Business News 21st August 2017
CPA hopes to inform, with its daily bite-size business news on Monday 21st August 2017, filled with stories we think will interest our members and visitors.
Markets Round up
The FtSE 100 index was down .9% at 7,324 on Friday extending Thursdays losses after three days of gains. The FTSE 250 fell 0.7% to 19,626 and European shares were down similar amounts too. .The markets were hit by falls in airline and financial stocks following terror attacks in Spain. Shares across the travel sector fell as investors worried about the impact of the Barcelona terror attack on tourism. Among the airlines, British Airways owner IAG dropped 2% while EasyJet fell 0.85%. Shares in hotel companies were also affected, with Intercontinental Hotels Group down 1.6% and Millennium and Copthorne 3.48% lower. Randgold Resources was one of the few risers, up 1.2%, as the price of gold was bolstered by the metal’s status as a haven in times of uncertainty, up to $1288. U.S. Shares were initally mixed, down slightly as no big economic data and few corporate earnings reports contributed to quiet trading but they closed low after Steve Bannon, one of President Donald Trump’s top advisors, left the administration. . The S&P500 fell 0.2% to 2426 and the Nasdaq fell 0.1% to 6217. Asian shares were fragile as investors remained unconvinced about U.S. President Donald Trump’s ability to fulfill his economic agenda, even as the departure of his controversial policy strategist raised hopes of some progress. Oil is down with WTI at $48.36 and Brent at $52.42. Currency wise Sterling has held ground at 1.096 Euros and $1.287 US dollars.
Jackson Hole
Ahead this week we have Jackson Hole where Mario Draghi and Janet Yellen are due to speak. As the world’s top central bankers gather in Wyoming this week, their relief about a stronger global economy will be tempered by a growing unease that inflation remains inexplicably low. The summit, held at a Jackson Hole mountain retreat, comes as central banks in advanced economies creep toward the policy exit after years of unprecedented easing, even with outlooks are clouded by stubbornly tepid inflation. The theme for this year’s Jackson Hole is ‘fostering a dynamic global economy’ and we should also expect discussions around economic growth and inflation.
Executive Pay
UK government is preparing to water down plans to curb excessive executive pay. Prime Minister Theresa May planned to give shareholders more powers to challenge boards, however, the most radical of these planned reforms are likely to be abandoned in the coming weeks. This includes proposals for more binding votes on remuneration, with investors having wanted a 25% protest over pay at a company’s annual general meeting to trigger a binding vote on a company’s remuneration policy, the report said.
House Prices
The average asking price for a house in the UK was down 0.9% in August, property tracking website Rightmove said – slipping 2,758 pounds. That follows the 0.1% increase in July. On a yearly basis, house prices climbed 3.1%, up from 2/8% in the previous month.
Boom in US tourists visiting the UK
Figures from the ONS show that over the past six months there was a 25% rise in visitors to the UK from North America compared to the first half of last year. A spokesman at Visit Britain, said the influx was largely down to a “Brexit effect” – more international awareness of the UK and a fall in the value of the pound against the dollar. Overall the number of overseas visits to the UK for January to June this year hit a record 19.1m, up 9% compared to the same period in 2016; contributing a record £10.6bn to the economy, up 11% on 2016. Howard Archer, an economist for EY Item Club, said: “This is a welcome positive for the UK economy.”
BBC News
VAT crackdown yields £3.4bn from SMEs
HMRC collected an extra £3.4bn from SMEs in the tax year to April 2017 after a crackdown on firms that fail to pay VAT, according to tax investigation insurance company PFP. VAT accounted for 49% of the extra tax take, compared with 45% last year. PFP managing director Kevin Igoe said: “Over the years the Revenue has widened its net – cracking down on smaller businesses, as well as larger organisations. It’s clear from the high tax take that the Revenue has found investigations into SMEs to be fruitful, and therefore it is likely that this focus on smaller organisations will continue. In order to avoid scrutiny, SMEs must make sure they are filing their returns correctly, so as not to incur a hefty fine.”
The Mail on Sunday, Page: 92
Borrowing predicted to be up for July
New figures from the ONS this week are expected to show that Britain’s budget deficit leapt by more than 150% to nearly £1bn in July, compared with £375m for the same month the previous year. Simon Ward, chief economist at Janus Henderson, said: “July is normally a strong month for tax receipts and the self-assessment revenues should be quite healthy. However, the trend is for a mild deterioration, I expect borrowing to be higher in July than it was last year. It will be around £1bn.” Investec economist Victoria Clarke was more optimistic saying the deficit could come in lower at £200m. Capital Economics economist Paul Hollingsworth agreed but warned that borrowing for the year will be 8% higher for the first four months than it was last year.
Sunday Express, Page: 64
U.K. Steps Up Pressure on EU Over Brexit Talks
Britain returned to a provocative posture a week before Brexit talks with the European Union resume in a bid to pivot discussions toward a trade deal. Prime Minister Theresa May’s government will publish five new position papers this week after declaring on Sunday that it’s “stepping up pressure” on the bloc to shift the negotiations away from the terms of separation. The use of fighting words in the past have not budged the EU, which has time on its side. With the clock ticking down to the U.K.’s March 2019 departure, and the two sides still at odds on many key issues, Brexit Secretary David Davis seems bent on reviving a debate over whether discussions should run in parallel rather than in the strict order the EU has laid out.
Trump targets tax reform
The Trump administration has decided to push hard for tax reform and dial down a controversial national security investigation into steel imports in a bid to swing Republican support behind the president after the turmoil of recent weeks, according to senior officials. They said that former marine general John Kelly, the new chief of staff, was leading efforts to restore order to the White House and reassure Republican leaders alarmed by Mr Trump’s equivocal reaction to white nationalist-fueled violence in Virginia last week and the subsequent open criticism from business leaders. Past efforts to bring order to the Trump administration and its policy making have struggled largely because of the president’s propensity to derail plans with a single riff on Twitter.
Property wealth gap widens
As many as 5.2m UK adults – or one in 10 – have bought or inherited a second home, according to research by the Resolution Foundation. The think tank said the number of multiple home owners grew by 30% between 2002 and 2014, including buy-to-let landlords. Those most likely to own a second home are baby-boomers, currently aged between 52 and 71, while those least likely are those born since 1981, who own just 3% of second homes. The number of people without property had also risen, the foundation said, with four in 10 adults owning no property at all. The Resolution Foundation added that despite increases to stamp duty for second home buyers and changes in tax rules for landlords, the government should do more to end the property wealth gap.
BBC News
Brexit
A group of pro-Brexit economists have argued that a ‘hard’ Brexit could lead to a £135bn uplift to the UK economy. The report, by the group Economists for Free Trade, says that removing all trade tariffs and barriers would lead to huge gains for a post Brexit UK. Others were quick to criticise the report with Labour MP Alison McGovern saying that the move would see Britain swamped with imports and “levels of bankruptcy and unemployment, especially in industry and agriculture, would sky-rocket,” Meanwhile the BBC has come under criticism for running the report by Professor Patrick Minford, the leader of the group Economists for Free Trade, as its top story. Opponents of the Professor claim he fails to understand nature of trade regulations and that his claims are far-fetched. Analysis conducted by the Change Britain campaign group found businesses reported planned investments worth more than £50bn since the vote to leave the EU, bringing 44,000 new jobs. Recent figures show Britain attracted record numbers of foreign direct-investment projects in 2016-17 and was the top destination for inward investment in Europe. Gisela Stuart, chairman of the Change Britain campaign, commented: “With every day, week and month that passes, Project Fear looks ever more farfetched as businesses announce investment after investment into the UK.” . Roger Bootle, chairman of Capital Economics and a member of EFT, says “proposals for transition periods and the various scare stories concerning a “cliff-edge” [Brexit] are really Project Fear in disguise.”
Most underestimate chance of receiving inheritance
Research by Drewberry Wealth has found that only around one in 10 people have assessed their liability for inheritance tax, despite an increasing number of families becoming liable in recent years. Tom Conner, director of Drewberry said IHT is “no longer for the Downton Abbey set” and that with the number of UK households facing IHT bills set to rise, “many families will find it’s well worth paying out for good financial advice.”
Daily Express
Retirees 46% worse off that in 2007
Analysis for the Telegraph by Fidelity reveals that ten years on from the financial crisis, pension investors are now 46% worse off than those who retired before 2007. Due to a mix of low interest rates, stagnant wages and rising inflation, a typical pension pot today would be able to produce an annual income of only £6,607, only just over half the £12,193 retirees in 2007 enjoyed.
The Daily Telegraph,
Tax-dodging landlords find the net is closing
Merryn Somerset Webb considers how HMRC is fighting back against the hidden economy and in particular landlords, following news that almost half the landlords in Newham are not registered for SA.
Financial Times, Page: 16
The lure of stocks and shares Isas
The Times’ Annabelle Williams considers the success of Innovative Finance Isas and the rise in popularity of the Business Property Relief (BPR) scheme, under which people can hold shares in certain AIM-listed companies without having to pay IHT. Ms Williams notes that HMRC does not provide a list of which companies which qualify but it does have a set of business activities that make a company ineligible for BPR. Although many AIM companies have seen their shares rise sharply, like Fevertree or Altitude Group, she cites research from UHY Hacker Young which shows 46 companies delisted from AIM because of financial stress or strategy failure in 2016. Using BPR shares in an Isa is becoming so popular, the government may consider disallowing it, says Lee Clark, a financial planner at Brewin Dolphin.
The Times, Page: 62
FCA backs right to final salary transfers
The Financial Conduct Authority is backing savers after a slew of complaints that pension providers are refusing to transfer final salary schemes into defined contribution ones despite savers knowing the risks. The City watchdog has now issued new guidance for advisers confirming that they should help people who want to transfer, irrespective of whether they think it is their best interests or not.
The rise of instant consumerism
Ashley Armstrong explores the rush to provide consumers with instant gratification as on-demand services become the norm. Brands are investing heavily in technology to help them respond to consumer demands faster. Ben Perkins, head of consumer research at Deloitte, says: “The rise of artificial intelligence, fingerprint recognition on smartphones, mobile wallets and contactless payment has removed some of the commerce barriers, while instant deliveries have made it faster and easier to get the services you want.” However, he warns that: “We are also seeing a rise of unplanned debt, which could be the result of unbudgeted expenditure as people become more carefree about getting their fix immediately.”
The Sunday Telegraph, Business, Page: 3
UK’s biggest companies behind on cyber-security
More than two-thirds of FTSE 350 boards say they have never received any training to deal with a cyber-attack and 10% said they had no plans in place to respond to a cyber incident, a survey by the Department for Digital, Culture, Media and Sport and Big Four firms has found. Paul Taylor, UK head of cybersecurity at KPMG, said: “While cybersecurity has cemented itself on to the board’s agenda, they often lack the training to deal with incidents. This is hugely important as knowing how to deal confidently with an incident in the heat of the moment can save time and money. The aftermath of a cyberattack, without the appropriate training in managing the issue, can result in reputational damage, litigation and [can] blunt competitive edge.”
Daily Mail, Page: 69
Previous News pages
Business News 18th August 2017
Business News 17th August 2017
Business News 16th August 2017
Business News 15th August 2017
Business News 14th August 2017
Business News 11th August 2017
Business News 10th August 2017
Business News 9th August 2017
Business News 7th August 2017
Business News 3rd August 2017
Business News 2nd August 2017
Business News 1st August 2017
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