Business News 29th September 2017

CPA’s daily bite-size summary of the business news on Friday 29th September 2017, filled with stories to inform and interest business people.

Markets Round up

Yesterday was a quiet day on the FTSE 100 as it climbed 0.13% to 7322.82 on low volumes. The FTSE 250 meanwhile climbed 0.6% to 19,678.5. In Europe the Eurostoxx 50 climbed 0.24% to 3563.64. US stocks finished slightly higher, with the S&P500up 0.12% to 2510 on gains in McDonald’s and pharma, while investors seemed buoyed by hope President Donald Trump will be able to move forward on tax reform. In Asia the Nikkei was flat while the Hang seng was up 0.5%, Chinese CSI 300 climbed 0.4% and the Korean Kospi jumped 0.9%. Oil prices rose, spurred by tension around northern Iraq following the Kurdistan region’s vote in favor of independence in a referendum. Investors continue to bet that efforts to cut a global glut are working and that the demand outlook is improving. WTI os at 51.75 and Brent is at $57.8. Gold touched a six-week low at $1287 after the dollar and U.S. bond yields rose on proposed U.S. tax reforms and strong economic data that supported the case for another U.S. interest rate hike this year. The Pound is at

UK GDP

UK GDP only rose 1.5% against the consensus forecast of 1.7%

US GDP

Economic activity in the US increased by slightly more than previously estimated in the second quarter, the US Commerce Department revealed in a report on Thursday. The report said gross domestic product jumped by 3.1% in the second quarter compared to the previously estimated 3.0% growth. Economists had expected the pace of GDP growth to be unrevised. The stronger than previously estimated GDP growth primarily reflected an upward revision to private inventory investment.

Brexit

Theresa May made a speech about EU security in the Estonian capital of Tallinn, where she said the UK is unconditionally committed to the future of defence and security in Europe. It follows weeks after the UK Government published a paper outlining the important role the country has played in EU security to date, suggesting the two sides could continue to work closely in this area. With the latest round of talks having closed, EU chief negotiator Michel Barnier said it could be “weeks or months” before they agreed to move on to the next stage of talks about future relations. He did, however, accept that Theresa May’s Florence speech has created a “new dynamic” in the negotiations. Brexit Secretary David Davis noted there was “real progress” this week, adding he leaves Brussels with “optimism. The UK and EU sides are due to meet again on October 9. Less than a fortnight later, the European Council will attend a pivotal summit during which member states will decide whether enough progress has been made to move the talks to phase two.

Doubt has been cast over one of the longest-standing economic claims in the Brexit debate, after an investigation revealed that Britain’s real exports to outside the EU are actually far lower than official figures suggest. The government’s trade statistics show that, over the past five years, the share of UK goods being exported to the European Union was only 46% – a fact frequently referred to by those who campaigned for Brexit. However, this number is severely distorted by the flow of gold bullion in and out of London – the world’s major centre for the trade of this precious metal.

Energy

With the Conservative Party conference starting in two days, almost 200 MPs, including 76 Conservatives, have signed a cross-party letter calling on PM Theresa May to cut energy bills. Mrs May had made the commitment prior to the election in June, arguing a cap would save 17 million households as much as £100. However, all major energy firms and some smaller operators have increased prices this year. After the election, energy regulator Ofgem said it would help only 2.2 million users with a “safeguard tariff”. The letter urges the Government to end the “stitch-up” and “help the millions of households who Ofgem seem set to ignore”.

Korea

South Korea expects more provocative acts by North Korea next month, to coincide with the anniversary of the founding of the North Korean communist party and China’s Communist Party Congress. During a meeting with President Moon Jae-in on Thursday, national security adviser Chung Eui-yong said he expected Pyongyang to act around October 10th, but gave no details. “The president said the United States speaks of military and diplomatic options, but South Korea can’t go through war again,” said Park.

Uber

A busy Theresa May has also stopped to call the decision not to renew Uber’s operating licence in the capital “disproportionate” and argued it puts thousands of jobs at risk. Speaking to the BBC, The PM said that although Uber had questions to answer, she wants a “level playing field” between private operators, adding “what I think people want to see is choice”. She laid the blame on London Mayor and TfL Chairman Sadiq Khan. “At a stroke of a pen, what the mayor has done is risked 40,000 jobs and of course… damaged the lives of those 3.5 million Uber users”.

Kenya

Kenya’s ruling Jubilee Party on Thursday presented parliament with proposals intended to prevent the Supreme Court annulling the results of a coming re-run presidential election, as it did the last vote in August. The court struck down President Uhuru Kenyatta’s poll victory then, saying there had been illegalities and irregularities in the transmission of results. Kenya used two systems to transmit results from polling stations: paper forms and the electronic transmission of the vote tallies plus scanned copies of the forms. The court found flaws in both. Jubilee’s proposed amendments to election law would stop the court from invalidating results if the electronic transmission again fails to work smoothly.

Ryanair

The UK Civil Aviation Authority has told Ryanair Holdings it has until 5 pm London time to meet obligations to thousands of customers affected by flight cancellations, Sky News reported. The CAA has ordered Ryanair to tell passengers they are entitled to reimbursement of their expenses and to be rerouted with another carrier, as well as to commit to help passengers who have chosen an “unsuitable” option due after being mislead, according to Sky News. The CAA has threatened legal action against Ryanair following the airline’s failure to properly inform customers of their rights.

ECB

European Central Bank policymakers will discuss adjusting but not ending the ECB’s economic stimulus in light of stronger growth, keeping in mind that markets can over-react to any change, ECB chief economist Peter Praet said on Thursday. “Things are going on the real (economy) side much, much better,” Praet told a conference in Berlin. “But the job is not yet done. Now we are talking about recalibration. The end of the story is not yet written.” “We know that markets can over-react. That is why we are prudent,” Praet said. “How prudent? … That is the debate we have in the governing council.”

Trump

The White House vowed to push ahead with President Donald Trump’s commitment to scrap the “carried interest” tax break enjoyed by hedge fund and private equity managers as it fended off charges that its tax plan was a gift to the wealthy. Gary Cohn, head of the White House economic council, said on Thursday that Mr Trump had not wavered in his determination to close a “loophole” that is worth billions of dollars to Wall Street money managers. “The president made it clear to the tax writers in the Congress that that is his position,” Mr Cohn told CNBC. “That was his position during the campaign and he continues to support the position that carried interest is one of the loopholes we talk about when we talk about getting rid of loopholes that affect wealthy Americans.”

Merkel & Macron

Angela Merkel signalled that she is prepared to engage with Macron to reform the EU, saying there was a “high degree” of consensus between Europe’s two biggest countries. The German chancellor, who won the recent election but lost seats and her coalition partner said a speech by French president Emmanuel Macron this week had set “important building blocks” for EU negotiations to come, although she cautioned the two countries still had “to talk about the details”.

Bitcoin

The New York Stock Exchange’s bid to list a bitcoin investment fund has been dropped, showing that regulation remains a barrier for those attempting to bring digital currencies to mainstream markets. The NYSE’s Arca platform, the most popular US venue for listing exchange traded funds, has withdrawn an application for regulatory approval to list shares of the four-year-old Bitcoin Investment Trust, according to the fund’s sponsor Grayscale Investments. Grayscale, which trades the Bitcoin Investment Trust “over the counter” on less formal exchanges, said in a statement that it “does not believe there have been enough regulatory developments” to prompt the Securities and Exchange Commission to approve the application.

Google

Google has made a small but significant ammendment to its search engine in Europe. The ad slots on the shopping results pages were reserved for Google’s ads and linked directly to merchants’ pages. From yesterday, the slots are auctioned off, some to rival comparison-shopping services. This is Google’s response to an EU antitrust ruling (and a €2.4bn fine).

Musk go faster

Travel anywhere on Earth in under an hour — that’s Elon Musk’s vision. He’s planning a new rocketship, code named BFR, that’ll be capable of ferrying passengers from New York to Shanghai in about 30 minutes. “If we are going to places like Mars, why not Earth?” Musk said in Adelaide today. Speaking of the red planet, Musk said SpaceX will send cargo there in 2022 and a crewed mission in 2024.

Businesses ‘unprepared’ for criminal tax evasion laws

Experts have warned that businesses are ill-prepared for new tax evasion laws coming into force tomorrow. Regulations in the new Criminal Finances Act will hold a company criminally liable if any of its employees help commit tax evasion, with the potential for unlimited fines. However, Jonathan Pickworth of White & Case said the new offence “has crept in somewhat under the radar,” while Andrew Tuson, partner at Berwin Leighton Paisner, said: “Firms should expect that the FCA will not wait a protracted period before assessing whether firms have in place appropriate systems and controls.” Michael Harris, of Gerald Edelman, explained that data will be important to ensure a business does not fall foul of the new laws. “The key is to know who the customer is,” he said.

City AM

SMEs still reliant on traditional bank products

Research by the British Business Bank has found that core debt products such as bank loans, overdrafts and credit cards remain the most frequently used method for SMEs looking to raise finance. But a clear trend has also emerged of fewer smaller businesses using core products since 2012. Applications for new debt facilities fell to 4% of smaller businesses in the first half of 2017, down from 11% in 2012. The BBB suggests these changes may be due in part to a change in preferences, where smaller businesses generally prefer holding positive bank balances and funding growth plans from their own resources.

Datawatch

An ECB survey reveals that finding skilled staff has risen as an issue for SMEs in the eurozone; nearly one in five say it is now the most serious hurdle they face, while access to finance is becoming less of an issue.

Government plans pensions for 16-year-olds

Workers as young as 16 could be enrolled into company pensions following a major review of UK retirement savings. Sources have said the Department for Work and Pensions will scrap the current auto-enrolment age limit of 22. Former Pensions Minister Steve Webb welcomed the proposal, suggesting that although the move would present a small additional cost to employers, it would “send out the right message” to savers.

Stamp duty holds back movers

Stamp duty has been identified by the Building Societies Association’s Property Tracker as one of the main reasons deterring people from moving up the housing ladder. The study reveals that 38% of those who aspire to relocate are concerned about stamp duty.

Carney: BoE cannot solve all economic ills

Mark Carney has said the Bank of England cannot be expected to solve every economic problem in the UK. Speaking at a conference to mark 20 years of monetary policy independence, the governor said officials can do their best to keep inflation low and to support jobs and growth, but they cannot boost long-term productivity or alter the fate of the nation. Mr Carney also said that household incomes will suffer as Britain shifts to a new relationship with the EU, and that Brexit’s shock risk justifies a slower return to the UK’s targeted rate of inflation.

Business confidence rising

The latest Lloyds Bank business barometer shows business confidence is rising but remains at its second-lowest level this year. The reading rose by six points this month to 23%. Economic confidence among businesses surveyed rose by 7 points to 12%.

Super-wealthy ranks swelled by one million

The number of high net worth individuals (HNWI) grew by more than one million last year, as booming stock markets increased the number of individuals with free assets of more than $1m (£750,000). Research by Capgemini found the number of HNWIs now stands at a record 16.5m, holding a collective fortune of $63.5tn. However, the UK dropped out of the world’s top five countries that HNWIs call home, with France pushing Britain into sixth place.