Business News 4th September 2017
CPA hopes to inform, with its daily bite-size business news on Monday 4th September 2017, filled with stories we think will interest Business people.
Markets Round up
On Friday the FTSE 100 rose 0.1% to 7438.5 and the FTSE 250 fell 0.1% to 19,786.2. In Europe the Euro Stoxx 50 and 600 both rose 0.6% to 3443.88 and 376.1 respectively. European and U.K. Shares moved higher as investors took note of several data releases, including the U.S. jobs report. UK equities continued their recent tilt in favour of large cap miners following strong China manufacturing PMI data which topped expectations. UK banking stocks however remained flat. The US Commerce Department reported non-farm payrolls rose 156k but revised down both June and July by 21k and 20k respectively. The US economy appears to be softer than expected. U.S. stocks closed higher on Friday as Wall Street assessed the likelihood of tighter monetary policy following a weaker-than-expected jobs report. The S&P 500 was up 0.2% to 2476.55 and the Nasdaq was up 0.1% to 6435.3.
Markets have opened Monday in a risk off mode following a ramping of tensions yet again in Korea. Asian stocks were mostly lower with Japanese stocks down 1% (The topix down to 1603.5 and the Nikkei down to 183.2) Hong Kond down 0.76% (Hang Seng down to 27740.2) China was up (The CSI 300 up 0.4% to 3845.6) Korea down 1.2% (The Kospi down to 2329.65) and India down 0.6% (nifty to 9912.6). Europe has opened lower with markets down about 0.5% across Europe.
The pound is slightly up, trading at 1.087 Euros and 1.295US Dollars. Oil is flat with WTI at $47.4 and Brent at $52.4. Gold is up to $1.334.2.
Brexit
Newspaper reports at the weekend suggested Prime Minister Theresa May was set to approve paying as much as £50 billion. Under that formula Britain would send to £17 billion a year to Brussels for three years after Brexit, ending payments ahead of the 2022 general election. . That kind of amount may help break the deadlock between the two sides and pave the way to a trade deal, but Brexit Secretary David Davis called the report “nonsense” and “completely wrong.” The British are seeking a faster pace of talks over the coming months in order to make a deal. Davis accused the EU of trying to “play time against money” and told the BBC’s Andrew Marr on Sunday that its pressure tactics “looked a bit silly.”
UK Manufacturing
Growth in the UK’s manufacturing sector accelerated last month, according to a closely watched survey, with output, orders and employment all picking up. The Markit/CIPS purchasing managers’ index (PMI) for manufacturing rose to 56.9 in August from 55.3 in July. A figure above 50 indicates expansion. The PMI reading was the second highest for more than three years. Rob Dobson from Markit said the sector continued to show signs of “solid progress”. He said it was increasingly likely that growth in the sector would be maintained “given the breadth of the expansion”, with both big and small companies seeing conditions improve.
Export drive targets SMEs
The international trade department wants to encourage 30,000 small businesses to start selling abroad as part of a revamped export drive. Advertising firm Ogilvy has been lined up to run the initiative, which is expected to begin in early January. It will be part of the Exporting is Great campaign, which urges companies to “think bigger” and look beyond the domestic market for growth.
The Sunday Times, Business and Money, Page: 2
Government urged to extend AE
The government is facing calls to extend the auto-enrolment pension scheme to the self-employed, amid suggestions that millions risk poverty in retirement. Around two million of the UK’s five million self-employed workers cannot afford to save anything at all, according to research from LV=, while a further one in 10 saves less than £50. Andy Tarrant, head of policy and government relations at The People’s Pension, said auto-enrolment has helped more than eight million lower-paid employees into a workplace pension and the scheme must now be extended to the self-employed.
Sunday Express, Page: 56
US Manufacturing
Activity in the US manufacturing sector expanded faster than estimated in the month of August, the Institute for Supply Management revealed in a report on Friday. The ISM said its purchasing managers index climbed to 58.8 in August from 56.3 in July, with a reading above 50 indicating growth in the manufacturing sector. Economists had expected the index to inch up to 56.5. The bigger than expected increase lifted the purchasing managers index to its highest level since reaching 59.1 in April of 2011. The jump by the headline index was partly due to a notable acceleration in the pace of job growth in the sector, as the employment index surged up to 59.9 in August from 55.2 in July. With the significant increase, the employment index climbed to its highest level since reaching 61.3 in June of 2011.
US jobs
The US economy added 156,000 jobs in August, less than the previous month and below expectations. Analysts had expected US non-farm payrolls to rise by between 175,000 and 185,000 last month. Data released by the US Department of Labor also showed that employment growth in June and July was lower than originally estimated. The department also announced that the jobless rate had ticked up to 4.4% from 4.3% in July. Previous data had put the number of jobs created in July at 209,000, but that has now been revised down to 189,000. June’s reading of 231,000 jobs has also been cut to 210,000.
Turkey
Angela Merkel on Sunday unexpectedly promised to try to end Turkey’s EU accession talks in a live televised German election debate, amid escalating tensions between Berlin and Turkish president Recep Tayyip Erdogan. The German chancellor was seemingly bounced into making this unusually bold pledge by Martin Schulz, her social democrat challenger, who was the first to say he would break off the talks if he won the parliamentary poll on September 24. The exchanges came with 12 German citizens now under arrest in Turkey in a crackdown by Mr Erdogan on regime critics and journalists that is widely seen in the EU as politically motivated and anti-democratic.
Staircase tax proves a step too far
Family firms across the country have warned they are being forced to downsize and make staff redundant because their business rates have been pushed up dramatically by the so-called staircase tax. The extra charge has arisen following a 2015 Supreme Court ruling, which said businesses operating from different rooms or floors in a multi-tenant office building would have to pay rates separately on each area divided by a communal staircase or corridor. Up to 90,000 commercial properties are now being looked at to see if they are affected, with the higher rates backdated to 2015. Chancellor Philip Hammond and Sajid Javid, the communities secretary, have been urged to address the issue, after business leaders said the “irrational” changes will hit tens of thousands of small companies and could bankrupt some of them
Brexit slowdown could be ‘an illusion’
A member of the Bank of England’s monetary policy committee has suggested the slowdown in Britain’s economy following the EU referendum could turn out to be illusory. Michael Saunders said that the economic weakness is likely to disappear as official data gets revised – much like the phantom “double-dip recession” of 2012.
The Sunday Times
SMEs look to the cloud
Over three-quarters (76%) of small businesses and entrepreneurs are looking to cloud solutions to increase their business efficiency, a poll by Smith & Williamson has found. “Businesses, particularly smaller and scale-up ones, are noticing the vast potential that working in, and using, the cloud can offer them,” says Maria Fandrakis, head of business outsourcing services at Smith & Williamson.
Labour to increase corporation tax but protect SMEs
Writing in the Independent, Newcastle MP Chi Onwurah outlines Labour’s industrial strategy which includes raising corporation tax. Ms Onwurah states there is scant evidence that reducing corporation tax leads to further business investment and that currently it costs the Treasury £10.8bn per year in lost revenue. “We’ll protect small businesses from this by reintroducing a lower small profits rate of corporation tax. And they will be some of the main beneficiaries of our infrastructure projects and plans to bring supply chains onshore,” she adds.
The Independent, Page: 28
HMRC targets offshore payroll company
HMRC is to demand income tax payments from 1,500 contractors at offshore payroll firm Aston Management Ltd (AML) over allegations of tax avoidance. Many employees of the Isle of Man-based company paid as little as 3% income tax, according to the Mirror. AML, which was registered under the Disclosure of Tax Avoidance Schemes, is appealing a High Court ruling arguing it was fully compliant with UK law. Graham Webber from WTT Consulting, which is advising former AML clients, stated: “HMRC’s incompetence caused this situation and they are now targeting decent, hardworking people who face financial ruin.”
Daily Mirror, Page: 13
Coastal communities among poorest
A new study shows the economic gap between coastal and non-coastal parts of the UK has grown. Average wages are £3,600 a year lower in these “pockets of deprivation”, with coastal communities among the country’s worst off for employment, health and education. Report author, The Social Market Foundation chief economist Scott Corfe, said a lack of local job opportunities and poor transport links contribute to badly-performing economies.
BBC News
Public sector pay cap to be lifted by Westminster
The Sun claims Theresa May is planning to lift the 1% cap on public sector pay increases later this month, in a bid to reconnect with the electorate. All workers will benefit, but the plans will be implemented over a two-year period to manage the costs involved. Nurses and senior leaders across the civil service will be the first to benefit, from April next year, as ministers authorise pay hikes of at least the rate of inflation. The Chancellor is understood to approve of the decision. It follows reports that Nicola Sturgeon will remove the 1% cap in Scotland.
The Sun
Small firms suffer from branch closures
A report by the FSB reveals there are now around 1,500 towns in the UK without a single bank branch. Mike Cherry, FSB National Chairman, observed: “At a time of unprecedented uncertainty, the last thing small businesses need is loss of in-person bank branch support.”
Pension deficit may be down to pessimistic accounting
Experts have suggested that accounting practices could be overstating the problem of deficits in defined benefit pension schemes, with a chance the funding gap could still narrow in the next decade. Companies listed on the FTSE 350 have deficits amounting to £62bn, according to Barnett Waddingham, but the actuary business LCP says the discount rate used to calculate a fund’s future returns is often too prudent. It has calculated that using a more realistic rate would reduce the value of pension fund liabilities.
Self-builders missing out on tax windfall
Research by the Homebuilding & Renovating Show reveals self-builders are owed an average of £30,594 each from HMRC in unclaimed VAT on building materials.
Premier League smashes transfer records with £1.4bn spend
Deloitte says English Premier League clubs have spent an unprecedented £1.43bn on players during this summer’s transfer window – the sixth-consecutive year that records have been broken.
Maths fails to tax Britons
One in four Britons say they would have preferred to be taught about taxes at school rather than maths, according to a poll by the credit report service Noddle.
Labour plans to claw £36bn back from tax dodgers
Labour wants to hire hundreds more tax inspectors to claw back £36bn a year from avoidance, John McDonnell has said. The shadow chancellor believes the figure could go even higher, taking into account schemes used by firms such as Apple, Starbucks, Amazon and Google to shift taxable income. Mr McDonnell said HMRC “has suffered terrible, counterproductive cuts, with even more on the horizon,” adding: “We need more, not less support for HMRC so that we can close the tax gap.”
Sunday Mirror
Buyouts dip due to uncertainty
A new report from Moore Stephens shows that the number of management buyouts fell over the last year. There were 80 MBOs in the year to June, down by 7% on the previous year and down by a fifth since 2014-15. Moore Stephens said potential buyers and vendors have been more cautious because of concerns over Brexit. Jamie Johnson, director at Moore Stephens, said: “A growing number of potential buyers and vendors are deciding to wait out this period of uncertainty.”
The Times, Page: 43
BBC stars facing tax hikes
Some of the BBC’s top presenters are facing tax hikes on their earnings, following pressure from HMRC. The corporation last week sent letters to staff telling them it would now tax some workers at source at the full 45% PAYE rate for salaries of £150,000-plus. Until now, many of the BBC’s biggest names have routed their salaries through personal service companies so they pay only 20% corporation tax.
P2P lender placed loans through rivals
It has emerged that one of the country’s biggest peer-to-peer lenders channelled millions of pounds of investors’ money into investments offered by rivals without telling its customers. Ratesetter connected some of its customers’ capital with investment opportunities offered by Wellesley and Archover, including about £10m of property development loans written in conjunction with Wellesley.
The Times, Page: 35
SMEs hurt as HSBC freezes accounts
HSBC has apologised to small business owners after bank accounts were frozen as part of measures to tackle money laundering from companies with foreign ties. The bank claimed many of the affected account owners were contacted but had failed to provide a response. However, the Federation of Small Businesses (FSB) said many businesses had complied with HSBC’s requests for information but had seen accounts frozen disrupting the payments to staff and suppliers. FSB chairman Mike Cherry stated: “Of course the bank must take a zero-tolerance approach to illegal activity – but it must also be certain of suspicions before action is taken against the exporting strivers that drive our economy forward.”
The Guardian, Page: 20
Hurricane Harvey
US Treasury Secretary Steven Munchin on Sunday challenged Congress to raise the government’s debt limit in order to free up relief spending for Hurricane Harvey, a disaster that the governor of Texas said could require up to £140 billion. Harvey, which came ashore on August 25th as the most powerful hurricane to hit Texas in more than 50 years, has killed an estimated 50 people, displaced more than 1 million and damaged some 200,000 homes in a path of destruction stretching for more than 300 miles. Texas Governor Greg Abbott estimated damage from Hurricane Harvey at $150 billion to $180 billion, calling it more costly than Hurricane Katrina, which devastated New Orleans in 2005.
Korea
North Korea conducted its sixth and most powerful nuclear test on Sunday, which it said was an advanced hydrogen bomb for a long-range missile, marking a dramatic escalation of the regime’s stand-off with the United States and its allies. North Korea, which carries out its nuclear and missile programs in defiance of UN Security Council resolutions and sanctions, said on state television that the hydrogen bomb test ordered by leader Kim Jong Un had been a “perfect success.” The Security Council is scheduled to meet later today to discuss the nuclear test, and US Defence Secretary Mattis said the members of the council “remain unanimous in their commitment to denuclearisation of the Korean Peninsula.”
Donald Trump has lashed out after North Korea’s latest nuclear weapons test, declaring the nation’s actions as “hostile and dangerous” to the US and leaving open the possibility of a military response against Pyongyang. After meeting with the president on Sunday, Jim Mattis, the defence secretary, appeared outside the White House to warn North Korea that any threat to the US or its allies would be met with a “massive military response”.
Or see our recent previous news pages
Business News 1st September 2017
Business News 31st August 2017
Business News 30th August 2017
Business News 29th August 2017
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