Business news 1 November 2021

James Salmon, Operations Director.

CBI survey points to business growth . MPC to weigh rate hike as inflation soars .  Inflation will ease after the supply chain crisis .  Workers eye new roles amid ‘the great resignation’ . Taxes set to hit £1trn . 44% believe Brexit is harming the economy. And more business news.

CBI survey points to business growth
The Confederation of British Industry (CBI) has revealed that British businesses gained momentum and grew at an above-average pace in the three months to the end of October, despite ongoing disruption to supply chains. The CBI’s monthly growth indicator, which draws on surveys of output from manufacturers, retailers and other services companies, rose to +29 from +27 in September, with this coming after the study saw growth hitting its highest since 2014 in August, with a reading of +34. CBI lead economist Alpesh Paleja commented: “Given the headwinds business has faced, achieving above average growth for the past six months shows real resilience in the UK economy.”

MPC to weigh rate hike as inflation soars
Analysts believe the Bank of England may opt to increase interest rates this week in an effort to cool rising prices amid continued inflation. This comes with the Office for Budget Responsibility last week forecasting that inflation is likely to average at around 4% in 2022 and potentially hit a peak closer to 5%. The Bank’s Monetary Policy Committee (MPC) will meet later this week and while analysts had predicted that an interest rate rise would come in December, experts at Investec now believe the MPC will vote in favour of increasing interest rates by 0.15 percentage points to 0.25% at Thursday’s meeting. Investec said: “In the collective mind of the MPC, we judge that concerns over inflation will outweigh the downside risks from a potential upturn in unemployment following the end of the furlough schemes.”

PM: Inflation will ease after the supply chain crisis
Boris Johnson has insisted inflation is likely to subside once short-term supply chain problems have come to an end.

With inflation forecast to average 4% over the course of next year and the Bank of England potentially increasing rates as early as next week, the Prime Minister was asked whether he was concerned about the rising cost of living. Mr Johnson replied: “I think that we have got to get the problems of the global supply chains ironed out, and that will start to ease things.”

This contrasts with the stance taken by Chancellor Rishi Sunak who has identified inflation and interest rates as being among the top threats to Britain’s economy. Meanwhile, the PM has said he is working with G20 countries to set up an “early warning on supply chain resilience” that will detect potential threats to the global supply chain more quickly.

Tax breaks urged for hybrid workers’ commuting costs
The Chartered Institute of Taxation has urged ministers to respond to changes in working habits and give employees who regularly work from home tax breaks against the cost of travelling to the office.

Job fears over long Covid
Campaigners have voiced concern that people with long Covid are being discriminated against at work because of their condition, with it feared that some are even being fired.

Office for National Statistics data suggests 405,000 people are experiencing symptoms that have persisted for at least a year since they were infected, with many unable to work and forced to take long-term sick leave.

A survey conducted by campaign group Long Covid Support shows that 5% of respondents had been dismissed directly because of long Covid, with contracts ended with no recourse or staff fired with immediate effect. The survey of 252 sufferers also found that 7% resigned while 45% have yet to return to work, despite repeated attempts to do so. Female workers with long Covid are disproportionately affected, according to the study.

A separate survey from the Trades Union Congress found that just over half of respondents with long Covid had experienced some form of discrimination or disadvantage in the workplace due to their condition, with 19% saying their employer had questioned the impact of their symptoms.

44% believe Brexit is harming the economy
An Opinium poll for the Observer has found that 44% of people think Brexit is having a bad impact on the UK economy, compared with 25% who think it is having a positive effect. The survey saw 53% say Brexit is having a negative effect on prices in shops, against 13% who think it is having a good effect, while 51% think it is adversely affecting the UK’s ability to import goods from the EU, against 15% who think it is helping. The poll comes in a week that Office for Budget Responsibility (OBR) chairman Richard Hughes said his organisation calculates that the negative impact on GDP caused by Brexit is expected to be twice as great as that resulting from the pandemic. The OBR expects Brexit to reduce the UK’s potential GDP by about 4% in the long term, while the pandemic will cut it “by a further 2%”.

Workers eye new roles amid ‘the great resignation’
A poll of over 6,000 UK workers by recruiter Randstad shows that close to a quarter of employees plan to resign within the next three to six months, with almost 70% hoping to move job in the next two months. Of those eyeing a new role, just 16% said they were worried about trying to get a new job.

Those in construction, tech and logistics were the most confident, with 74% of manufacturing employees confident about moving to a new job immediately. HR, legal, and accountancy professionals were among the least confident.

Randstad chief executive Victoria Short said the pandemic “has changed how some people think about life, work, and what they want out of both” but warned that a wave of job changes could cost the UK’s private sector. Reflecting on the findings, she commented: “The great resignation is here. Very few people moved jobs during the pandemic. A lot of people who wanted to quit just hadn’t and they led to a deluge of resignations.”

Good jobs are about more than pay
Resolution Foundation analysis suggests that while job satisfaction has not shown a significant decline, skilled manual workers are twice as likely to find work stressful compared with the 1990s. The report also shows that while low earners used to be most satisfied, this in no longer the case, despite the minimum wage increasing their relative pay.

Meanwhile, a new study from the US’ National Bureau of Economic Research has quantified the non-monetary benefits of work, such as respect, and concludes that having more affluent parents means a worker can afford to choose a career that isn’t always well paid.

Pointing to both studies, Torsten Bell, chief executive of the Resolution Foundation, says there is “more to life than work” and “more to work than pay”. He adds: “Taking a broader view of ‘good jobs’ means recognising low earners deserve not just a higher minimum wage, but more control over the work they do.”

Covid support fraud sees director prosecutions jump
Research from Mazars shows that prosecutions of company directors for fraud tripled over the past year amid a crackdown on coronavirus loan scams, with 122 company directors convicted of crimes during the year to the end of September — a rise from 40 during the previous 12 months. The total points to a high conviction rate, with 127 company directors prosecuted.

The analysis highlights fraud centred on pandemic loan schemes, noting that “time pressure and the volume of demand forced banks to dilute their normal due diligence procedures.” This left the Business Interruption Loan Scheme and Bounce Back Loan Scheme “susceptible to fraud”. Mazars’ research shows that insolvency specialists reported seeing companies incorporated purely to take advantage of the Government support initiatives.

Mazars suggested that pleas by professional bodies such as the ICAEW and the Insolvency Practitioners Association for members to report suspected fraud may have driven the increase in prosecutions. Michael Pallott, a partner at Mazars, said: “The Insolvency Service is sending a clear message that directors will now face serious penalties, including prison sentences, in cases of gross misconduct.”

London office take-up climbs
CBRE has found that office take-up in central London has reached its highest level in nearly two years. For the third quarter, some 2.7m sq ft was taken on, with uptake rising 58% on Q2. Over the past 12 months, the creative sectors and banking and finance industries have led the way, with the industries each accounting for 23% of central London take-up.

Diverted profits tax ‘a total failure’
A levy introduced to crack down on multinational firms shifting profits overseas has been described as a “total failure”, with the tax predicted to raise no money over the next six years.

The diverted profits tax, which was introduced in 2015 and designed to target multinationals who were reducing their UK corporation tax by shifting profits overseas, was predicted to raise up to £400m a year.

Commenting after figures published with the Budget revealed revenues for the so-called Google tax slumping to zero, shadow financial secretary to the Treasury James Murray said: “Rishi Sunak tried to bury it but the diverted profit tax is a total failure.” He added: “Big multinationals are benefiting time and again from the Chancellor’s tax breaks – while British businesses are stifled with debt and unfair business rates.” George Turner, director of the UK charity TaxWatch, said the tax had not stopped firms shifting profits overseas, commenting: “Companies will continue to move their profits around the world to exploit the lowest possible rate of corporation tax.”

HMRC planning tax crackdown on cash-in-hand work
HMRC is to vet taxi drivers and scrap metal merchants as part of a crackdown on cash-in-hand work designed to reduce tax dodging. As of next year, the tax office will begin conducting ‘tax checks’ before workers can obtain permits for the licensed activities, with HMRC hoping the new checks will bring in £270m by 2026/2027 by discouraging tax avoidance. The system, which covers individuals, partnerships and companies, will come into effect in England and Wales in April and in Scotland and Northern Ireland from 2023.

G20 leaders endorse minimum corporate tax
The G20 meeting in Rome has seen the leaders of the world’s biggest economies agree to a global minimum corporate tax rate. Leaders have endorsed a 15% global minimum corporate tax rate that will be in place by 2023.

This will look to prevent multinational companies from stashing profits in countries where they pay few or no taxes. The agreement, drawn from proposals developed by the Organisation for Economic Co-operation and Development, is designed to safeguard tax revenues and offer stability to businesses that operate across national borders.

Bruno Le Maire, France’s finance minister, described the agreement as “good news for all of us”, adding that it is “clearly a revolution in the international tax system.”

US treasury secretary Janet Yellen said that the deal on new international tax rules “will end the damaging race to the bottom on corporate taxation”. Meanwhile, US President Joe Biden took to social media, tweeting: “Leaders representing 80% of the world’s GDP – allies and competitors alike – made clear their support for a strong global minimum tax.” He added: “This is more than just a tax deal – it’s diplomacy reshaping our global economy and delivering for our people.”

Shell and BP benefit from tax breaks on gas and oil production
Company filings show that Shell and BP have not paid any corporation tax on oil and gas production in the North Sea for the last three years, having benefitted from tax breaks and reliefs. Annual “payments to governments” reports show the firms paid no corporation tax or production levies on North Sea oil operations between 2018 and 2020, and claimed tax reliefs of nearly £400m. In the same period, the oil firms paid shareholders more than £44bn in dividends. Philip Evans, an oil and gas campaigner for Greenpeace UK, said it is “outrageous” that the UK has one of the lowest effective tax rates in the world for oil extraction. “We’re giving tax breaks worth billions of pounds to companies that have been fuelling the climate emergency for decades”, he added.

Taxes set to hit £1trn
Taxes are set to hit £1trn for the first time, Budget documents published by the Office for Budget Responsibility (OBR) reveal, with analysis suggesting the total tax take will reach £1,038,000,000,000 in 2026/27.

The figure is a third more than the £775.7bn expected this year and would take the tax burden to the equivalent of 36.2% of GDP – the highest level since the early 1950s.

The OBR report also suggests wealth taxes – inheritance tax and capital gains tax – will bring in more than £130bn over the next six years. By 2027, the Government will collect £91.9bn in CGT and £40.5bn in IHT, the documents forecast.

Mortgage approvals hit 14-month low
British banks and building societies granted the fewest new mortgages for house purchase in more than a year in September. Bank of England (BoE) data shows that mortgage approvals fell to 72,645 in September from 74,214 the month before, the lowest since July 2020. The decline has been attributed in part to the winding down of the stamp duty holiday, with the tax break rolled out to support the market amid the pandemic withdrawn at the end of September. Despite a dip in the number of approvals, net mortgage lending for transactions that completed in September surged to £9.524bn. This was the highest total since June – the last month before the stamp duty holiday started to taper. Martin Beck, senior economic advisor to the EY Item Club, said: “The stamp duty holiday has been highly distortionary, causing transactions to be brought forwards and being a major factor behind the frothiness in prices over the past year.” Separate BoE figures shows that consumer lending totalled £234m in September. Lending rose by 0.1% from August – the smallest monthly rise since March – and was 1.8% below the level recorded a year earlier.

Opinion poll delivers a post-Budget lift for the Chancellor
Chancellor Rishi Sunak has seen his approval rating rise to 41% from 39% following last week’s Budget, despite analysis showing that the tax burden is forecast to reach its highest level since the early 1950s. Adam Drummond, head of political polling at Opinium, said Mr Sunak “has delivered another reasonably well received Budget and his approval ratings have seen a slight boost as a consequence.” He added: “The other good news for the Chancellor is that, while 46% voters think the economy is still in a bad state, this is down from 64% back in March.” The Opinium poll also revealed that the Conservatives hold a five-point lead over Labour.


The UN’s climate conference – COP26 –  in Glasgow, got off to a poor start after a weekend summit of the G20 failed to agree on any binding measures to reduce emissions. Joe Biden said two of the group’s most-polluting members, China and Russia, “basically did not show up” with any plans to curb their fossil-fuel use. With Russia pushing back reductions to 2060.  During the COP’s opening speech on Sunday in a master class of understatement, Alok Sharma, its president, said the window to keep global warming to 1.5°C was closing. The G20 is responsible for 80% of emissions reaffirmed their commitment to the Paris agreement of 2015.  But words are cheap.


Barclays reported that its CEO Jes Staley has stepped down with immediate effect following an FCA probe into his relationship with Jeffrey Epstein. Mr Venkat, formerly head of its capital markets division has been appointed to replace Mr Staley.

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