Business leaders set out recovery plan – business news 29 April 2021.
James Salmon, Operations Director.
Business leaders set out recovery plan, Scottish insolvencies expected to jump, Brexit deal ratified and lots more of the stories we have seen that we think will interest our members and visitors.
Business leaders set out recovery plan
A group of leading executives have set out a plan for a post-pandemic economic recovery, with the Covid Recovery Commission calling for the creation of at least one new globally competitive industry hub in every part of the UK by 2030. The commission, whose members include executives from firms including Tesco, Vodafone and AstraZeneca, is also calling for a radical overhaul of the Apprenticeship Levy, with the establishment of £10,000 lifelong training allowance for all over-25s. Tesco chair John Allan said the commission’s report goes beyond “purely economic measures”, arguing that there is a need for growth to be used to remedy widening social inequality.
Scottish insolvencies expected to jump
R3, the trade body for insolvency and restructuring accountants, says the number of Scottish companies facing insolvency is expected to rise despite restrictions on the economy being relaxed, with the repayment of coronavirus-related Government loans set to hit firms that have been kept afloat by the support measures. Figures show corporate insolvencies in January to March were down 31% on Q4 2020 and 63% lower than the first quarter of last year. However, the number is set to climb in the coming months, with Tim Cooper, chair of R3 in Scotland, saying companies are “in a form of suspended animation” but warning that this “cannot last forever”.
Brexit deal ratified
After some delay, the European Parliament has finally and overwhelmingly approved the EU-UK trade and co-operation agreement negotiated last December. Britain’s parliament ratified the deal quickly, but MEPs wanted time to examine the text’s almost 1,500 pages. Eventually they backed the deal as better than nothing, while still calling Brexit a “historic mistake”. Much of the delay was caused because MEPs made it clear that they did not trust Boris Johnson’s government to strictly abide by the agreement.
GlaxoSmithKline
GlaxoSmithKline said its first quarter results are in line with expectations and has reconfirmed its 2021 and 2022 guidance. The pharmaceutical company reported revenue in the first quarter was down 18% year-on-year to £7.41 billion and down 15% at constant currency. GSK’s operating profit in the first quarter was down 16% year-on-year to £1.68 billion and down 8% at constant currency. The company said these decreases were a result of stocking and pandemic disruption, reflecting the expected year-on year impact from Covid 19.
Heathrow
Heathrow airport revealed it had lost a further £329m in the first three months of the year, bringing total losses since the start of the pandemic to £2.4bn. Just 1.7 million passengers traveled through the airport during the quarter, down 91% on the period in 2019. Cargo volumes are also down 23% on 2019. The airport head, Mr Holland-Kaye said “These results show how Covid has devastated the aviation sector and British trade, restarting international travel from May 17 will help to kickstart the economic recovery, allowing exporters to get their goods to market, as well as reuniting families who have been separated for over a year.”
Big Tech
Both Apple and Facebook beat analyst estimates in their quarterly reports yesterday. Facebook reported revenue of $26.2billion compared with an expected $23.7billion and Apple reported revenue of $89.6 billion compared with an estimated $77.3. Apple’s profits rose to $23.6bn in the first quarter of 2021, up from $11.3bn last year. Facebook made $9.5bn although it admitted Apples new privacy feature could harm future profits. Apple also announced a $90 billion share buyback plan that dwarfs the $50 billion plan announced by Google-parent Alphabet earlier. All eyes are now turning to Amazon.
NatWest
NatWest returned to profit in the first quarter of the year after releasing cash it had set aside to cover bad loans due to the pandemic. The bank reported a pre-tax profit of £946m for the first three months of the year, beating an average analyst forecast of £536m. It exceeds the £519m pre-tax profit that NatWest made in the same period last year.
WH Smith
WH Smith warned it could breach its covenant tests next year as it revealed it swung to a first-half loss and launched a £325m bond offering. The newsagent chain announced yesterday evening that it was possible that “the group would not meet the conditions of the August 2022 covenant tests”. It posted a loss of £17m in the six months to February, down from profit of £80m in the previous year. Group revenue was down 44 per cent at £420m
Barclays tops LinkedIn companies list
Professional network LinkedIn has released a ranking of the top 25 firms to build and sustain a long-term career, with Barclays identified as the best place to work for those keen to progress up the ladder. The Top Companies List identifies the organisations that offer growth, skills development opportunities and job stability. Tesco came second in the rankings, with NatWest third, BT fourth and PwC fifth. Deloitte (6th) and EY (8th) also made the top ten. Siobhan Morrin, news editor at LinkedIn, said the Top Companies List “provides a helpful resource of companies that offer skills development and stability, giving our members that added confidence when taking that first step towards their next opportunity.”
7 in 10 willing to pay more tax to boost frontline workers’ income
A poll by the IE University Centre for the Governance of Change shows that seven in 10 UK workers are willing to pay more tax if it would boost the income of frontline workers. While 70% of UK and Swedish taxpayers would pay more tax to increase the wages of workers on the frontline, France was the only European nation not prepared to boost the wages of low paid workers, with 54% against the idea. Overall, the poll of 2,769 adults across nine European countries found that 61% of Europeans said they were willing to pay more in taxes in exchange for raising the salaries of essential workers.
House Prices could climb £23k
Research from estate and lettings agent Barrows and Forrester suggests the extended stamp duty holiday could see the average house price climb by more than £20,000 this year. The analysis shows that since the Chancellor announced the tax break in July 2020, house prices across England have increased by an average of 0.84% each month, hitting £268,291. If this rate of growth continues, the average price could be £23,376 higher by the end of 2021. The South East of England, where typical prices have risen 0.87% month since the introduction of the stamp duty holiday, could see the biggest jump, with £31,176 added to the average if the current rate of increase is maintained.
Women in North worst hit by pandemic
The IPPR North think-tank has published a study which shows that women living in the North of England have been disproportionately hit by the economic disruption caused by the coronavirus pandemic. The research found that almost half of northern women currently in work are in sectors that have been hardest hit by the coronavirus emergency, such as retail and hospitality. By comparison, men constitute around only a quarter of the workforce in these industries. The report also found most key workers in the North are women. IPPR North wants pay and working conditions for women across the region to be improved, and proper data to be amassed on inequalities.
HMRC to target tax evaders’ crypto assets
UHY Hacker Young has warned that a surge in interest in cryptocurrencies – alongside their climbing value – is likely to lead to increased scrutiny over their links to organised crime. The firm said that with organised crime becoming increasingly digital, there are concerns cryptocurrencies are being used by tax evaders, with HMRC set to demand data on cryptocurrency holdings from those it suspects of tax evasion in its “statement of assets” form. David Jones, director at UHY Hacker Young, said: “While criminals can still choose to not declare these assets, doing so gives HMRC another opportunity to bring criminal charges against them if their forensic work finds a hidden Bitcoin wallet.” Pointing to tax office concern that hidden wealth is “slipping through its fingers” due to the rise of cryptocurrencies and unsanctioned money transfer systems, Mr Jones added: “This demand for information is an im portant step in HMRC’s fightback against that”.
Samsung heirs to pay record inheritance tax
The family of Samsung Electronics chairman Lee Kun-hee will pay more than £7.8bn in inheritance taxes on his estate. Samsung said that the payment is one of the largest ever in South Korea and globally, noting that it is more than half of the value of the late chairman’s total estate. South Korea’s inheritance tax rate is the world’s second highest after Japan, coming in at 50% – with the rate rising to 60% for company shares inherited by large shareholders. In the UK and US the levy is set at 40% while across the Organisation for Economic Cooperation and Development, the rate averages 15%.
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