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Fri 2nd Sep 2022 - Update: Chancellor covid-style tax breaks for firms, Starbucks appoints new CEO
Zahawi plans covid-style tax breaks for firms facing ruin: Nadhim Zahawi has drawn up plans for a multibillion-pound package of tax cuts to help businesses facing bankruptcy because of rising energy costs. The Times reports the chancellor, who is working on an emergency energy strategy for the new prime minister, said the government could learn the “lesson from covid” and introduce targeted reductions in VAT and business rates to help the retail and hospitality sectors. He suggested that tax breaks could also be given to energy-intensive industries and urged people not to “panic” about the cost of living crisis. While he is not expected to remain as chancellor after the Tory leadership contest ends on Monday, Zahawi is understood to have discussed his plans with the frontrunner, Liz Truss, and is in line for a senior job in her cabinet. He warned that failing to act could force many companies into bankruptcy and lead to economic “scarring”. But he insisted that Truss, if elected, would “deliver help” to families and businesses despite her failure during the campaign to make specific commitments. Zahawi said Truss would ensure that the government acted to minimise the impact of the increase next month as well as a further expected rise in January. He said: “If we don’t support businesses I worry about the longer-term scarring of the economy. I had an example given to me the other day from EDF. One of their clients, their bills have gone from £25m a year to £75m. This is a perfectly viable business. We have to make sure we support businesses as well as households. The lesson from covid is that actually there are some levers like VAT, like business rates. Targeting particular sectors of the economy, whether it’s hospitality or high energy use sectors, can be done very effectively. But as I say there are no easy options,” he said. During the pandemic the government cut VAT for the hospitality and tourism industries, costing £4bn in lost tax revenues. The government also temporarily scrapped business rates for the retail, hospitality and leisure sectors at a cost of £16bn. His ideas to help them include business rates relief and targeted VAT reductions.

Next edition of The New Openings Database to be sent to Premium subscribers today, 14,300-word report included: The next edition of The New Openings Database, which is produced in association with StarStock, will be sent to Propel Premium subscribers today (Friday, 2 September), at midday. It will show the details of 315 newly announced site openings and upcoming launches. The database shows the details of which company has opened a site or its plans to open one in the future. It will have details on what type of site it is and its location. There will also be a website link to the businesses so you can find out more about them. It is published on a monthly basis. The next edition of the database features expanding hotel and restaurant operators, niche cuisine, and international brands making their UK debut. Premium subscribers will also receive a 14,300-word report on the new additions to the database. Premium subscribers also receive access to three other databases. The latest Propel Multi-Site Database, which is produced in association with Virgate, was sent to Premium subscribers last Friday (26 August). The database contained 47 new companies, bringing the total number of businesses listed up to 2,617. The 293 sites run by those 47 new additions means the entire database of sites has reached 66,609 sites. Premium subscribers also received a 3,200-word report on the new businesses added. The go-to database provides company names, the people in charge, how many sites each firm operates, its trading name and its registered name at Companies House if different. There is also a synopsis of what the business does and significant news associated with it. Premium subscribers also receive the Turnover & Profits Blue Book, which is produced in association with Mapal Group, and the UK Food and Beverage Franchisor Database, which is an exhaustive guide to the companies offering a food and beverage franchise in the UK and will be updated every two months. Companies can now have an unlimited number of people receive access to Propel Premium for a year for £895 plus VAT – whether they are an operator or a supplier. The single subscription rate is £445 plus VAT for operators and £545 plus VAT for suppliers. Email jo.charity@propelinfo.com to upgrade your subscription. Premium subscribers also receive their morning newsletter 11 hours early, at 7pm the evening before our 6am send-out; regular video content and regular exclusive columns from Propel group editor Mark Wingett.

Starbucks names former PepsiCo executive Laxman Narasimhan as new CEO: Coffee giant Starbucks has named long-time PepsiCo executive Laxman Narasimhan as its new chief executive. It said that Narasimhan will join Starbucks on 1 October, and work closely with Starbucks’ interim chief executive Howard Schultz through to 1 April 2023, when he will assume the chief executive role and join the company’s board. Narasimhan was most recently chief executive of Reckitt, the UK-based consumer health, hygiene and nutrition company. Prior to that, Narasimhan, who will relocate from the UK to the US for his new role, held various leadership roles at PepsiCo, including as global chief commercial officer. He also served as chief executive of the company’s Latin America, Europe and Sub-Saharan Africa operations. Narasimhan has also served as a senior partner at the consulting firm McKinsey & Co, where he focused on its consumer, retail and technology practices in the US, Asia and India. Schultz came out of retirement and assumed the interim chief executive job in March after the company’s former chief executive, Kevin Johnson, announced his retirement. Schultz also returned to the company’s board, and will remain there even after Narasimhan takes over. “When I learned about Laxman’s desire to relocate, it became apparent that he is the right leader to take Starbucks into its next chapter. He is uniquely positioned to shape this work and lead the company forward with his partner-centered approach and demonstrated track record of building capabilities and driving growth in both mature and emerging markets. As I have had the opportunity to get to know him, it has become clear that he shares our passion of investing in humanity and in our commitment to our partners, customers, and communities. The perspectives he brings will be a strong asset as we build on our heritage in this new era of greater well-being. I greatly look forward to our partnership over the coming months and years,” said Schultz. “Starbucks commitment to uplift humanity through connection and compassion has long distinguished the company, building an unrivaled, globally admired brand that has transformed the way we connect over coffee. I am humbled to be joining this iconic company at such a pivotal time, as the Reinvention and investments in the partner and customer experiences position us to meet the changing demands we face today and set us up for an even stronger future,” said Narasimhan. “I look forward to working closely with Howard, the board, and the entire leadership team – and to listening and learning from Starbucks partners – as we collectively build on this work to lead the company into its next chapter of growth and impact.”

Energy bill at Tom Kerridge’s pub to leap from £60,000 to £420,000: Tom Kerridge, the celebrity chef, revealed that the annual energy bill at his pub has soared from £60,000 to £420,000 and warned that “ludicrous” price rises left the hospitality sector facing a “terrifying landscape”. It comes as a quarter of pub and hotel owners consider closing over the Christmas period because staying open will lose them money, according to research by UKHospitality, the industry body. Speaking to the BBC, Mr Kerridge said one of his pubs has a monthly electricity bill of £5,000 – but this is set to soar to £35,000 in December when a tied contract ends. He told The Telegraph that “at the minute it’s a hugely volatile marketspace”, adding: “There’s no way that businesses are going to be able to absorb four, five, six hundred per cent price increases.” Kerridge said businesses would face “harsh realities” when trying to stay open over the winter, and that this would mean a “huge amount of business closures or a huge amount of temporary business closures” as prices went up while consumers’ pockets are squeezed, describing it as a “terrifying and scary landscape” for the sector. He called for “some form of energy price cap” for business, as for domestic use, alongside a reduction in VAT not only for pubs but for all industries. He has three pubs, all in Marlow, and said he would be looking to “shop around” for a better deal given the high quote from his existing supplier, adding: “But energy costs for that pub have gone from £60,000 a year to £420,000 a year. It is just absolutely ludicrous.”

Companies brace for record price rises as they struggle to hire staff: Businesses expect record inflation in the year ahead and are facing growing difficulties in hiring workers, according to a Bank of England survey. The Times reports that a monthly survey of more than 2,500 chief financial officers across different industries found that the private sector had increased its inflation expectations to a record high of 8.4% over the next 12 months. That is up from the 7.3% reported in July as part of the Bank’s regular survey of decision makers in the private sector. Businesses have been facing record rises in producer prices this year on the back of rocketing energy costs and global supply chain disruptions that have hit everything from fresh food to semiconductors. In the Bank’s latest survey, companies reported output prices inflation of 7.7% in the three months to August, up ten basis points from the previous rolling three-month period. However, in tentative signs that some global inflationary pressures are easing, thanks to falling commodities prices and improvement in supply chains, monthly prices inflation fell to 7.6%, from 7.9% in August. The survey of chief financial officers found that companies were facing difficulties hiring workers, forcing the employment growth index to fall to its lowest level since the start of the year. Monthly employment growth dipped to 3.5% from 4.7% in August, the weakest level since January, while the three-monthly average also fell to its lowest level in six months at 4.3%. “Recruitment difficulties remained widespread,” the survey said. “In August, 86% of firms reported they were finding it harder to recruit new employees compared with normal. Of those, 63% reported that it was ‘much harder’, three percentage points higher than in July.”

Business leaders expect 14% inflation and recession by end of year: The economy will fall into recession before the end of the year with inflation rising to 14%, according to a new survey of business leaders. The Times reports weak economic growth will continue into 2024, latest forecasts from the British Chambers of Commerce show. The organisation, which represents thousands of businesses, has downgraded its outlook for the rise in British GDP, the main measure of economic growth, to 3.3% in 2022, down from 3.5% in its previous forecast three months ago. It said Britain would enter a recession, defined as two consecutive quarters of negative growth, by the third quarter of this year, with GDP expected to have contracted in the second, third and fourth quarters. The forecast suggests that the recession will hit earlier than the Bank of England expects. The central bank said last month that Britain would enter a recession in the final quarter of this year, lasting until mid-2024, after inflation erodes the value of household incomes and suppresses demand. The BCC has called for the government to help businesses with the cost of their energy bills by offering emergency grants and temporary cuts in VAT on energy.

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