Business News 11th September 2017
CPA hopes to inform, with its daily bite-size business news on Monday 11th September 2017, filled with stories we think will interest Business people.
Markets Round up
On Friday we saw markets switch to a “risk off” stance with markets muted and gold held it’s high levels. Markets awaited the impact of Irma on Florida. European reinsurance stocks were lower, both Swiss Re and Munich Re will likely face considerable losses in the US hurricane season. The US dollar was lower against every major currency except the Mexican peso, which fell following a devastating earthquake. The FTSE 100 fell 0.3% to 7377.6 and the 250 fell 0.4% to 19,610.4. In the US the S&P 500 fell 0.5% to 21,797.8 and in Asia with little news on North Korea markets perked up in early Monday trading with the KOSPI up 0.9%. Watching CNN news, the excitement was palpable when a wheelie bin blew over in Miami 10 hours before the storm made landfall. The FTSE behaviour reminds of the old adage, when the US catches cold, the UK develops pneumonia. Oil prices edged up after the Saudi oil minister discussed possibly extending a pact to cut global oil supplies beyond March 2018 with his Venezuelan and Kazakh counterparts with WTI at $47.8 and Brent at $53.7. Gold prices fell early to $1336.7 after hitting its highest level in over a year last week, with a recovery in the U.S. dollar reining in any upward momentum in the metal. The pound is strengthening and is at 1.312 US Dollars and 1.097 Euros.
UK Manufacturing
The UK’s manufacturing output grew at the fastest pace this year in July, according to official figures. Output rose by 0.5% in the month, the Office for National Statistics (ONS) said, as car production rebounded after declining in June. Recent surveys of the manufacturing sector have suggested that it is seeing a pick-up in orders and output. However, separate figures from the ONS indicated that there was little change in the UK’s trade deficit during July. The trade deficit in goods and services was barely changed at £2.872bn, while the deficit in goods widened slightly to £11.576bn, compared with June’s downwardly revised figure of £11.527bn.
Administration tasks costly
Research by Sage has found that SMEs spend an average of 120 working days a year on administrative tasks, and if the government helped them access digital ways of working the resulting increase in productivity could boost the economy by £33.9bn a year. The firm said time spent on accounting is most costly, amounting to more than 20% of total administration time.
SMEs discover benefits of cloud solutions
Research by Smith & Williamson reveals that 76% of SMEs and entrepreneurs are considering cloud-based solutions to improve efficiency. Tom Edwards, associate director at the firm’s Birmingham office, says: “Businesses are waking up to the efficiency that cloud computing has to offer; from agile working to automation, real time information access to collaborative ways of working. We’re barely touching the surface of what cloud computing can offer and yet the measurable impact it is having on business cost and profit margins already are extraordinary.”
HR help for SMEs would boost productivity
A report from the Chartered Institute of Personnel and Development says productivity could be boosted if the government invested £13m a year to support SMEs. The CIPD made the call after a year-long pilot scheme providing HR support to firms on issues such as workers’ terms and conditions and job descriptions.
One small business owner a week faces prison over unpaid rates
Research by CVS has found that sole traders are increasingly facing prison over unpaid rates bills, with courts handing down 90-day sentences to 54 business owners to the end of March this year. Mark Rigby, chief executive of CVS, commented: “It is the only tax not related to the ability to pay, so it places both a disproportionate financial and legal burden on sole traders.”
Household spending set to be lowest since 2013
Household spending is on track to record its weakest year of growth since 2013, edging up just 0.3% in August, according to Visa’s UK Consumer Spending Index, with the monthly rise for the year averaging just 0.2%. “Consumer spending in August has bucked the trend of the previous three months, registering a marginal increase against last year,” said Kevin Jenkins, UK & Ireland managing director at Visa. “Nevertheless we are wary about taking this as a sign that the household squeeze is easing given the clear slowdown in spending during the preceding three months”. Separate data from the British Retail Consortium (BRC) show that high street footfall fell by 2.6% in August, compared with a 2.1% fall in July.
Rates set to hold, while prices continue to rise faster than wages
The BoE is set to leave interest rates on hold at a record low 0.25% this week, with seven members of the monetary policy committee – including the governor Mark Carney – expected to vote for rates to remain as they are despite a forecast that inflation is set to rise. Two members of the committee, Ian McCafferty and Michael Saunders, are likely to vote for a quarter-point rise. Meanwhile, the CPI is tomorrow expected to show a rise to 2.8% for August, up from 2.6% in July, but labour market figures on Wednesday are predicted to show wage growth of only 2.2%, meaning real wages are falling. The UK unemployment rate could drop to 4.3%, experts say, but BDO’s Peter Hemington warns the rise in employment has not yet led to higher productivity.
Public sector pay cap lift
The government is expected to announce that the 1% public sector pay cap will be lifted for the first time for both police and prison officers. The move, based on the recommendations of independent pay review bodies, is also likely to pave the way for similar increases in other sectors where there are similar problems with recruitment and retention, such as teaching and nursing. Meanwhile, Labour is preparing to force a vote on the pay cap in Parliament on Wednesday, while union leaders have also announced nationally coordinated campaigns to press ministers into lifting the cap for all public sector workers.
BBC News
Government publishes second Finance Bill
The government has published its second Finance Bill, which includes a measure to abolish non-dom status for those resident in the UK for 15 or more out of the last 20 years; will reduce the Money Purchase Annual Allowance from £10,000 to £4,000 – a loophole which allows people to recycle their pension savings to get extra tax relief, and confirms that the dividend allowance will be cut from £5,000 to just £2,000 in April 2018. James Hender, head of private wealth at Saffery Champness, said although many people will pay more tax under the new rules, the Bill brings “much needed clarity to what was fast-becoming a tax vacuum.”
Ombudsman called in over HSBC account blocking
The Financial Ombudsman Service has been asked by SMEs to step in after HSBC mistakenly froze hundreds of accounts as part of a crackdown on money laundering. Businesses complain that the bank blocked access to their money with no warning.
Biotech crowdfunding platform to launch
Capital Cell, a new crowdfunding platform exclusively for life sciences, is to launch later this month. It hopes to plug a funding gap for start-up biotech companies.
Knee jerk worries over migration plans?
The Observer examines how the Conservatives’ migration pans for a post-Brexit Britain could impact on the economy following warnings from business leaders who fear massive shortages of workers. The paper cites CEBR research which predicts a 3.1% fall in GDP by 2025 and tax receipts down by £32.7bn if net migration fell to below 100,000 a year, but acknowledges that City economists believe a reduction in migrants would eventually feed through into higher pay. KPMG’s Punam Birly adds that most countries operate similar immigration systems to that proposed in the Home Office leak and still manage to prosper. The paper suggests policy on migration should change once the uncertainty is out of the way.
The Observer, Business, Page: 41
Irma
Hurricane Irma is showing signs of weakening and could be downgraded to a tropical storm.. The National Hurricane Centre said the storm “should continue to lose strength and fall below hurricane intensity” during the day, as it continues its path northwards. But forecasters have warned the threat to life still remains, as Florida continues to be battered by 100 mph winds and torrential rain. Powerful storm surges could also cause more devastating flooding across the state. Overnight, Irma was downgraded to a category 2 storm, but continued to wreak havoc along the west coast.
Brexit
UK members of Parliament have been warned by David Davis that voting against the Brexit repeal bill would amount to backing a “chaotic” exit from the European Union. The Brexit Secretary stressed the British people “did not vote for confusion” in last year’s referendum and Parliament should respect that when it divides on the European Union (Withdrawal) Bill for the first time. Labour will vote against the legislation, arguing so-called “Henry VIII” powers in the Bill that would allow ministers to alter laws without full parliamentary scrutiny amount to a “power-grab”. But Davis’s words could weigh heavy on Labour MPs from Leave-backing constituencies, with sources estimating around a dozen could rebel against Jeremy Corbyn’s orders. Prime Minister Theresa May’s U.K. government is set to rally just enough lawmakers to back a key piece of Brexit legislation that will then face higher obstacles before it can become law. Support from Northern Ireland’s Democratic Unionist Party and a lack of opposition within her Conservative Party mean May will likely squeak to victory on a bill designed to allow her government to copy European Union law and enshrine it in the domestic statute. Once enshrined, the laws can be edited after Brexit in 2019. Lawmakers plan to debate the bill on Monday before a late-night vote that could continue into the early hours of Tuesday. The real challenge will be whether May can keep the draft amendment free at the so-called committee stage it enters next.
Mexico
At least 58 people died when the most powerful earthquake to hit Mexico in over eight decades tore through buildings, forced mass evacuations and triggered alerts as far away as Southeast Asia, with most fatalities in the picturesque state of Oaxaca. The 8.1 magnitude quake off the southern coast late Thursday was stronger than a devastating 1985 temblor that flattened swathes of Mexico City and killed thousands. This time damage to the city was limited as the quake was deeper and further from the capital.
Rise in UK millionaires
According to Barclays Wealth’s UK Prosperity Map rising house prices have led to highest ever number of UK millionaires – with one in 79 now a millionaire. The increase has jumped up 44,000 on last year and nearly half of all millionaires live in London and the South East, where houses are the most expensive.
Chinese Inflation
China’s consumer price inflation rose more than expected in August and producer prices advanced on higher raw material costs, data from the National Bureau of Statistics showed over the weekend. Consumer price inflation accelerated to 1.8% in August from 1.4% in July. This was the fastest since January and exceeded the expected level of 1.6%. Nonetheless, inflation was well below the government’s full year target of around 3%. Food prices fell 0.2%, while non-food prices rose 2.3%. On a monthly basis, consumer prices advanced 0.4%, faster than the 0.1% rise in July. This was the second consecutive increase.
Germany accuses other EU countries of allowing tax evasion
Germany has accused Italy, France and Spain of allowing for tax evasion, claiming that they have kept open loopholes that have enabled corporations to avoid paying tax. Germany holds that this has resulted in the EU losing 50 to 70bn euros in revenue per year. A German minister told Süddeutsche Zeitung, “The extent of the participation of other member states in the discussions to curb harmful tax competition has reached a new low.”
Barcelona
Hundreds of thousands of Catalans are expected to rally in the streets of Barcelona on Monday in what campaigners hope will be a show of support for independence after Madrid moved to block a planned referendum on the region’s split from Spain. ‘Diada’ day, September 11th, which commemorates the fall of Barcelona to Spain in 1714, is often used by activists to voice their demands for an independent state. Hostility between Madrid and Barcelona has ramped up since Spain’s Constitutional Court last Thursday suspended the referendum, planned for next month, following a legal challenge by Prime Minister Mariano Rajoy
Apple
Apple Inc.’s most important new phone for years will be called the iPhone X, according to a leak of the company’s latest mobile operating system on Saturday. Apple is to launch three new phones will be called the iPhone 8, iPhone 8 Plus, and iPhone X. The iPhone 8 and iPhone 8 Plus are successors to the current iPhone models, while the iPhone X is the premium version with an all-new design, crisper OLED screen, improved cameras, and a 3-D facial recognition scanner for unlocking the device. The “X” in the iPhone’s name may be a reference to this model being a special 10th anniversary edition. The iPhone 8 and iPhone 8 Plus will look similar to the iPhone 7 and iPhone 7 Plus, but include faster processors, The new devices will be unveiled at an event on Tuesday.
Or see our recent previous news pages
Business News 8th September 2017
Business News 7th September 2017
Business News 6th September 2017
Business News 5th September 2017
Business News 4th September 2017
Business News 1st September 2017
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