Energy costs drive up inflation, opportunities for UK engineering, design and technical services firms, and the fight against subscription traps continues
In today’s blog post we run through the factors which have led to an increase in inflation, how UKEF’s incentives are providing opportunities for UK engineering, design and technical services firms, and how subscription traps for consumers are being tackled by the government.
Inflation on the rise: What October’s figures mean for businesses
The latest inflation figures from the Office for National Statistics (ONS) reveal that the Consumer Prices Index (CPI) for October 2024 rose to 2.3%, up from 1.7% in September. This marks the first increase in inflation since July, and it has sparked interest among business owners, economists, and policymakers alike.
The rise in inflation was widely anticipated, and as a result the Bank of England have already signalled that any future cuts to the base rate will happen gradually. However, the latest CPI figures make it unlikely that the Bank will reduce rates any further when they meet in December.
What’s driving the numbers?
According to the ONS, the rise in inflation for October was largely driven by higher energy costs. However, other factors helped to balance the increase:
- Falling ticket prices: Live music and theatre ticket prices dropped.
- Lower business costs: Raw material costs for businesses have been falling.
Despite these offsets, some sectors faced steeper price increases:
- Services inflation: Inflation in the services sector, which includes services like haircuts, hotels, and airfares, rose to 5%.
- Alcohol and tobacco: Prices for these items rose sharply. Encouragingly though, food inflation remained unchanged from September.
What does this mean for your business?
The rise in inflation, though modest, signals shifts that businesses may need to navigate carefully:
- Energy costs: You should revisit your energy usage and consider whether you might be able to reduce costs, either through using energy more efficiently, or considering whether a different supplier or price plan could meet your needs at a lower cost.
- Pricing strategies: Businesses in the services sector should prepare for potential challenges as rising costs affect consumer spending patterns. Balancing price increases with value will be key to maintaining customer loyalty.
- Cost control: With raw material costs easing, this may be a good time for manufacturers and retailers to lock in supply contracts or reassess margins.
A broader economic context
While inflation has ticked upwards, this is in line with the Bank of England’s forecast that inflation will temporarily rise again before reducing in 2025. For now, businesses can take heart that interest rates are unlikely to rise sharply in the near term. However, with base rate cuts now likely to come more slowly than had been hoped earlier in the year, borrowing costs will remain a factor for planning and investment.
Also, while October’s figures suggest only a modest uptick, sector-specific changes – particularly in services and energy – highlight the importance of staying agile in your pricing and how your business operates.
This period of mild inflationary growth is an opportunity for forward-thinking businesses to fine-tune their strategies for the months ahead.
See: https://www.ons.gov.uk/economy/inflationandpriceindices/bulletins/consumerpriceinflation/latest
New UKEF guarantee boosts opportunities for UK engineering, design and technical services firms
UK Export Finance (UKEF), the UK’s export credit agency, has launched a new initiative aimed at helping British engineering, design, and technical services firms secure international contracts. The Early Project Services Guarantee (EPSG) is designed to make UK expertise more attractive to overseas buyers while filling a key financing gap for the early stages of major projects.
How the EPSG works
The EPSG provides overseas buyers of UK services with access to private finance by guaranteeing payments to lenders. This assurance makes it easier for international buyers to choose UK firms for essential scoping and design work in the planning phase of projects.
Beyond this initial stage, the EPSG also opens the door for buyers to refinance their loans as part of the larger financing for the project’s construction phase. This creates a life-cycle financing advantage, giving UK firms an edge in securing contracts for both the early and later stages of international projects.
The EPSG addresses a long-standing gap in market provision for financing the preparatory phases of major projects. By supporting the services sector, UKEF aims to drive export growth across all UK regions.
What this means for your business
For UK businesses offering engineering, design, and technical services, the EPSG could be a game-changer in helping you explore opportunities in international markets. It could be the key to unlocking new contracts and expanding your global reach.
If you would like help with how your business could take advantage of this new scheme, or would like some broader advice on exporting, feel free to get in touch with us. We’re here to help you seize opportunities and grow your business.
See: https://www.gov.uk/government/news/new-export-guarantee-champions-uk-engineering-and-design-services
Government proposes crackdown on “subscription traps”
The UK Government has launched a consultation to tackle so-called “subscription traps,” aiming to make it easier for consumers to cancel unwanted subscriptions and secure refunds. These proposals are designed to simplify cancellation processes and improve transparency, potentially saving UK families up to £1.6 billion annually.
The problem: Trapped in subscriptions
“Subscription traps” occur when consumers are misled into signing up for subscriptions, often via free trials or introductory offers, only to find themselves locked into costly plans due to unclear terms or complex cancellation procedures.
New figures reveal that nearly 10 million of the UK’s 155 million active subscriptions are unwanted, costing an average of £14 per subscription per month. From magazines to beauty boxes, many businesses employ cumbersome cancellation methods, including lengthy phone calls or restrictive opening hours, leaving consumers feeling trapped.
Proposed solutions
The consultation seeks input on measures to protect consumers while ensuring businesses can still offer subscription-based services. Key proposals include:
- Simpler cancellation processes: Looking at the arrangements businesses need to put into place to help customers conveniently cancel a contract.
- Clearer communication: Consumers would receive reminders about trial periods ending or auto-renewals for long-term contracts.
- Improved refund rights: Proposals explore how refunds should work when consumers exercise their right to cancel within the statutory 14-day cooling-off period or if businesses fail to meet their obligations.
Next steps
The consultation is open to businesses offering subscription services, consumer groups, and enforcement agencies, so that all perspectives can be considered.
To see further information about the consultation and participate, see: https://www.gov.uk/government/consultations/consultation-on-the-implementation-of-the-new-subscription-contracts-regime