Business news 4 May 2023
James Salmon, Operations Director.
Artificial intelligence could affect jobs as much as the industrial revolution. BoE expected to hike rates again. Branson, Shell, listing reform, tax, interest rates and more business news that we thought would interest our members.
Artificial intelligence could affect jobs as much as the industrial revolution
Sir Patrick Vallance has warned that artificial intelligence could have as big an impact on jobs as the industrial revolution and calls for consideration of its wider impact on society. While he acknowledged its potential benefits within industries such as medicine, Sir Patrick raised concerns over the distortion of truth and erasure of jobs. He called for a national review of which sectors would be most significantly affected so plans could be drawn up “to retrain and give people their time back to do [their jobs] differently”.
The Competition and Markets Authority (CMA) is set to review the artificial intelligence market to make sure no individual firm will dominate and its benefits are available for all. The CMA will investigate the software behind artificial intelligence models like ChatGPT.
The software behind ChatGPT has the potential to transform the way businesses compete as well as drive substantial economic growth. However, it is could be the biggest disruption to the way we work and the jobs we do for over a century.
Geoffrey Hinton, the so called godfather of artificial intelligence, quit his job at Google, warning about the growing dangers from developments in artificial intelligence, which enables technology to create images or text that are barely distinguishable from the work of humans. He said “Right now, they’re not more intelligent than us, as far as I can tell. But I think they soon may be.”
“Right now, what we’re seeing is things like GPT-4 eclipses a person in the amount of general knowledge it has and it eclipses them by a long way. In terms of reasoning, it’s not as good, but it does already do simple reasoning,” he said. “And given the rate of progress, we expect things to get better quite fast. So we need to worry about that.”
Branson
Sir Richard Branson said he feared he was going to lose his entire business empire during the pandemic and says he personally lost around £1.5bn during the pandemic. The Virgin Group asked the UK government for a loan to save the company for which he was criticised. The strain of trying to save his businesses left him “a little depressed” for a couple of months, he said. “I’d never experienced that before in my life.”
BoE expected to hike rates again
A survey of economists by Bloomberg shows most expect the Bank of England will increase rates again this month to 4.5% and then keep them on hold. Markets, however, are betting on further hikes bring rates up to 5% by September. But rate rises beyond next week’s meeting will be “highly data dependent” says UBS economist Anna Titareva, while the BoE’s quantitative tightening is expected to help stimulate the economy
Shell
Shell posted stronger-than-anticipated first-quarter profit, extending a record run of bumper results after commodity prices surged in 2022 following Russia’s full-scale invasion of Ukraine. Shell reported adjusted earnings of $9.6 billion for the first three months of the year, comfortably beating analyst expectations of $8.6 billion, according to Refinitiv. The company posted adjusted earnings of $9.1 billion over the same period a year earlier and $9.8 billion for the final three months of 2022. Shell also announced a $4 billion share buyback, which it expects to complete by the announcement of its second quarter results.
FRC welcomes FCA consultation on equity listing rule reforms
The Financial Reporting Council (FRC) has welcomed the Financial Conduct Authority’s consultation on listing rule reforms as the regulator pushes to boost the attractiveness of the UK market for companies. Mark Babington, executive director of regulatory standards at the FRC, said: “We welcome the FCA’s consultation and the potential for its proposals to increase the number of companies using our flexible and proportionate Corporate Governance Code to drive high-quality governance and reporting and improve market confidence. We also plan to consult on revisions to our code shortly to ensure it continues to meet those needs.”
LSE boss rails against high pay complaints
Julia Hoggett, the chief executive officer of London Stock Exchange, has called for a “constructive discussion” on how Britain approaches executive pay to stop companies moving to US. In a statement on the LSE’s website, Ms Hoggett said: “We should be encouraging and supporting UK companies to compete for talent on a global basis, so we remain an attractive place for companies to base themselves, stay and grow. The alternative is we continue standing idly by as our biggest exports become skills, talent, tax revenue and the companies that generate it.” She added: “Often the same proxy agencies and asset managers that oppose compensation levels in the UK support much higher compensation packages in different jurisdictions, notably in the US.” Ms Hoggett went on to say that the LSE was looking to bring together the chairs of listed companies, founders of private companies, asset managers, the Financial Reporting Council, the Investment Association and proxy agencies for talks.
High earning Scots could soon be prompted to move south
Writing in the Times, Daniel Hough, a financial planner at RBC Brewin Dolphin, comments on proposals from Scotland’s first minister for an additional 44% tax bracket for those with an income between £75,000 and £125,140 per year. The Chartered Institute of Taxation points out that this would result in an effective 68% tax rate for those earning between £100,000 and £125,140, meaning some people will pay over £4,600 per year more in tax compared with the rest of the UK. “There will inevitably come a crunch point where the difference in tax is too much and some highly talented people who contribute a large amount to Revenue Scotland decide to vote with their feet,” says Hough. “As the Scottish government continues to tinker, that day draws ever closer.”
Little-known IHT loophole could save families millions
The Telegraph’s Charlotte Gifford reports on a little-known loophole that saved 430 families £67m in death duties last year. The “normal expenditure out of income exemption” allows individuals to make unlimited gifts completely free of IHT. The “normal expenditure” rule allows families to gift far larger sums than the commonly used £3,000 annual exemption. But figures from HMRC show the tax break is being underused as anyone with sufficient “surplus income” can it, meaning thousands more families may have neglected to claim. Sean McCann of the financial advice firm NFU Mutual said: “Gifts out of normal expenditure is one of the most powerful but least known exemptions. By allowing you to give away excess income immediately free from IHT, it can help stop your inheritance tax liability growing every month.”
Fed implements quarter-point rate rise, signals potential pause
The US Federal Reserve increased its benchmark interest rate for the tenth time in a row on Wednesday, hiking it a quarter of a percentage point to a new target range of 5% to 5.25%. However, the central bank also dropped from its policy statement language saying that it “anticipates” further rate increases would be needed raising hopes that it may be coming to the end of its tightening cycle. But Fed Chair Jerome Powell said policymakers were prepared to do more to curb inflation and cast doubt on speculation that rates could be cut this year. “We on the committee have a view that inflation is going to come down not so quickly, it will take some time,” he told reporters, and “in that world, if that forecast is broadly right, it would not be appropriate to cut rates” this year.
ECB to raise interest rates for a seventh time
The European Central Bank will today raise interest rates for the seventh meeting in a row. A 25 basis point move, a slowdown after three straight 50 basis point hikes, appears the most likely outcome, as the central bank battles to get inflation down. Markets see an 80% chance of a 25 basis point move while the vast majority of economists polled by Reuters were also betting on the smaller hike.
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The Credit Protection Association – Prompting Punctual Payments – Ethical, Effective, Efficient, Economical collections.