5th largest economy
Despite a cumulative fall in GDP of 21.2% in the first half of 2020, the latest analysis from the Centre for Economic and Business Research (CEBR) shows that the UK has leapfrogged India to return to its position as the worlds 5th largest economy.
Annual growth is predicted to be 4% for the UK until 2025 however after that, the estimation is that it will fall to 1.8% annually. The CEBR also forecasts China to take America’s crown as the worlds largest economy by as early as 2028. Focusing back on the UK, expectations from the CEBR are that the UK economy will grow at its fastest rate since the 2nd World War in 2021 with national income potentially rising by as much as 8%. This is largely due to Briton’s beginning to spend the circa £200bn that has been saved throughout the course of the pandemic.
SME Confidence boosted by vaccine roll-outs
A recent poll of 500 SMEs by Starling Bank and the Great British Entrepreneur Awards revealed 70% of small business owners feel more confident about 2021 as a result of the roll-outs of Coronavirus vaccines.
The report goes on to show that 42% of those surveyed believe they will need financial support in 2021 whilst 39% feel they can make it through the year without any further funding.
Lockdown #3 could see deficit rise to £450bn
The latest lockdown measures introduced at the end of December has put borrowing on course to reach £450bn in 2021, significantly surpassing the £394bn predicted by the Office for Budget Responsibility in November.
Chief Economic Adviser at the EY Item Club, Howard Archer, stated a £450bn deficit was a “rising and genuine possibility” before adding, “I suspect the deficit could still be up around £100bn in five years time.”
The prediction comes as JP Morgan UK economist Allan Monks forecasted a 2.5% slide in growth for Q1 in 2021.
Tax Return rules relaxed by HMRC
The HMRC has extended the January 31st deadline for tax returns to help ease the pressure on the potentially millions affected by the pandemic. The HMRC confirmed that it will not penalise anyone who does not file their online tax return by the end of January. However taxpayers will receive a £100 fine if their returns are not filed by the later date of February 28th.
It is calculated over 3 million people are still to file their online tax returns for 2019/20, with an estimated 8.9 million having already done so. It’s worth noting that once tax returns have been filed, customers are able to set up an online payment plan to spread self-assessment bills of up to £30,000 over up to 12 monthly instalments.
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*Sources: City AM, Gov.uk, NACFB.