Business News – 17th May 2017

British Real Wages Drop

British workers saw their real earnings fall in the first quarter for the first time in 2 1/2 years, despite unemployment dropping to its lowest in more than four decades. Regular pay adjusted for inflation fell 0.2 percent, the Office for National Statistics said Wednesday. Nominal earnings slowed to growth of 2.1 percent, an eight-month low. The unemployment rate fell to 4.6 percent, the lowest since 1975.Inflation is heading toward 3 percent this year and squeezing consumer spending, the engine of the economy. In March alone, real earnings fell 0.5 percent, the biggest decline since July 2014.



The UK government confirmed it has sold the last of its shareholding in Lloyds Banking Group, leaving the lender entirely in private hands. The UK government sold approximately 638.4 million shares in the lender, a 0.89% stake. At its peak the UK government held a 43% stake in the lender, following its bailout of the bank in 2008. The price of the sale was not disclosed. Shares in Lloyds closed up 1.3% at 70.31 pence Tuesday, giving the shares sold a value of about £449 million.

Tax rises to fund Labour’s £50bn manifesto pledge

Labour has unveiled pledges costing £48.6bn – to be funded from extra tax revenue – in its election manifesto. Jeremy Corbyn said his party would invest billions more in schools and the NHS, as well as expanding free childcare and scrapping university tuition fees. The income tax rate would rise to 45p for earnings above £80,000 and then to 50p in each pound earned over £123,000. Mr Corbyn said the income tax levels would raise up to £6.4bn a year. Labour would also impose levies on companies with excessive pay, raise corporation tax to 26%, crack down on tax avoidance and end corporate tax relief. The Conservatives said Labour’s plans will “bankrupt Britain,” and Paul Johnson, director of IFS, warned: “The chance of getting £50bn are pretty small.” Carolyn Fairbairn, director-general of the CBI, added that the tax measures “will work against the UK’s ability to attract and retain talent or set the conditions for businesses to thrive and create jobs”. Elsewhere, the FT says Labour’s policies will raise the UK tax take to a level not seen since the 1940s. The Independent’s Ben Chu says some of Labour’s tax costings look “broadly reasonable”, but plans to clamp down on tax avoidance are little more than an “aspiration.” But the Guardian broadly welcomes the party’s tax plans, arguing that “the principle that fair and necessary taxes are a mark of a civilised society is the right one.”

Financial Times, Page: 1   Financial Times, Page: 2   The Times, Page: 1-2   The Times, Page: 37   The Daily Telegraph, Page: 1-5   The Independent, Page: 1, 29   Independent i, Page: 6-7   The Guardian, Page: 1-2, 28   Daily Mail, Page: 1, 6-8   Evening Standard, Page: 1, 6-7   Daily Express, Page: 6-7   Daily Mirror, Page: 8-9   The Sun, Page: 9   The Scotsman, Page: 1


May hints at tax break for low paid

Theresa May has hinted the Conservatives will introduce income tax cuts for millions of low-paid workers. Mrs May was quizzed about her plans for the personal allowance, which is £11,500 a year, during a visit to Stoke-on-Trent. The PM would not be drawn on details of the manifesto, but stated: “We’ve taken about four million people out of paying income tax altogether and by raising the allowance there’s been a cut which, for the basic rate taxpayer, is the equivalent of about £1,000 a year. We are a low-tax party.”

Daily Express, Page: 7

Victory for HMRC over Swiss bank account challenge

A taxpayer has lost a legal dispute over a controversial UK-Swiss agreement aimed at collecting unpaid tax from undisclosed accounts while preserving bank secrecy in the country.

Financial Times

Small businesses seeking improved support

Business groups have joined forces to call for improved support for exporters and the appointment of a cabinet minister with responsibility for small companies. The 14 groups, including the ICAEW, IPSE, the Forum of Private Business and the Royal Society of Arts, are pushing for a bolder target for public sector procurement from small companies, demanding that one in three public contracts go to SME outfits. The government has an established target to spend £1 in every £3 with smaller companies, which relates to direct and indirect spending from central government. However, the existing approach has been criticised by the National Audit Office, which said that it was not possible to say whether small companies’ access to public funds was really improving or not. Separately, the Times publishes a letter from Mike Cherry, chairman of the FSB, calling on the Conservatives to set out plans to reform business taxes and stop late payments.

The Times, Page: 45   The Times, Page: 28

 Pub boss calls for business rates re-think

Simon Townsend, CEO of the pub company Ei Group, has called on the next government to review the “concerning” business rates system, as he revealed a fall in profits at the pubs chain which is struggling with a £2.2bn debt pile. In response to new rates bills which came into effect in April, Mr Townsend said: “I remain very concerned. They are a tax on business and a disincentive to invest.” He urged the government to find a “business-friendly” solution.

Evening Standard, Page: 37   The Times, Page: 44

Ruling sheds light on BHS funds

Former BHS owner Dominic Chappell could be pursued for millions of pounds after his company Retail Acquisitions (RAL), which bought BHS for £1 in 2015, was put into liquidation. BHS administrators Duff & Phelps had sought a court ruling to put RAL into liquidation so the money can be reclaimed for BHS’ creditors. The High Court ruling on the group’s financial state paves the way for liquidators to sift through RAL’s paperwork seeking clarity on where funds taken from BHS were moved to and attempting to recover them.

The Guardian, Page: 23   Financial Times, Page: 18   Daily Mail, Page: 67   The Daily Telegraph, Business, Page: 2   City AM  

US looks to UK over cutting corporate taxes

With Donald Trump proposing to cut America’s corporate income tax rate, as part of the most ambitious tax reform package since Ronald Reagan’s in 1986, City AM reports on how many Republicans are now looking to Britain for inspiration on how a pure corporate tax rate cutting agenda could work.

City AM

UK inflation highest since September 2013

The UK’s inflation rate hit its highest level since September 2013 in April, official figures show, at 2.7%, up from 2.3% in March and above the Bank of England’s 2% target. Higher air fares were the main reason, up by 18.6% from the month before, while rising prices for clothing, which jumped to the highest level for six years, vehicle excise duty and electricity also played a part.

Financial Times, Page: 3   The Times   The Daily Telegraph, Business, Page; 1, 5   Independent i, Page: 5   The Sun, Page: 2   Daily Mail, Page: 2

 London house price growth among slowest in the UK

Average UK house prices increased 4.1% in the year to March 2017, according to the ONS, with prices in London recording the second-lowest annual growth, at 1.5%, according to Land Registry data. The lowest annual growth was in the North East, where prices decreased by 0.4%, while London continues to enjoy the highest average house price, at £472,000.

The Times   Independent I, Page: 38

In related news Foxtons that its first quarter revenue slumped 25 percent as sales commissions almost halved, the latest slump in performance from the firm which once symbolised the capital’s property boom. Foxtons, which said revenue had dropped to £28.7m in the first three months of the year, suffered after a bumper first quarter last year in which many buyers brought forward purchases to avoid a tax hike.

Oil prices fell after data showed an increase in U.S. crude inventories, stoking concerns that markets remain oversupplied despite efforts by top producers Saudi Arabia and Russia to extend output cuts.

Gold advanced for a fifth straight day as investors cut back on risk, with President Donald Trump’s administration embroiled in controversy after controversy and the dollar sinking to the lowest since November.

Previous News pages

Business News – 16th May 2017

Business News – 16th May 2017

Business News – 12th May 2017

Business News – 11th May 2017

Business News – 10th May 2017

Business News – 9th May 2017

Business News – 8th May 2017

Business News – 5th May 2017

Business News – 4th May 2017

Business News – 3rd May 2017

Business News – 2nd May 2017

Business News – 28th April 2017

Business News – 27th April 2017

Business News – 26th April 2017

Business News – 25th April 2017

Business News – 24th April 2017

Business News – 21st April 2017

Business News – 20th April 2017

Business News – 19th April 2017

Business News – 18th April 2017