Business News 13th September 2017

CPA hopes to inform, with its daily bite-size business news on Wednesday 13th September 2017, filled with stories we think will interest Business people.

Markets Round up

The pound rose to a one year high yesterday against the dollar following on from data that showed that inflation had risen more than expected, leading investors to believe that this will bring forward an interest hike by the Bank of England next year. The pound is up to almost 1.33 against the dollar and 1.11 against the Euro. The Consumer Price Index rose to an annual 2.9% in August and these figures were released before the Bank of England interest rate decision on Thursday. The data had a positive effect on the banking sector which has suffered over the past couple of months with Barclays and Lloyds both up over 2% intraday.The housebuilders were also in focus yesterday following the chairman of Redrow Steve Morgan selling 7% of his holding in the company, this lead to an examination of the disposal by analysts, with Shore Capital suggesting “the sale is indicative of the housebuilding sector moving into the peak cycle.” This had a negative effect on Taylor Wimpey, Persimmon and Barratt Developments on the UK100 although all three were off the lows from this morning.  The FTSE 100 which measures most of its earnings in foreign currencies was hit by the rising pound and bucked the trend of other markets, falling 0.2% to 7400.7. The FTSE 250 fell 0.1% to 19,665.9.  Meanwhile in Europe the EuroStoxx 50 rose 0.5% to 3512.56.  Over in the US,  Wall Street scored fresh records as concerns over North Korea and US hurricanes faded, The S&P500 & Nasdaq both rose 0.34% to 2496.48 and 6454.28 respectively.  Asian stocks wobbled but still marked a 10-year peak, cheered by record highs on Wall Street, while shares of Apple Inc’s suppliers dipped following the release of the latest iPhone. Oil prices rose for a second straight session, buoyed by the latest OPEC report that showed oil production from the cartel fell last month. Brent is at 54.40 and WTI is at $48.34 despite reports of rising US stockpiles.  Gold prices moved lower to $1332.45, trading at their lowest in over a week as a prevailing tide of investors continued to take their chances on stock market upside, snubbing haven assets.

Business expenditures cost SMEs £1m

New research from American Express and the Centre for Economics and Business Research has found that the UK’s SMEs spend an average of £1.016m each on business expenditures every year, with the biggest costs going on hiring new staff (24%), paying suppliers (20%) and investing in technology (19%). The average rises to £1.82m for firms in London and £1.14m in the Midlands and East of England, but falls to £526,882 in the North.

The Budget

Chancellor Philip Hammond will deliver the government’s first budget of the parliament on Wednesday 22 November, the Treasury confirmed on Wednesday afternoon. Following the shake-up the Chancellor announced last year, there will now only be one fiscal budget per year, held in the autumn. “From 2018 there will be a spring statement, responding to the forecast from the OBR, but no major fiscal event,” the Treasury said.

Inflation

Further to yesterdays breaking news, UK inflation climbed more-than-expected in August to its joint highest level in over five years, driven by strong increase in clothing and petrol prices, and added pressure on the Bank of England rate-setters to raise interest rates amid the Brexit-fueled economic uncertainty. The consumer price index rose 2.9% year-on-year following 2.6% increase in July. Economists had forecast 2.8% inflation. The 2.9% inflation is the highest since April 2012 and was previously logged in May this year. The pound surged to a one-year high versus the US dollar following the release of the data. The currency also soared against the euro. The drop in the value of the pound since the Brexit referendum in June last year boosted import prices, which partly fueled price growth for household items.

Digital Currencies

The City regulator, the Financial Conduct Authority (FCA) has warned consumers of the dangers of investing in digital tokens issued by firms. So-called initial coin offerings can raise millions of dollars for firms and consumers can make a gain if the new crypto-currencies then go up in value. But the FCA says investors also stand to lose their entire stake in the high-risk investments. In an initial coin offering (ICO), a firm sells digital tokens, or “coins”. These are often in exchange for a more established crypto-currency such as Bitcoin or Ethereum. Seperately JPMorgan CEO Jamie Dimon said he would fire anyone trading bitcoin — “for being stupid.” He attacked the digital currency at a Barclays event, describing it as a “fraud” worse than tulip bulbs that will eventually blow up.

Brexit

Prime Minister Theresa May has strengthened her power to deliver her Brexit plan and domestic agenda after winning a key vote giving her government a majority on important committees. The House of Commons voted on Tuesday by 320 to 301 to back a government motion that will allow May’s Conservatives to hold a decisive majority on committees that scrutinize new laws in detail. May’s party failed to win a majority in June’s election and her main opponent, Labour leader Jeremy Corbyn, has accused her of trying to “rig” Parliament. Philip Hammond has revealed that Britain will seek a Brexit transition deal that “looks a lot like the status quo”, maintaining single market and customs union membership in all but name. The chancellor’s comments come ahead of a planned speech by Theresa May, thought to be on September 22, in which the prime minister is expected to tell a European audience how she hopes to deliver a phased Brexit. Mrs May’s team insists that she has always envisaged “an implementation period” after Brexit in March 2019, but the version articulated by Mr Hammond on Tuesday goes beyond what she originally intended. Brexit negotiators postponed next week’s scheduled round of talks.

UK average house price up 1.1% in July

Data from the ONS shows that house prices grew 1.1% between June and July, taking the UK average to £226,000 – up £11,000 on July 2016. The annual rate of growth matched the 5.1% seen in June, meaning year-on-year growth has remained at around 5% through 2017.

Tax specialists for mid-sized firms

Medium-sized businesses will get their own dedicated tax adviser under plans being rolled out by HMRC. From next Wednesday, businesses with a turnover of more than £10m or with more than 20 employees, who are looking to increase turnover or expand their business, will be able to ask for a tax specialist. They will be available to support the business during key events such as mergers and acquisitions or big jumps in turnover. An HMRC spokesman said: “The aim is to help these business customers grow in the right way.”

Loan scheme helps 50,000 business

The government’s Start Up Loans scheme has helped 50,000 people to get a business off the ground over the past five years, official figures show. The initiative, which offers loans of up to £25,000 and a year’s free guidance provided to those setting up companies, has provided £345m of low-interest finance since it was established in 2012. However, the government expects overall losses from the scheme to be about 40%. Margot James, the small business minister, said that the scheme, was “removing barriers to finance”.

Apple

Apple revealed the iPhone X, its most important new device in years. The handset features a new OLED display, upgraded cameras and a facial recognition scanner instead of a fingerprint sensor. The X — pronounced “ten” — won’t be available until 3rd November and starts in the US at $999. It comes a decade after the original model, and is the first major redesign since 2014. The new iPhone 8 and 8 Plus will start at $699 and $799, respectively. Apple also unveiled its latest watch. Markets responded with shares slipping 0.4%.

Banking

A third of banking positions could disappear in the next five years as automation and robotics take over, according to former Citigroup chief Vikram Pandit. The industry is becoming “enormously competitive,” he said, predicting the emergence of more specialist providers and consolidation.

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