Week ahead

Tax cuts talk, new energy price cap, Calnex stalls

Jeremy Hunt and Tommy Cook of Calnex will be followed by the latest energy price cap

Jeremy Hunt’s Autumn Statement is shrouded in tax cuts speculation as Tory backbenchers demand firm action ahead of a General Election next year.

The Chancellor and Prime Minister Rishi Sunak have insisted that cutting income tax would be inflationary, but they are now said to be weighing up cuts to income tax or national insurance to boost economic growth and the Conservative Party’s electoral fortunes.

There are already expectations of cuts to inheritance tax and the possibility that Mr Hunt will announce a plan to scrap it altogether. He will also offer a number of tax reliefs to support business investment and potentially encourage savers to invest in ISAs.

Mr Hunt is still to decide whether to increase the pensions triple lock by average earnings of 8.5%, or to strip out bonuses and one-off payments, lowering the uplift to 7.8%. There is talk of using October’s lower inflation rate of 4.6% in order to save billions.

Shona Robison, the Scottish Finance Secretary, has urged Mr Hunt to avoid tax breaks for the wealthy and focus on additional funding for public services and an increase in Scotland’s capital budget.

“The autumn statement must learn the lessons from last year’s ‘mini-budget’ — it must not compound these problems with ill-timed tax breaks which would place even greater pressure on the public finances,” she says in a letter to Mr Hunt.

There are reports that the Treasury will hike duty on whisky by 15% and the SNP has said this will cost the sector about £100 million and contradicts the Conservatives’ 2019 manifesto commitment to “ensure our tax system is supporting Scottish whisky and gin producers and protecting 42,000 jobs supported by Scotch across the UK”.

Consumer groups and opposition parties will be on alert from any support Mr Hunt offers with energy bills. A day after his statement, Ofgem will announce the next energy price cap to apply from 1 January. Bills are expected to rise by 5% to about £1,930 a year for a typical gas and electricity bill.

electricity power supply
Power bills are likely to rise from 1 January

The forecasts are based on the wholesale market prices for gas and electricity, which have climbed in recent weeks after the start of the Israel-Hamas war last month.

Craig Lowrey, a principal consultant at Cornwall Insight, said: “An unstable wholesale energy market, coupled with the UK’s reliance on energy imports, makes it inevitable that energy bills will rise from current levels.

“This leaves households facing yet another winter with bills hundreds of pounds higher than pre-pandemic levels, and affordable fixed deals few and far between.”

Retailers will be hoping that Black Friday provides a much-needed lift in festive sales. Sales declined by 0.3% during a rainswept October following a revised 1.1% drop in September, missing expectations for a 0.3% increase.

Corporate announcements

Transport giant Firstgroup is expecting bumper profits in its half year results this Thursday amid strong passenger volumes on bus and rail.

Analysts have forecast a £13m rise in underlying profit to £95m and £4.7bn in sales for the full year to March 2024, while investors are currently looking forward to an 18% rise in the dividend to 4.5p.

Compared with National Express owner Mobico, Firstgroup’s trading performance has been positive this year, with its shares up 80%.

The group has largely avoided the impacts of rail strike action, with operators Lumo and Hull trains unaffected by walk-outs and its bus segment benefitting from increased demand on the suspension of railway routes.

A £99.5m partnership with Hitachi to lease up to 1,000 electric buses was revealed last week, described by Russ Mould, investment director at AJ Bell, as a “major step in the fleet renovation programme.”

He added that Firstgroup was now able to look ahead after “brushes with activist investors,” a failed takeover bid from the US-based private equity firm I Squared and a major asset disposal, which shored up the FTSE 250 firm’s balance sheet.

Shares in Linlithgow-based Calnex Solutions, which reports half-year results on Tuesday, slipped to a near-three year low following last month’s profit warning for the six months to September.

It said there had been weaker than expected demand from global telecom customers. The share price fell 30.2% to 66p on the news and closed at 61.5p on Friday.

Revenues will be up to 30% lower than previous expectations. Normally there are additional orders at the end of a quarter, but that did not happen in September. Management is trying to diversify the client base into defence and government.

Calnex Solutions joined AIM on 5 October 2020 via a placing at 48p per share and went to an immediate premium.

Analysts at Canaccord Genuity lowered their target price from 165p to 110p but said a recovery was likely to take place in 2024.

Cavendish has slashed its 2023-24 pre-tax profit forecast from £4m to £100,000, down from £7.2m last year, on revenues reducing from £27.4m to £17m.

There does appear to be demand for the company’s instruments, but predicting when it will turn into revenues is difficult.

The balance sheet remains strong even though net cash is set to fall to £13.9m.


Seminar: Scottish businesses will share their US trading experiences at an event organised by the Scottish North American Business Council (SNABC). It is hosting a “Doing Business in the USA masterclass” at the offices of Burness Paull in Glasgow on Tuesday.


Monday 20 November

  • Full-year results from Diploma and Compass
  • First-half results from Big Yellow Group

Tuesday 21 November

  • Full-year results from Avon Protection
  • First-half results from Calnex Solutions, Telecom Plus, Cranswick and Workspace

Wednesday 22 November

  • Full-year results from Sage, Britvic and Grainger
  • First-half results from Johnson Matthey, AO World and Speedy Hire
  • Trading statements from Kingfisher, TT Electronics, Bodycote, Rotork and Breedon
  • UK Autumn Statement
  • UK government borrowing figures

Thursday 23 November

  • Full-year results from Virgin Money UK and AB Dynamics
  • First-half results from Jet2, Motorpoint, Firstgroup and Volex
  • Trading statements from Intertek, PZ Cussons and Coats
  • Ofgem announces the energy price cap for 1 January to 31 March

Friday 24 November

  • First-half results from Hornby
  • Japanese inflation
  • Black Friday sales weekend

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