Business News 22nd August 2017
CPA hopes to inform, with its daily bite-size business news on Tuesday 22nd August 2017, filled with stories we think will interest our members and visitors.
Markets Round up
The FTSE 100 fluctuated but was generally down yesterday taking the lead from the US where nerves built up ahead of President Trump’s first televised address yesterday.The FTSE 100 fell 0.1% to 7319 while the 250 rose 0.1% to 19,647. The Euro Stoxx 50 fell 0.6% to 6424. US markets were muted and halted recent falls with the S&P500 climbing 0.1% to 2438 and the Nasdaq falling 0.1% to 6213. In Asia, markets had modest gains as the Yen snapped four days of gains. Japanese markets were flat, the Hong Kong,Hang Seng rose 1.2% to 27,478 the Chinese CSI300 rose 0.3% to 3752 and the Korean and Indian stocks were up 0.4%. In currencies the pound fell against the Euro to 1.091 and against the US dollar to 1.2856. Gold fell to $1285.4 and Oil rose with Brent at $52.0 and WTI at $47.7.
Cashflow crisis for builders as big firms hold back payment
Large contractors are putting small construction firms under unbearable pressure by withholding payments, according to the Specialist Engineering Contractors’ Group. The large contractors are facing their own cashflow problems as traditional funding sources dry up and customers delay projects over Brexit fears, the SEC said, but they are delaying payments to shore up their own positions. The Times adds that the government is expected to publish a review of the retentions system next month. The SEC also cited research by Funding Options which showed that directors of smaller construction companies had been putting 27% more of their own cash into operations in 2016 than they were in 2014.
The Times, Page: 43
Brexit
Britain has set out proposals to ensure that trade in goods and services can continue with Europe after the point at which the UK leaves the European Union. A position paper published by Brexit Secretary David Davis called for goods already on the market to be allowed to remain on sale in the UK and EU without additional requirements or restrictions following Brexit. And it said any agreement should allow oversight arrangements to remain in place, permitting action to be taken against unsafe or non-compliant goods to preserve patient safety and consumer protection. The EU is nevertheless holding firm to its view that it won’t discuss trade until “sufficient progress” is made addressing the Irish border, Brexit bill and citizens’ rights. EU chief negotiator Michel Barnier tweeted on Monday that the new round of negotiations next week will “focus on orderly withdrawal” and that he’d been “clear and transparent since day one.”
Political class permits tech overthrow of British companies
The Times’ Andrew Ellson describes government ministers as “feckless” in permitting technology giants such as Amazon or Airbnb to use favourable tax arrangements to undercut British businesses. Car dealers will soon be the latest victims, he says, after Amazon said it plans to start selling cars online. Car dealerships face an extra 15% in business rates over the next five years while Amazon benefits from an April rates cut. Amazon’s Luxembourg domicile hurts the likes of John Lewis too, adds Ellson, as our “witless leaders” allow tech giants to “grow to such dominance that the economy and innovation suffers”. Mark Rigby, the chief executive of CVS, the business rent and rates specialist, said: “This is yet another example of inequality in the tax system in light of today’s digital economy. It’s more important than ever that we have a tax system fit for the 21st-century economy.”
The Times, Page: 10
Peer-to-peer lending websites struggle to attract borrowers
Research by EY found only 7% of borrowers would go to a P2P lender for cash, with concerns over scams and identity theft among the factors deterring investors. The Times reports that Funding Circle will no longer allow investors to pick which businesses to back. It says its move to passive-only investments would make its platform simpler and fairer. The paper’s James Hurley suggests the move could pave the way for the P2P lender to launch a tax-efficient Isa product. But this has to be a negative for investors who are no longer allowed to apply prudence.
The Times, Page: 35
Ministers must grasp case for property tax reform
The Evening Standard’s Russell Lynch calls for urgent reform of stamp duty, which he says is a tax which creates economic inefficiencies including making the labour market less flexible by discouraging people from moving. He suggests stamp duty could be replaced by a “housing services tax” which is levied as a simple percentage of the rental value of each property, whether it is rented or owner occupied.
Evening Standard
Accountants warn of post-Brexit spending cuts
The Chartered Institute of Public Finance and Accountancy (CIPFA) has said the Scottish government should prepare for a £3.7bn public spending black hole in the aftermath of Brexit. Head of CIPFA Scotland Don Peebles said: “As it is likely that many of the fiscal risks predicted will be realised in future years, the Scottish government must begin to budget for Brexit, so that it will be in the best position to sustain any financial shocks.”
Credit to Cards
The use of credit and debit cards by UK consumers has sped up and is growing at the fastest rate since 2008 according to industry group UK Finance. The number of transactions on plastic was u up 12% year on year to the end of June, with the value of the transactions also up by 7%. The figures are of concern to analysts at the Bank of England and while the move to cards is in part a signal of a structural trend away from the use of cash payments, this is not the whole story. Rising inflation and slow wage growth is giving rise to an increase in consumer borrowing as households continue to feel the squeeze. The rise in levels of borrowing has moved the Bank of England to demand credit companies increase their capital base in an attempt to protect the financial system. While consumers are spending, reports suggest that this is focused on essentials such food and fuel rather than luxuries.
UK Cars
Rules of Origin | Manufacturers of “Made in the U.K.” cars are facing a worrying dilemma: Their vehicles might not be British enough to escape expensive tariffs after Brexit. Current trade pacts generally require exporters to prove that 50 to 60 percent of a product’s components are from the originating country to avoid duties. But U.K. cars now contain on average just 44 percent British-made parts, according to the Automotive Council. Such numbers mean auto companies are already bracing themselves for the U.K. to strike post-Brexit trade deals that will most likely require them to source more vehicle parts from within Britain.
Previous News pages
Business News 21st August 2017
Business News 18th August 2017
Business News 17th August 2017
Business News 16th August 2017
Business News 15th August 2017
Business News 14th August 2017
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