Business News 14th August 2017
CPA hopes to inform, with its daily bite-size business news on Monday 14th August 2017, filled with stories we think will interest our members and visitors.
Markets Round up
On Friday the FTSE 100 hit a 3 month low following the escalation in rhetoric between the US and North Korea. The FTSE 100 dell 1.1% to 7310 and the FTSE 250 fell 0.8% to 19,544.80. At one point the market hit 7296 before rallying somewhat. In the US the VIX (the volatility index) closed at its highest level since Trump was elected. Gold prices climbed to two-month highs as investors sought refuge from escalating tensions between North Korea and the United States, while gold also received support from weak U.S. inflation data. US Stocks saw some strength on Friday, as bargain hunters helped the markets regain ground following the sell-off seen Thursday. The Nasdaq and the S&P 500 rebounded after ending Thursday’s trading at their lowest closing levels in a month. The major averages all closed in positive territory, although the tech-heavy Nasdaq outperformed its counterparts. While the Nasdaq climbed 40 points or 0.6% to 6,257 and the S&P 500 edged up 3 points or 0.1% to 2,441. Despite the gains on the day, the major averages moved lower for the week. The Nasdaq and the S&P 500 tumbled by 1.5% and 1.4%, respectively. Asian stocks carried forward those gains this morning, boosted by the Japanese GDP figures and chinese data.
Oil
World oil demand is growing more strongly than previously thought, but revisions to past data for demand from developing economies means the excess oil on the market will clear less quickly than initially expected later in 2017, according to the rich-world’s energy watchdog. In its latest monthly Oil Market Report, the International Energy Agency revised its forecast for oil demand growth in 2017 from 1.4m barrels per day to 1.5m b/d it forecast in July and said that same pace would be maintained throughout 2018.
Business confidence falls amid political uncertainty
Business confidence has dropped as political uncertainty takes a toll, according to the ICAEW. Its index of optimism, where anything above zero suggests firms are positive, fell from 6.7 in the second quarter to -8. Matthew Rideout, director of business at the ICAEW, said the fall back into negative territory was “not unexpected”. He said: “The industrial strategy has been lost in the void, coupled with no clear signal towards post-Brexit policy,” he said. “As a result, businesses cannot see through this haze of uncertainty and are struggling to look further than the end of the next quarter in terms of their decision making.”
The Times, Page: 41 Daily Mail, Page: 69 The Daily Telegraph, Business, Page: 29
Slowing economy could hit businesses
According to The Share Centre’s profit watch report, the UK’s top 350 listed firms saw revenues rise at the fastest rate since 2014 over the past year, climbing 5.7% to £346.1bn, while profits jumped 41% to £22.7bn. The ratio of sectors with rising profits compared to those with falls was the highest on record, with just one in 20 businesses posting a loss for the year to March 31 versus one in nine in the previous two years. However, the study warned of darker days ahead. “Even those that performed extremely well may not continue to do so,” it said. “Since the beginning of the year, the economy has slowed markedly, sparking a succession of profit warnings. The UK is now the worst performing economy in Europe.”
The Daily Telegraph, Business, Page: 28 The Times, Page: 41 Daily Mail, Page: 69 Daily Express, Page: 45 The Scotsman, Page: 32 Yorkshire Post, Business, Page: 15
Brexit
Chancellor of the Exchequer Philip Hammond and Secretary for International Trade Liam Fox wrote an article for the Sunday Telegraph in which they said a limited interim phase following the official exit by Britain from the Europe Union would provide more security for the British economy. The British government is set to publish a series of strategy papers ahead of a third round of talks between London and Brussels at the end of August.
London landlords may be avoiding £200m in tax
Up to 13,000 landlords in Newham, east London, have failed to declare their rental income to HMRC, according to the local council. Newham was the first to introduce a compulsory borough-wide licensing scheme for landlords in 2013 and says of the 27,000 registered, nearly half had not registered for self-assessment. The council estimated that unpaid tax by landlords is costing the public purse nearly £200m in London. HMRC said its Let Property Campaign, launched in 2014, had so far “generated £115m in additional and previously unpaid tax and interest.” The Guardian suggests that the data from Newham indicates HMRC’s previous estimate that £550m in tax was being avoided by landlords may be low of the mark.
The Guardian, Page: 2
How HMRC cashes in on our vices
The Express details how so-called “sin” taxes on smoking, drinking and eating to excess, are bolstering the Treasury. New research by the Institute of Economic Affairs (IEA) shows that only obesity has an actual cost to the state. Smoking generates £9.5bn a year in duty plus £9.8bn in savings from premature death, against £3.6bn treating smoking-related illnesses and £1bn of other costs. Drinking brings in £10bn-plus compared with £4bn in costs for alcohol-related problems. But obesity costs the state £2.5bn a year after deducting savings on pensions, healthcare and other benefits. Total profit to the state from drinking, smoking and over-eating: over £20bn.
Daily Express
HMRC introduces successful tech
More than 1m people used new online tools for the first time to complete their tax credit renewals ahead of the July 31 deadline, HMRC has said. The Revenue’s customer service department handled 43% of all renewals by supporting 170,000 customers through the process via webchat. It also saw more than 35,000 people choose to submit returns through the new renewals app. HMRC said a new trial SMS service reassuring customers their renewal had been received and was being progressed was a success, with 85% of recipients saying the messages stopped them calling the helplines.
The Press and Journal, Page: 36
Loan referral scheme has disappointing start
The small business referral scheme has only helped 230 companies in its first nine months, the Times reports. The scheme obliges banks to pass loan applications from SMEs to alternative finance provides if they do not fit the banks’ criteria, but only 3% of the 8,100 businesses referred drew loans under the scheme, resulting in less than £4m of finance being provided. The Times points out that P2P lender Funding Circle lent £14m to 166 companies as a result of its own private referral deals with Santander and Royal Bank of Scotland. Mike Cherry, chairman of the FSB, said: “These are early days. We need to see the number of firms benefiting … rising from the hundreds to the thousands.”
The Times, Page: 38
Car Exports
Exports of British-built vans, trucks and buses increased by more than 11% in the first half of the year, with almost all the vehicles going to the European Union, new figures show. Almost two-thirds of commercial vehicles built in Britain were exported, with 27,800 out of the 43,700 produced sent to more than 45 countries across the world. The Society of Motor Manufacturers and Traders said six of the top 10 markets for British-built commercial vehicles (CV) were within the EU.
US inflation
The cost of living in the United States increased at a slightly lower-than-expected pace last month as the cost of energy and that of cars and trucks fell. Headline consumer prices in the US advanced by 0.1% month-on-month in July and were up by 1.7% year-on-year, according to the Bureau of Labor Statistics. That was less than the 0.2% on the month (1.8% year-on-year) gains economists had penciled in. At the ‘core’ level, CPI was up by identical magnitudes, in-line with forecasts. Whereas food prices rose by 0.2% in comparison to June, energy prices dipped by a tenth of a percentage point.
China
China’s economy showed further signs of entering a second-half slowdown, as curbs on property, excess borrowing and industrial overcapacity began to bite. The world’s second-largest economy faces some headwinds this year as the effects of deleveraging and industrial capacity cuts kick in, and those factors are beginning to show up in the hard data. With cooling property markets and uncertainty in the trade outlook, policy makers may refrain from tightening too aggressively to keep growth humming, especially with the political transition entailed in the 19th Party Congress looming. China’s industrial production growth eased at a faster-than-expected pace in July, official data from the National Bureau of Statistics showed. Industrial production climbed 6.4% year-over-year in July, slower than the 7.6% spike in June. Economists had expected the growth to moderate to 7.1%. Retail sales advanced 10.4% annually in July, following a 11.0% surge in the prior month. The expected rate of growth for the month was 10.8%.
Japan
Japan’s economy grew in the second quarter at the fastest pace in more than two years as consumer spending and capital expenditure both rose at the fastest in more than three years, highlighting stronger domestic demand. Gross domestic product expanded an annualized 4.0 percent in April-June, government data showed, more than the median estimate for 2.5 percent annualized growth and the biggest increase since January-March 2015. Compared to the previous quarter, the economy expanded 1.0 percent, versus the median estimate for 0.6 percent growth. Annualized GDP for previous quarter was revised to a 1.5 percent increase, while quarterly real (inflation adjusted) GDP was revised up to 0.4 percent growth from a 0.3 percent increase.
Rees-Mogg’s Tory vision: Cut stamp duty and income tax
Tory MP Jacob Rees-Mogg outlines his vision for the Conservative party in the Telegraph, with his chief priority being stamp duty, which he says must be cut “as a matter of urgency”. He also urges the PM to cut income tax, stating that the only money belongs to the individual and is created in the private sector: “It is not the state’s money of which it benevolently allows the taxpayer to keep a portion.” He adds that lower corporation tax has helped economically and aided business investment. “This example ought to be applied to income tax and, as a matter of urgency, to stamp duty.” In favour of the free market and the rights of the individual, Rees-Mogg goes on to say this does not mean the state should not intervene when “scarcely competent” monopolies treat their customers with arrogance and punish loyalty.
The Daily Telegraph, Page: 1, 2
UK retirees rushing to settle in Europe
Financial advisers have reported a rush of British retirees looking to settle on the Continent before Brexit. Experts say moving to countries such as Spain, Portugal and France will likely become much harder for people once they finish working unless there are reciprocal rights, especially for healthcare. Jason Porter, business development director at Blevins Franks, which provides financial and tax advice to British expats, said he believed a deal would be struck. In the meantime: “The feeling we are getting from our clients is that it is better to be in the country before Brexit than looking to do this after,” he said.
The Guardian, Page: 8
One in six care homes is in danger of failing
One in six care homes in the UK are showing signs that they are at risk of failure, research by Moore Stephens has found. The percentage of nursing homes showing signs of financial distress increased to 16% compared with 12% the previous year, with the combination of rising costs, cuts to funding and an ageing population pushing businesses in the sector “back to the brink”. Of the 7,497 care home companies examined by the firm’s Lee Causer, 1,210 were in a state of financial distress.
Independent i, Page: 13
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Business News 11th August 2017
Business News 10th August 2017