Business News - 12th May 2017 - CPA | The Credit Protection Association

Business News – 12th May 2017

Bank of England cuts growth outlook

The Bank of England has trimmed its UK growth forecast for 2017 to 1.9%, from its February estimate of 2%, warning that household spending is slowing more quickly than expected. The Bank kept interest rates on hold at 0.25% and warned consumers were being squeezed between sluggish income growth and rising inflation. The Bank, unveiling its Quarterly Inflation Report, also raised its forecast for inflation this year to 2.7% from its February forecast of 2.4%. BoE governor Mark Carney said forecasts assumed Brexit would be smooth, implying a traumatic exit would hurt growth.

The Times, Page: 2 The Times, Page: 40 The Daily Telegraph, Business, Page: 1, 5 Daily Mail, Page: 19 The Guardian, Page: 2 Independent i, Page: 5, 48 Daily Express, Page: 4 The Scotsman, Page: 1, 5 Yorkshire Post, Page: 2 Daily Mirror, Page: 4

Industrial output falls

The ONS said industrial output fell 0.5% in March compared with February, when it dropped by a revised 0.8%. Construction output was down by 0.7% in March, after a 1.7% fall in February, while the UK’s deficit in goods and services widened to £4.9bn in March, from a revised figure of £2.6bn in February. The total trade deficit for Q1 widened by £5.7bn to £10.5bn. Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said: “March’s simply dreadful trade figures demonstrate that Britain is failing to capitalise on sterling’s depreciation.”

BBC News Financial Times, Page: 2 The Daily Telegraph The Guardian, Page: 29 The Scotsman, Page: 33 Yorkshire Post, Business, Page: 17 The Times, Page: 40

FTSE 100 groups offer staff cash instead of pension contributions

A survey of FTSE 100 companies by LCP found 84% were offering staff cash in lieu of pension contributions as employees worry about incurring tax charges for breaching allowances. Elsewhere, Adrian Grace, the CEO of Edinburgh-based life and pensions group Aegon, has called for the next UK government to scrap limits on how much people can save towards their retirement.

Financial Times, Page: 2 The Scotsman, Page: 35

PwC fined over Connaught audit

PwC has been fined a record £5m and severely reprimanded over its auditing of collapsed property services group Connaught, which went bust in 2010. The Financial Reporting Council (FRC) spent five years investigating PwC’s audit of Connaught in 2009 and found evidence of misconduct by the accountant and retired partner Stephen Harrison, who was personally fined £150,000. PwC was ordered to pay the FRC’s legal costs and make an interim payment of £1.5m. The Times’ Alistair Osborne notes that, tucked away in BT’s results, is confirmation that it’ll be “appointing new auditors for 2018-19” – PwC had the BT role since 1984. BT is cutting 4,000 jobs in the wake of the accounting scandal at its Italian arm which triggered a £530m write-down in January.

Financial Times, Page: 20 Evening Standard, Page: 43 BBC News The Daily Telegraph, Business, Page: 5 Daily Express, Page: 46 Independent i, Page: 48 Daily Mail, Page: 73 The Times, Page: 42 The Scotsman, Page: 35 Yorkshire Post, Business, Page: 17 The Press and Journal, Page: 37 The Times, Page: 39 The Daily Telegraph, Business, Page: 1

Corbyn’s £30bn spending black hole

An analysis of the spending commitments outlined in Labour’s leaked manifesto suggest there will be a £30bn shortfall in funding. Economists say the plans include up to £90bn worth of spending commitments which will cost every household in Britain the equivalent of £4,000 each, but the Institute of Economic Affairs estimates that Labour tax rises, including increasing income tax for people earning over £80,000 and raising corporation tax by 40%, will only generate £63.5bn. Paul Johnson, the head of the Institute for Fiscal Studies, stressed that the plans were more than just about tax and spending, pointing to state intervention reaching levels not seen since the 1940s. Writing in the Times, he explains that, due to the changes in regulation, the labour market and the role of the state, the plans are “impossible to cost”. Jeremy Corbyn said the manifesto would “transform the lives” of many people in Britain, but the CBI said Labour’s proposals “’risk putting our economy into reverse gear” while the IoD warned that Labour was planning a “very expensive experiment with the UK’s competitiveness”.

The Daily Telegraph Financial Times, Page: 3 The Times, Page: 9 The Times, Page: 8-9 The Sun, Page: 10 Daily Mail, Page: 1-2, 10, 14 Independent i, Page: 7 Daily Express, Page: 4 The Guardian, Page: 1, 6-7

Scotland could get 50p top rate of tax

The Scottish Government’s council of economic advisers is considering the introduction of a 50p top rate of income tax from next April. Finance Minister Derek Mackay confirmed the move, although he admitted that officials have warned that there is “revenue risk” association, as the wealthy could decide to move to England. However, Mr Mackay said the plan could move ahead “if we are sufficiently assured” this could be mitigated.

The Daily Telegraph Independent i, Page: 9 The Scotsman, Page: 8

SoftBank injects $500m into UK tech start-up

The deal with Improbable is largest venture financing round for private British company. The London-based virtual reality firm has raised $500m (£388m) in one of the biggest investments in an early stage European technology business. Japan’s Softbank is backing Improbable in a funding round that values the business at more than $1bn. The deal is further evidence that the UK’s technology sector can now compete with the best.

ft.com

Eurozone industrial output dips

Eurozone industrial output declined slightly in March for the second month in a row after a sharp drop in energy production, official figures show. Eurostat said industrial production in the single-currency bloc fell by 0.1% from February, but rose by 1.9% compared with last year.

Sterling falls again after BOE rate decision

The pound fell by more than 0.25% against the other major currencies after the Bank Of England’s inflation report and their statement that rates were unlikely to rise for 2 years.