Business News - 22nd May 2017 - CPA | The Credit Protection Association

Business News – 22nd May 2017

US Markets

A rise in oil prices and strong corporate earnings pushed US markets higher, but the main financial indices closed down for the week amid turmoil in Washington. After ceding ground on Wednesday, Friday’s gains were broad-based, powered by firms such as Deere & Co, Chevron and Walmart.

Greece

Euro zone finance ministers and the International Monetary Fund will seek a deal on Greek debt relief that balances the IMF’s demand for a clear “when and how” with Germany’s preference for “only if necessary” and “details later”. Without the deal, no new loans can be disbursed to Athens, even though the bailout is now handled only by euro zone governments, and Greece needs new credit to repay some €7.3bn worth of maturing loans in July.

Tories defend social care plans

The Conservatives have defended their plans for social care reform after being widely criticised for their “dementia tax” that would see people pay for care at home from their property assets. Former Chancellor Ken Clarke said it was a sensible proposal and the alternative of upping taxes for younger people was “grossly unfair”. A range of comment pieces support this view. Leo McKinstry in the Express says it would be unjust to increase taxes to pay for social care, a move that would see working people subsidise the inheritances of often very affluent families, while the Mail’s Dominic Lawson says Labour would tax work and enterprise instead, to the detriment of the economy. The Independent’s Ben Chu says the PM is quite right not to offer subsidised social care to well-off pensioners, and finally the Telegraph’s Juliet Samuel states that the policy is a “welcome step towards dismantling the pernicious, universal welfarism favoured by Labour.”

The Daily Telegraph, Page: 14 The Independent, Page: 22 Daily Express, Page: 12 Daily Mail, Page: 18 Yorkshire Post, Page: 4

Facebook

The EU’s executive branch has continued its crackdown on US tech firms after fining Facebook €110m for providing misleading information during its acquisition of popular messaging app Whatsapp in 2014. The European Commission found that Facebook had broken an agreement it made during the merger which meant that the social network and messaging app could not match user accounts.

Sir Lynton Crosby’s use of tax haven could embarrass May

The Mirror claims Theresa May’s election strategist, Sir Lynton Crosby, received a six-figure payout from a firm registered in Malta. Sir Lynton is a shareholder and former director of Rutland Holdings and was due to receive £150,000 in dividends in 2015, the latest accounts show, and being a non-dom in the UK would not have to pay tax on it. Although there is no suggestion he has done anything illegal, the paper says Crosby’s use of a tax haven will prove an embarrassment for the PM. A spokesman for Sir Lynton said: “Rutland never did any business in the UK or Europe, nor did it receive fees from any company, body, entity or individual in those countries. Lynton Crosby complies with his full tax obligations, including paying tax in the UK, on his UK earnings.”

Daily Mirror, Page: 1, 4

Tory tax avoidance plans shelved due to election

The Mirror reports that key pledges by the Conservatives to crackdown on tax avoidance were shelved because there was not enough time to debate them before the general election. One of the laws was to punish facilitators of tax avoidance, such as lawyers and accountants, and the other was to scrap non-dom tax status for people who have lived in the UK for 15 of the last 20 years. The paper says tackling tax avoidance was a key plank in the PM’s policy announcements and lists six occasions on which she called for businesses to pay their fair share and improve their corporate governance.

Daily Mirror, Page: 4

Managers set Brexit priorities

A survey of 800 managers by the CMI has found that almost half of company managers want the next UK government to prioritise access to the single market and freedom of movement of people during the Brexit talks. Only one in five said cutting corporation tax should be a priority.

Independent I

Failure to strike Brexit deal could cost £36bn

The Centre for Economics and Business Research has warned that failure to strike an EU deal giving access to the single market for services would cost the UK economy £25bn to £36bn a year. Elsewhere, the Times looks at how City firms are preparing for Brexit. In its latest Brexit tracker EY found that more than a quarter of the 222 firms it monitors said they would move jobs or business, a 50% increase in four months. Omar Ali, EY’s UK financial services leader, said he does not believe the City will wither if banks depart. He said: “I am definitely not a doom monger. It is absolutely clear that no one location is emerging as the winner of business from London. Their ecosystems cannot replicate what we have here.”

The Guardian, Page: 11 Daily Express, Page: 45 The Independent The Times, Page: 9 The Times, Page: 43 The Scotsman, Page: 34

Paris turns to English law to lure City business

The FT reports that Paris is stepping up its efforts to attract financial sector activities from the UK by replicating the English law and extending non-dom tax exemptions for foreigners. Meanwhile, Qatar is also attempting to woo the UK’s financial community with the Qatar Financial Centre (QFC) highlighting the country’s “compelling tax regime” and “transparent legal and regulatory environment” during a series of roadshows.

Financial Times, Page: 9 The Daily Telegraph, Business, Page: 4

Controlled inheritances on the rise

Wealthy parents, particular those owning small businesses, are increasingly using discretionary trusts to make gifts to their children with conditions attached. Financial advisers and lawyers say parents want more control over how assets are used and want to ensure funds are passed on to grandchildren instead of spouses should their children divorce or die. Andy Wood, the director of Enterprise Tax Consultants, said: “We are now seeing far more individuals worried about what might happen in the event of their gifting assets to children in an uncontrolled manner.” But Andrew Goldstone, a partner at Mishcon de Reya, said: “Parents who make a lifetime gift to a trust rather than outright to an adult child may think the assets are safe if the child later divorces but that’s not always true.”

The Times, Page: 17

House prices hit record high

Rightmove has said that house asking prices reached a record high this month, with the average cost now £317,281. The website said this shows signs that sellers’ moving needs are taking priority over uncertainty surrounding Brexit and the forthcoming election.

Daily Express Independent 1

CBI warns against over-regulation of gig economy

The Confederation of British Industry (CBI) has submitted policy ideas to Mathew Taylor, the PM’s reviewer of modern employment, stating that a heavy-handed approach to regulating Britain’s flexible labour market would put the economic recovery at risk. The CBI said assumptions that all workers favoured fixed employment were “lazy” and “outdated” and that the UK labour market had more complex needs. Theresa May has pledged to “properly protect” workers in the so-called gig economy, but the CBI advocated the promotion of good practice rather than relying on legislation alone to ensure minimum standards.

The Daily Telegraph, Business, Page: 1

GDP set to struggle

City economists expect the Office for National Statistics will this week confirm that the UK’s economic growth dropped to 0.3% in the first quarter of the year, down from 0.7% in the previous quarter. Investec’s Philip Shaw said household spending will likely have been “very soft”, following relatively strong growth in the previous quarter. The economy grew by 1.8% in 2016, but Shaw believes rising inflation and the impact on household finances means 2017’s growth will likely be a subdued 1.7%.

The Guardian, Page: 22

CEO’s in trouble

Ford look to be replacing their CEO, Mark Fields after weak sales. Ex-RBS CEO Fred Goodwin is being pursued by angry shareholders for allegedly misleading them during a 2008 capital raising. And Barclays have had to tighten their email security after Jes Staley was caught in an email hoax.

Oil prices rose, supported by reports that an OPEC-led supply cut may not only be extended into next year but might also be deepened to tighten the market and prop up prices.

Gold edged lower, as Asian shares gained, although political worries surrounding U.S. President Donald Trump are expected to keep supporting appetite for the metal as a so-called safe-haven asset.