Business News 8th June 2017

We hope you enjoy reading the business news compiled by the Credit Protection Association on Thursday 8th June 2017 for its members and visitors.

Britain Goes To The Polls

In an election dominated by Brexit, the result will have a major impact on Britain’s negotiating stance. Theresa May had hoped for an increased majority but opinion polls shows that Labour has narrowed the gap to the Tories. Many will be staying up late tonight to watch the results with keen interest. Bloomberg has a useful hour by hour guide of what to watch for and a look at 5 different scenarios.

Sterling remains steady ad final polls continue to indicate a conservative win.

Fears Brexit will dampen entrepreneurial spirit

Jamie Hopkins, head of small businesses landlord Workspace, has warned of a loss of “vibrancy and entrepreneurial spirit” in the capital after Brexit. He said: “We can only talk about what we are seeing today, which is a very healthy environment. But my main concern is much longer term if London loses its vibrancy and entrepreneurial spirit and people decide they don’t want to be here. I hope that doesn’t happen, but that is the main longer-term risk.”

Evening Standard, Page: 43

OECD predicts slowing UK growth

The OECD predicts UK growth forecasts of 1.6% in 2017 and 1% in 2018. It said the UK economy will slow in the coming years as Brexit uncertainty hampers growth and consumers endure a spending squeeze caused by higher prices and lower wages. The OECD said: “Households are expected to continue to support their consumption by further reducing their saving rate. Business investment is projected to contract amid the large uncertainty and because of lower corporate margins”. The OECD said that low interest rates and the long duration of national debt gave the government “substantial fiscal space” to borrow for investment. “Further fiscal initiatives to increase public investment should be considered,” it said. Writing in the Guardian, economist Joseph Stiglitz has also backed the case for increased investment. The west’s leading economic thinktank has predicted a tentative recovery for the global economy this year and next but warned of risks from fragile trust in government, weak wage growth and persistent inequality.In its latest health check on growth prospects, the Organisation for Economic Cooperation and Development described the outlook for the global economy almost a decade on from the financial crash as “better, but not good enough”.

Financial Times The Times, Page: 46 City AM BBC News The Daily Telegraph, Business, Page: 5 The Guardian, Page: 33 The Scotsman, Page: 36

Millennials are easily seduced by the socialist money tree

Both the Times’ Iain Martin and the Telegraph’s Allister Heath comment on how young people usually grow out of revolutionary sensibilities and fear millennials today don’t understand the dangers of their dalliance with the extreme left. Mr Martin says “life, work and taxes forced a rethink” of his socialist leanings and laments that nobody today makes the case to the under-30s for the free market. Mr Heath quotes “a former Marxist who took until middle age to see the light and is now an eminent professor” who used tease him by misquoting Winston Churchill: “If a man is not a socialist by the time he is 20, he has no heart; if he is not a conservative by the time he is 40, he has no brain”. Adopting a more serious tone, he states: “Almost every country has experimented at some stage with confiscatory levels of taxation, including wealth taxes, and the result has been a uniformly disastrous reduction in enterprise, impoverishing all of society.”

The Times, Page: 33 The Daily Telegraph, Page: 16

Parking wardens issue fines to those stranded in terror attack

Traffic wardens issued terror tickets to motorists whose cars were left stranded after the London Bridge attack five minutes after the cordon was lifted. Transport for London has apologised for its “insensitive mistake” after penalty charge notices were handed out in Borough High Street when the police cordon was reduced on Wednesday morning. The fines, which can be up to £130, will be cancelled, a TfL spokesman said.

telegraph

EU officials probed following Panama Papers leak

The European Anti-Fraud Office (OLAF) has announced it is forensically examining the accounts of several high-ranking EU officials over allegations that they used offshore bank accounts to avoid paying tax. OLAF’s Director-General, Giovanni Kessler, pointed out it was the first time EU staff involved in the Panama Papers leak had been probed, saying “no EU member state had carried out any such checks”. Dutch former Commissioner Neelie Kroes is the only official to be formerly named so far in a probe that is to focus on 17 individuals initially.

Daily Express

Corbyn’s tax plans would drive business from London

The Standard reports that business leaders believe jobs will move abroad if Labour implements plans for higher corporate taxes, plus income tax hikes that would be passed on to company payrolls. Stephen Herring, head of taxation at the Institute of Directors, said international companies were sensitive to corporation tax levels when deciding where to locate. But he also said that Labour’s plans for raising tax on high incomes would put off firms such as investment banks. “When companies move staff overseas, they have to compensate staff for the tax rates they will pay, which means these higher taxes fall on to the company’s bills,” he said. “This would be a significant extra cost for a bank considering locating in London.” Julian Jessop, chief economist at the Institute for Economic Affairs, said: “The burden of any increases in taxes – whether based on income or wealth – will fall more heavily on people living in London and the South-East than the rest of the country.” Elsewhere, Lord Karan Bilimoria, founder of Cobra Beer, has warned that businesses find Labour’s tax policies worrying and unfriendly. Labour policy has always been to tax and spend, he said, and “that has not been a successful policy.” The Crossbench Peer added however, that Theresa May’s threat of a no-deal Brexit was also a problem for business.

Evening Standard, Page: 1, 2, 8-9 Daily Express

Labour beat Tories on tax avoidance, argues anti-corruption advocate

Author and anti-corruption campaigner Paul Holden argues in favour of Labour’s manifesto pledge to tackle the UK’s Crown Dependencies and Overseas Territories tax havens against David Cameron’s vow to crack down on offshore tax evasion, which has now, he claims, “disappeared” from the Tory manifesto. Mr Holden goes on to challenge the Tory pledge to scrap the Serious Fraud Office and move its work to the National Crime Agency: “By moving the SFO into the NCA, it could seriously limit its freedom from political interference, as well as disrupt a number of high-profile investigations the SFO is undertaking into corruption by UK companies,” he adds.

The Independent

Uber avoids £40m VAT with loophole

Uber is avoiding about £40m tax a year by shifting responsibility for VAT payments to its 40,000 drivers, an investigation by Reuters found. The company is exploiting an EU rule on business-to-business sales across borders which allows it to treat its UK drivers as small businesses that are responsible for making VAT payments themselves. However, Uber’s drivers will not pay any VAT because they are unlikely to exceed an £85,000 sales threshold. Margaret Hodge, the former chairwoman of the Public Accounts Committee, said it was “yet another example of how large companies find loopholes and use the law for a purpose for which it was never intended. There is a failure to pay tax that should be due,” she said.

The Times, Page: 8 Daily Mail, Page: 35

May: Back me for a better Britain

Writing in the Telegraph, Theresa May calls on voters to remember that she needs a strong hand to negotiate a “Brexit deal that delivers for Britain” and that Jeremy Corbyn is “singularly ill-equipped” for the task of leader. The PM adds that the Tories will continue to encourage businesses to set up “by cutting corporation tax to the lowest rate in any developed economy. Establishing a new National Productivity Investment Fund to put at least £23bn into housing, research and development, infrastructure and skills by 2022 to spread prosperity and opportunity across the United Kingdom. And keeping taxes low so that people keep more of the money they earn.”

The Daily Telegraph, Page: 16

House prices flat ahead of election

House prices edged up in May as buyers held off before the general election. The average property sold for £220,706 last month, a rise of 0.4% compared with April, according to Halifax, but a fall of 0.2% when comparing the three months to May with the previous three months. “Buyers and sellers have been in limbo recently with the market awaiting more certainty from the General Election and Brexit negotiations,” said Jeremy Leaf, a north London estate agent and former RICS chairman.

The Daily Telegraph, Business, Page: 1 The Times, Page: 22 BBC News

House sales slumped after Osborne’s stamp duty hike

Land Registry data showed that property sales have fallen by 19% in the 12 months since George Osborne’s stamp duty hike on buy-to-let and second homes was introduced, and by 33% in London.

Daily Mail, Page: 23

Does the BA excuse add up

British Airways A has claimed the computer system crash was down to a lone engineer cutting the data centres power and messing up the reboot. Former BA IT workers have raised eyebrows at such a claim.

BBC

ECB Meeting

The ECB will release its interest rate policy today. Whilst no change in interest rates is expected there is an expectation that the wording of the statement about the outlook, what is known as ‘forward guidance’ may be changed to reflect an improvement in the economic conditions. Previously the ECB have indictaed interest rates could possible go lower. If they no longer give that indication, expect the Euro to climb.

Security concerns baffle Tech Firms

In the days since the London Bridge attack, the pressure on internet companies has been building. They have been told they must take action in two areas – preventing the spread of extremist content, and ending the provision of a safe space for terrorists.But when I talked to representatives of the major firms they were confused. “We’re told ‘something must be done,'” one executive told me. “But it’s not clear what that “something” is.”

BBC

Japan

Growth rate revised down but outlook remains positive.

QATAR

The United Arab Emirates tightened the squeeze on Qatar on Wednesday, threatening anyone publishing expressions of sympathy towards Doha with up to 15 years in prison and barring entry to Qataris. UAE Minister of State for Foreign Affairs Anwar Gargash told reporters there would be more curbs if necessary and said Qatar needed to make ironclad commitments to change what critics say is a policy on funding Islamist militants.

Amazon

Amazon is looking to ramp up lending in challenge to big banks. The company is targeting more of the 2m businesses on its ‘marketplace’ with the offer of capital.

UK House prices

The house price balance in the UK was down in May, the latest survey from the Royal Institution of Chartered Surveyors showed on Thursday. The house price balance declined to +17 in May from +22 in April. It was expected to fall to +20. Moreover, British house prices grew at their weakest rate since August 2016. Price growth appears to have lost momentum in the latest report and expectations suggest a further cooling is likely in the near term, RICS said.

Oil

Oil plummeted nearly 5% yesterday as US Inventories Grow. Crude oil futures plunged Wednesday, adding to recent losses after US government data showed US stocks of crude oil and gasoline surprisingly rose last week, The Energy Information Administration said crude inventories rose by 3.3 million barrels in the week ended June 2, compared with expectations for an decrease of 3 million barrels. US stockpiles had been dwindling for eight consecutive weeks from record highs.

Asian Markets

Asian shares were fairly steady as investors parsed economic data and awaited market-moving events in Europe, including Britain’s general election and a European Central Bank meeting.

U.S. Markets

U.S. shares closed higher and Treasury yields rose on Wednesday after the release of written testimony from ex-FBI chief James Comey, with investors looking ahead to his U.S. Senate appearance on Thursday, the same day as a British parliamentary vote and a European Central Bank meeting.

Gold

Gold edged lower early after a written testimony by former FBI director James Comey ahead of his Congressional appearance was seen containing few fireworks, as investors also braced up for the UK national elections and a policy meeting of the European Central Bank later in the day.