Business News 31st August 2017
CPA hopes to inform, with its daily bite-size business news on Thursday 31st August 2017, filled with stories we think will interest business people.
Markets Round up
On Wednesday global stock markets brushed off North Korea fears with the FTSE 100 closing 27.8 points higher yesterday at 7365, up 0.4%. The FTSE 250 likewise climbed 0.5% to 19,617. The Euro Stoxx 50 also climbed 0.5% to 3403.7 while the euro stoxx 600 climbed 0.7% to 371. In the US stocks moved mostly higher over the course of Wednesday, adding to the gains posted Tuesday. Trading activity was somewhat subdued, however, as traders seemed reluctant to make significant moves. The Nasdaq jumped 66 points or 1.1% to 6,368 and the S&P 500 climbed 11 points or 0.5% to 2,458. The strength on Wall Street came following the release of some upbeat US economic data, including a report showing a jump in private sector employment. Asian stocks were mixed. The Japanese indexes were up with the Topix up 0.6% and the Nikkei up 0.7%. The Hong Kong Hang Seng was down 0.4% to 27970. The Chinese CSI300 was down 0.3% to 3822. The Korean Kospi also fell 0.4% to 2363 while the Australian ASX was up 0.8% to 5715 while the Indian Nifty is flat at 9885.
Sterling rebounded from an eight-year low against euro on the back of economic data released today where mortgage approvals rose more than expected, however consumer lending fell to £1.2bn. The dollar also remained firm on the back of economic data. Sterling rose against the Euro to 1.085 and fell against the dollar marginally to 1.29.
Oil futures continued to fall Wednesday, touching their lowest since July amid concerns about the fallout from Hurricane Harvey. WTI oil was down 48 cents, or 1%, to settle at $45.96. Brent was down to $50.76. The move might seem counter intuitive but the disruption to refinery operations along the Texas coast may be interrupted for weeks, and this is therefore predicted to limit the demand for crude oil.
Gold prices retreated from its highest level in 11 months, as a stronger dollar and upbeat U.S. economic data set prices up to snap a three-session streak of gains. Gold is down to $1306.9.
Late payments owed by larger peers
A study by Zurich has found larger businesses are responsible for the majority of late payments made to SMEs. The report shows that 53% of late payments to small businesses were from firms larger than their own, and that SMEs were owed an average of £16,250. The news comes ahead of the appointment of the first ever small business commissioner, a role created by the government to tackle late payment issues. Some 73% of SME owners thought the appointment of a “national champion” for small businesses was a good initiative, but 78% were not aware of the role.
UK Economic Confidence
UK economic confidence dropped in August in stark contrast to the bullish mood across the Channel where eurozone economic sentiment has hit its highest level since July 2007. The European Commission’s Eurostat arm reported the economic sentiment indicator for the euro area rose to 111.9 in August from a revised 111.3 the previous month and beating the consensus forecast of 111.3. Confidence in industrial and services businesses both improved more than forecast, while consumer confidence increased, though retail and construction indicators showed worse readings. The ESI increased in three of the five largest euro-area economies, with Italy up 3.6, France 1.7 and Spain 1.4, while it eased 0.6 in Germany 0.9 in the Netherlands.
May not quitting!
Theresa May has insisted she is “not a quitter” and vowed to lead the Conservatives into the next general election. The decision to come out fighting followed reports that she was preparing to stand down the day before Britain leaves the European Union in 2019. In a series of interviews during a visit to Japan, May set out her plan to fight on, promising to deliver social reforms that will give the country a “brighter future”. She wants to remain Prime Minister until the next General Election, expected to take place in 2022, and intends to be in power “for a long time.” Foreign Secretary Boris Johnson has reportedly given Mrs May his “undivided backing”. Labour, on the other hand, accused the Prime Minister for being delusional. “Theresa May leads a zombie government”, commented shadow Cabinet Office minister Jon Trickett.
Brexit
Britain aims to ‘cut and paste’ deals struck by the EU with other countries after Brexit, the Prime Minister has revealed. Speaking in Japan, Theresa May said the current trade negotiations between the EU and Japan could be “the basis for a future trade deal between the United Kingdom and Japan.” Mrs May commented that this approach would give businesses “certainty” and prevent the UK from missing out on trade boosts negotiated by the EU. She added that copying and pasting other EU free trade deals would probably be a temporary measure – the so-called transition period before the UK reaches independent agreements. Japanese leaders have nevertheless made clear that their negotiations with the EU was a priority at the moment and expressed concerns that there was uneasiness about Brexit in Japan’s business community.
SME borrowing slows
Business lending picked up in July, according to figures from the Bank of England. Total borrowing by non-financial companies increased by 4.2% on the year, up from 3% in the 12 months to June. However, the rise is almost entirely driven by large businesses, where lending grew by 6.3%, rather than SMEs, which increased borrowing by only 0.7%. “Small businesses’ appetite for new finance is waning against a backdrop of unprecedented uncertainty, anaemic domestic growth and inflationary pressure weighing on consumer demand,” said Mike Cherry, national chairman of the FSB. Meanwhile, a survey by Lloyds Bank shows confidence among businesses with a turnover above £1m has fallen to a balance of 17%, the lowest level since last August.
Personal borrowing slowed in July
Personal borrowing growth eased off in July, according to the Bank of England’s latest figures. Consumer credit rose in July at an annual rate of 9.8%, its slowest growth rate since April last year. The BoE’s figures also show total mortgage lending hit £21.2bn in July, the highest level since 2008.
Workless family numbers lowest for 21 years
The proportion of UK households where no-one is working has fallen to its lowest level since 1996, according to the ONS. Its latest Labour Force Survey found 14.5% of households – some 4,130,000 people in 2,998,000 homes – were classified as completely workless in the first quarter of this year.
Currency rip offs
Travellers buying their currency at airports are being offered much lower rates, even lower than High Street banks. A survey carried out by foreign exchange broker FairFX has revealed that airport bureau de change offered as little as 86 euro cents to the pound, while the average euro rate at 16 biggest UK airports was 95 euro cents to the pound. James Hickman, chief commercial officer at FairFX, observed that the figures show currency exchange firms at airports are taking advantage. “At most airports and terminals individual companies have a monopoly” said Mr Hickman, adding that those firms should be regulated.
Record duty take draws comment
The daily Mail reports on analysis from Nationwide revealing that the Treasury took a record £12.8bn in stamp duty in the year to June. MP Jacob Rees-Mogg has told the Mail that the “large tax take reduces flexibility in the housing market and ultimately reduced liquidity.” On reforms to stamp duty introduced by former Chancellor George Osborne, GetAgent chief executive Colby Short comments: “There is nothing that shows the stamp duty surcharge has prompted an increase in first time buyers, which is what the Chancellor had hoped for.”
Big business faces £25bn tax bill
HMRC is chasing large businesses for £24.8bn of potential underpayments last year, as it steps up efforts to close loopholes and stamp out avoidance. The annual estimate has risen 31% from £19bn since 2014-15. “Tax under consideration is not tax owed or unpaid, it’s an estimate of what might be at stake if we didn’t investigate,” HMRC said. The data, disclosed after a freedom of information request from Pinsent Masons, also reveals similar work by the Revenue has brought in £53bn that would have otherwise gone unpaid since 2010. HMRC’s investigations are distinct from the “tax gap”, which in 2014-15 was estimated to be £36bn. Despite the focus on larger firms, HMRC estimates that small business avoids more than twice as much tax. The tax gap for small businesses in 2014-15 was estimated at £15.8bn, compared with £6.7bn by large businesses.
US economy
New figures show the US economy expanded at annualised rate of 3% in the three months to the end of June, growing at its fastest pace in more than two years. Consumer and business spending was higher than previously estimated, the US Bureau of Economic Analysis said. The revision lifted the annual GDP growth rate from the earlier 2.6% estimate, with growth accelerating from a slow start to the year. But economists said it did not alter the picture significantly.
China Manufacturing
The manufacturing sector in China continued to expand in August, and at a faster rate, the latest survey from the National Bureau of Statistics said on Thursday with a PMI score of 51.7. That beat forecasts for 51.3 and was up from 51.4 in July. It also moved further above the boom-or-bust line of 50 that separates contraction from expansion. The bureau also said that its non-manufacturing PMI came in with a score of 53.4, down from 54.5 in the previous month.
Japan Industrial Production Slides
Industrial output in Japan fell a seasonally adjusted 0.8% on month in July, the Ministry of Economy, Trade and Industry said on Thursday. That missed forecasts for a decline of 0.3% following the 2.2% spike in June. On a yearly basis, industrial production climbed 4.7% – again missing forecasts for 5.2% and down from 5.5% in the previous month. Upon the release of the data, the METI maintained its assessment of industrial production saying was that it shows signs of picking up
Germany
Angela Merkel’s Christian Democratic bloc looks set for a clear win in Germany’s election on Sept. 24. But polls suggest she’ll still be short of a parliamentary majority in the Bundestag and will need weeks, if not months, to form a new coalition government. The chancellor is likely to have two obvious options: a rerun of her “grand coalition” with the Social Democrats, or a combination previously untested at the national level in Germany, a three-way tie-up with the Free Democrats and Greens.
Trump
Donald Trump has said “it’s time” for US lawmakers to act on tax reform. President Trump has warned Congress not to fumble the chance to rewrite the U.S. tax code and reinvigorate the economy as he kicked off his effort to sell the American public on a tax commenting during a speech at a manufacturing plant in Springfield . “I am fully committed to working with Congress to get this job done, and I don’t want to be disappointed by Congress — do you understand me?”. His administration is pushing for a simpler tax code and lower rates, but it has said it will leave the details of the proposal to Congress. Lawmakers are expected to present a bill in coming months.
Elsewhere, President Trump’s criticism of journalists amounts to an attack on the freedom of the press and could provoke violence against reporters, the United Nations’ human rights chief warned yesterday. Zeid Ra’ad al-Hussein said Trump had also made worrying remarks about women, Mexicans and Muslims and went on to question the president’s approach to immigration and decision to pardon former Arizona sheriff Joe Arpaio. “It’s really quite amazing when you think that freedom of the press, not only sort of a cornerstone of the U.S. Constitution but very much something that the United States defended over the years is now itself under attack from the President,” he said.
It was a busy day for Trump. Donald Trump has also warned that talking to North Korea is “not the answer” as tensions between Pyongyang and Washington mount once again following the latest North Korean ballistic missile test. “The US has been talking to North Korea, and paying them extortion money, for 25 years. Talking is not the answer!” Mr Trump tweeted one day after he had declared that “all options are on the table”.
Or see our recent previous news pages
Business News 30th August 2017
Business News 29th August 2017
Business News 23rd August 2017
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
follow us on social media:-