Business news 14 June 2024
Business groups seek more tax reassurances. Private equity bosses avoid income tax. Markets, net household worth, Japan, Tesco, Tesla, house prices, Labour pledges, insolvencies & more business news that we thought would interest our members.
James Salmon, Operations Director.
Business groups seek more tax reassurances
While Labour’s manifesto has set out a number of measures to support small firms, Rachael Griffin, a tax and financial planning expert at Quilter, said a “conspicuous lack” of any pledge that capital gains tax will not be increased “will spark significant concern among entrepreneurs and investors in the UK.” She added that while Labour has explicitly ruled out increases to income tax, National Insurance, VAT and corporation tax, party leader Sir Keir Starmer and shadow Chancellor Rachel Reeves have recently “doubled down on the fact they have ‘no plans’ to increase CGT rates without completely ruling it out.”
Jason Hollands, managing director at Evelyn Partners, suggested the pledge that income tax, NI or VAT will not increase is “a doubled-edged sword because in attempting to head off fear of higher taxes by explicitly ruling these out, it inevitably creates suspicion about which other areas could be vulnerable.” Tina McKenzie, policy chair of the Federation of Small Businesses, said firms are looking for more reassurances over tax.
Private equity bosses avoid income tax on $1trn of gains
Private equity firms have avoided paying income tax on around $1trn (£780bn) worth of gains, according to Ludovic Phalippou, a professor at Oxford’s Said School of Business. The report says the world’s largest buyout firms, venture capital funds and infrastructure investors have earned more than $1trn in carried interest pay since 2000. Carried interest – the share of profit that private equity bosses make when an asset is sold – tends to be taxed as a capital gain rather than ordinary income. The Resolution Foundation think-tank says carried interest amounts to £2bn a year, with an average gain of £1m for the approximately 2,000 investors who receive it.
Markets
Yesterday, the FTSE 100 closed down 0.68% yesterday at 8159.23 and the Euro Stoxx 50 closed down 2.01% at 4933.32 with the French rout continuing due to the political uncertainty. Overnight in the US, markets hit new record highs. The S&P 500 rose 0.23% to 5433.74 and the Nasdaq rose 0.34% to 17667.56.
Paris equities fell sharply, down 2% with investors concerned that the forthcoming election could result in either the first step towards a chaotic dalliance with far right wing politics, an experience possibly like Brexit, or a stalemate where no single party has an absolute majority, known as a cohabitation in France
Today at the time of writing the pound is currently worth $1.2725 and €1.1886. Brent is at $82.31, Gold is at $2318. The FTSE 100 is flat at 8164 and the Eurostoxx 50 is down 0.60% at 4905.
Peel Hunt sees ‘tentative signs’ of City recovery
There are “tentative signs of recovery” in the City after a slowdown in deals and trading, according to Steven Fine, chief executive of broker Peel Hunt, who said: “While challenges remain, we are becoming cautiously more confident of a broader recovery in equity capital markets activity.” He noted an increase in trading volumes and highlighted recent initial public offerings in London, saying these point to an increase in optimism. He added that while the pipeline of possible flotations is still “not great”, the mood seems more positive and UK investors “are increasingly receptive to high-quality companies.”
Net household worth
UK net household worth fell 0.8% over the year to just under £200k per person or £12trn in terms of national total. The value of land in the UK fell 6.3% over the year according to the Office of National Statistics. In total the UK got £600bn poorer according to the ONS.
Japan
The Bank of Japan kept its benchmark interest rate unchanged on Friday, but indicated it’s considering the reduction of its purchase of Japanese government bonds. The central bank left short-term rates unchanged at between 0% to 0.1% at the end of its two-day policy meeting, as widely expected.But notably, the bank said in its statement it could reduce its purchases of Japanese government bonds after the next monetary policy meeting, scheduled for July 30 and 31. Japanese markets jumped and the Yen fell.
Tesco
Tesco said it underwent a fourth consecutive quarter of market share gains in the first three months of the financial year, helped by growing volumes, despite mixed sales in the period. The country’s largest supermarket increased its market share by 59 basis points to 27.6%, helped by growth in all its channels including food sales which rose by 5.1% year-on-year and was helped by “strong volume growth” in fresh food.
Bellway
Bellway has closed out the week confirming press speculation that it made an offer for Crest Nicholson, the fellow home construction company whose shares sunk more than 11% yesterday on the back of poor results. Bellway said it made an offer on May 7 but Crest Nicholson’s board rejected it. Under the terms of the offer, Bellway had promised to give Crest Nicholson shareholders 0.093 shares in the former for every share owned in the latter, representing an implied value of 253p per CN share.
Tesla
Tesla’s shareholders voted to confirm their support for a pay plan worth $56bn for Elon Musk, the EV maker’s founder and boss.
House prices set to stagnate
Capital Economics analysts have downgraded estimates for house price growth for 2024, saying they expect prices to rise by around 0.5% this year. They had previously forecast growth of around 2%. Andrew Wishart, senior UK economist at Capital Economics, predicts that “the market will move into a state of excess supply” in the coming weeks, which will cause prices to dip over the summer. Elsewhere, Rob Wood, chief UK economist at Pantheon Macroeconomics, said that while higher mortgage rates are taking a toll, he still expects the Bank of England to cut interest rates this year. This, he added, would “light the way to renewed buyer interest” and push up prices by 3% in 2024.
Labour makes tax pledges as it looks to ‘rebuild Britain’
Sir Keir Starmer says a Labour government will “rebuild Britain” by boosting economic growth, insisting that the party’s manifesto represents “a credible long-term plan.” Labour says it will deliver its policies through £8.5bn in annual tax rises, and £1.5bn in savings from cutting government “waste and other efficiencies.” The tax rises include a 1% stamp duty surcharge on property purchases by overseas buyers and hiking taxes on bonuses for managers at hedge funds and private equity firms -as well as introducing VAT on private school fees. Labour would also raise extra revenue by closing “loopholes” in the government’s existing plans to tax non-domiciled taxpayers and oil and gas firms. Labour has reiterated a pledge that it will not increase income tax, National Insurance or VAT, while also ruling out a rise in the main rate of corporation tax. Mr Starmer said Labour’s approach is both “pro-worker and pro-business,” adding that “for working people, we are not going to increase their taxes.” Chancellor Jeremy Hunt accused Labour of relieving a “Tax Trap Manifesto”, saying that it “contains only tax rises and no tax cuts.” He added: “Under Labour’s published plans, taxes will rise to levels never before seen in this country.”
Best paid WFH role offers £150k
Data from job search website Jooble shows that the highest paid work from home jobs currently on offer come with a salary of around £150,000. Jooble data shows that the average salary for people working from home in London is £66,845 – with this 51% more than the UK average. A recent survey by Deloitte found that 77% of Gen Z workers in the UK would consider looking for a new job if told they had to turn up at their workplace full-time, as would 71% of millennials. Meanwhile, research from RSM UK shows that a third of businesses now allow their employees to log in from anywhere across the world.
Gatwick boss: Duty free for arrivals would boost tourism
Stewart Wingate, the chief executive of Gatwick Airport, says that introducing duty-free shopping for arriving passengers would make the UK’s tourism sector more competitive internationally. While the UK increased inbound duty free allowances after the UK left the EU, passengers are unable to purchase products at duty-free prices on arrival in British airports. Mr Wingate said: “One of the things we continue to lobby the Government on is why we don’t take advantage now that we are outside of the EU and offer that product to passengers arriving into Gatwick or the other UK airports.” He has also backed calls to scrap the so-called tourist tax, saying VAT-free shopping for international visitors would boost the UK’s appeal
Minor Hotels calls in restructuring advisers
Minor Hotels has drafted in AlixPartners to advise on cost management issues at its Wolseley Hospitality Group, which owns of some of London’s best-known restaurants.
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Why should you become a CPA member!
The Credit Protection Association (CPA) has been assisting thousands of UK businesses to get paid, since 1914. We have seen many financial crises, this last one was particularly deadly for suppliers and we are still seeing elevated insolvencies as businesses struggle.
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Just call Peter Uwins, CPA’s National Sales Manager, on 020 8846 0000 (business hours) or email nsm@cpa.co.uk today.
When you see your money come in, you will be so glad you used CPA.
The Credit Protection Association – Prompting Punctual Payments – Ethical, Effective, Efficient, Economical collections
Do you have a commercial late payer that is causing you grief? Use CPA’s no-win, no-fee, commercial debt recovery service!
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The Credit Protection Association – Prompting Punctual Payments – Ethical, Effective, Efficient, Economical collections.
Get compensated for previous late payments
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