Business News 23rd August 2017
CPA hopes to inform, with its daily bite-size business news on Wednesday 23rd August 2017, filled with stories we think will interest our members and visitors.
Markets Round up
The pound slipped yesterday in response to Brexit concerns and the FTSE100 responded, closing up 0.9% or 63 points at 7,382 as the pound has slipped. HSBC, Glaxo, Tesco, Shire, Rio Tinto and BHP Billiton led the index up. The pound was hit by underwhelming economic data, as the Office for National Statistics reported that the UK posted its first July budget surplus since 2002, debt costs in the fiscal year to date rose by the most for the period since 2010. Stocks with overseas earning rose and the miners were up on rising commodity prices. The FTSE 250 was also up 0.5% to 9,751. In Europe the Euro Stoxx 50 was up 0.9% to 3456 and the euro Stoxx 600 was up 0.8% to 375.8 as the German DAX climbed 1.4%. US stocks climbed with the S&P500 up 1% to 2452.5 and the Nasdaq up 1.4% to 6297. The markets were boosted following positive comments from Washington on the debt ceiling and tax reform. House Speaker Paul Ryan reiterated that tax reform is very different from healthcare reform. Tax reform is “far easier” to pass as Republicans, which control both the House and the Senate, have built a consensus on the way forward. He added that the entire tax reform bill could be passed as one bill. Meanwhile,there are reports in the media revealed that Trump’s administration and congressional leaders have reached a consensus on how to reduce individual and corporate tax rates.
The MSCI Asia Pacific index showed the region was up 0.2% to 159.6 with US enthusiasm tempered by investors having a nervous eye on Jackson hole and Trump’s threat to bring the US government to shutdown if “obstructionists” keep blocking the funding of his border wall and he reiterated comments indicating NAFTA negotiations will lean towards obstructing free trade. The Hong Kong Hang Seng was outlier rising 0.9% to 27,402 despite being hit by Typhoon Hato with its 140 mile winds.
Oil prices headed higher with Brent up to $51.95 on Tuesday, buoyed by expectations that data this week will show that U.S. supplies of crude oil fell for an eighth-consecutive week. Brent had dipped to $51.7 by this morning and WTI was down to$47.6 as markets became concerned over improving Libyan output.
Gold prices slipped on Tuesday to $1287 and were down to $1285 by this morning, pressured by a stronger dollar, while investors focused on North Korea tensions and remained cautious ahead of an annual central banking meeting in Jackson Hole later this week.
The pound has fallen against the Euro to 1.089 and against the US dollar to $1.282.
Government runs first budget surplus for 15 years
July saw a budget surplus, of £0.2bn, for the first time since 2002, according to fresh figures from the ONS, which noted more cash from self-employed tax receipts. Receipts of £8bn from self-assessed income tax were the highest since records began in 1999, while for the four months so far this year public sector net borrowing was £1.9bn higher than last year’s at £22.8bn. The data also showed that total government debt, excluding public sector banks, stood at £1.758tn at the end of July, equivalent to 87.5% of GDP. Howard Archer, chief economic advisor for the EY Item Club, said Philip Hammond is likely to have some “wiggle room” by the time he delivers the autumn Budget, but the Chancellor will probably only “to make limited tweaks to the fiscal approach in November’s Budget rather than radical policy changes.”
BBC News
EU law
Theresa May conceded that EU law will influence the U.K. long after Brexit. In a marked change of tone from seven months ago when she vowed to end the European Court of Justice’s jurisdiction, the compromise is seen as an attempt to speed up divorce talks. The government will say today it’s about escaping “direct jurisdiction” and list alternative ways to enforce rights and obligations.
Employers’ confidence falls
Employers’ confidence in the UK economy has dropped, prompting warnings over the impact of Brexit. A survey by the Recruitment and Employment Confederation (REC) found 31% of employers expect the economy to worsen, compared with 28% expecting it to improve. CEO Kevin Green said: “Businesses are continuing to hire to meet demand, but issues like access to labour, Brexit negotiations and political uncertainty are creating nervousness.”
Independent i, Page: 11 The Times
Brexit
Britain says it wants “coherent common rules” governing cross-border judicial affairs after it leaves the European Union, as it released its latest Brexit position paper on Tuesday. The paper states that Britain wants to build a “deep and special partnership with the EU,” ensuring that there are “coherent common rules to govern interactions between legal systems.” The framework outlines rules to govern which country’s courts will hear civil, commercial or family law cases that raise cross-border issues, and which country’s laws will apply in these cases. It also suggests that a judgement obtained in one country might be recognised and enforced in another.
Euro Manufacturing
A Purchasing Managers’ Index for euro area manufacturing rose to 57.4 in August from 56.6 in July, according to IHS Markit. That’s the highest reading in two months and compares with a median estimate for a slowdown in activity. However services unexpectedly slowed to a seven-month low. Surging demand for euro area goods is boosting the economy and creating jobs and finally creating inflationary pressures. More of the Euro’s nineteen nations are joining the recovery with exports growing ast the fastest pace in six years.
Sports Direct
UK department store operator Debenhams PLC on Tuesday said sports clothing and equipment retailer Sports Direct International PLC has increased its stake in the company to over 21%. Sports Direct raised its holding in Debenhams to 13% in March, before buying more shares last Friday to give it a stake over 21%. Sports Direct also has large interests in a number of other London-listed retailers, including a 27% holding in fashion brand French Connection Group PLC and 25% stake in video games retailer GAME Digital PLC. Shares in Debenhams were trading up 1.9% at 41.25 pence on Tuesday, while Sports Direct shares were trading down 1.1% at 402.40p.
Supermarkets
UK supermarkets had an eventful past few months, with the big four supermarkets enjoying their strongest run in four years and discounter Lidl stepping up to become the seventh largest grocer in the country. The 12 weeks ending 13 August saw overall supermarket sales grew 4.0% year-on-year, research from Kantar Worldpanel revealed on Tuesday, up from the 3.9% reported a month ago but down from the 5% reported in June. Like-for-like grocery inflation ticked up to 3.3% from the 3.2% level it had held for the previous two months.
Mutual benefit from apprenticeships
Flora Carr discusses alternatives to the university route for school leavers, such as apprenticeships, traineeships and BTEC courses. A variety of experts provide comment, including Mark Farrar, CEO at the Association of Accounting Technicians (AAT). He says not enough is done in schools to inform children about alternatives to the traditional university route. Mr Farrar cites AAT research which found two thirds of students reported that they experienced some pressure to choose a more traditional route. He adds that apprenticeships are “mutually valuable” for the apprentice and the business and that they help “to produce a more satisfied workforce and retain talent in the longer term”. Elsewhere, the Standard details how EY, Grant Thornton, KPMG and PwC offer A-level entry schemes to professional qualifications.
The Daily Telegraph
Super-rich would find ways around Labour tax rises, says IFS
Analysis by the IFS suggests Labour’s plans to tax the rich would hit those earning between £80,000 and £200,000, rather than those with the very highest incomes. The think tank said although Jeremy Corbyn’s proposal for a 45p income tax rate for those earning more than £80,000 and 50p for more than £123,000 would raise additional revenue, it would not be as much as Labour thought. The IFS warned policymakers it was hard to be sure about the amounts that higher taxes on the wealthy would raise, which should be explained to voters.
The Times, Page: 2
Councils denying SMEs contact opportunities
Fewer than one in four small companies have won public sector contracts over the past year, according to the Federation of Small Businesses, despite the government setting a target of awarding a third of public sector work to SMEs by 2020. The FSB blamed local authorities for failing to advertise work that was within reach of SMEs on the digital platform that lists public sector projects – Contracts Finder. The FSB’s national chairman Mike Cherry said: “Local authorities are getting around their obligations to clearly and fairly advertise contracts. It is scandalous that only 20% of all local government contracts go to small businesses.”
The Times, Page: 38
Call for Chancellor to suspend staircase tax
The Sun reports that the Valuation Office Agency is exploiting a court ruling that considers firms on different floors or corridors in a mixed-use building as two separate premises to demand thousands more in business rates. Some councils are backdating bills to 2015, the paper says. FSB chairman Mike Cherry commented: “Enough is enough – the government needs to stop punishing the little guy. It’s an insult on top of injury to smack small businesses with a new backdated tax on staircases and corridors.”
The Sun, Page: 4
First-time buyers are on the rise
First-time buyers took out 20% more mortgages in June than in May, according to HMRC figures. The increase has been put down to stamp duty changes which have deterred buy-to-let investors.
Daily Express, Page: 27
Chappell to be prosecuted over BHS collapse
The Pensions Regulator is to prosecute Dominic Chappell, the former boss of BHS. He is charged with failing to provide information and documents the regulator requested during its investigation into the sale of BHS. Frank Field, who chairs the Parliamentary Work and Pensions Committee, commented: “If the Pensions Regulator is frightened of landing the whale, I suppose going after the sprat is the next best thing. Why was Sir Philip Green allowed to get away with an inadequate settlement, in which pensions have been cut, yet Dominic Chappell is going to be sued?”
BBC News
Superfast broadband?
Telecoms company Vodaphone and network operator Openreach are in discussions on a joint venture aimed at rolling out ultrafast fibre-optic broadband to UK cities. While the talks are in early stages the move would be a welcome one as the UK has lagged behind many other developed nations when it comes to broadband speeds.
Standing Desks
Some health experts think the worst thing most of us do every day is sit down. That’s why desks that can be adjusted as workers get up and sit down again are the fastest growing office perk in the U.S. and are offered by 44% of firms, according to one poll. They’re common in Scandinavia and about 16% of German workers have them. Soon enough, these desks will be fitted with sensors that vibrate to nudge users who have been on their behinds too long. Basically it’ll be like having a trainer at work. This news page for example is compiled at a standing desk and the compiler recommends it.
Or see our recent previous news pages
Business News 22nd August 2017
Business News 21st August 2017
Business News 18th August 2017
Business News 17th August 2017
Business News 16th August 2017
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