Business News 22nd June 2017
We hope you enjoy reading the business news compiled by the Credit Protection Association on Thursday 22nd June 2017 for its members and visitors.
UK Shares
The FTSE 100 was broadly flat yesterday with a light day for corporate announcements, one of the highlights was Shire Pharmaceuticals which got US FDA Regulatory Approval For ADHD Symptom Control Drug Mydayis., which saw the stock trade up over c.2% intraday. The Crude Oil bear market started to effect other sectors. The major casualty on the FTSE 100 was Provident Financial which warned after hours on Tuesday that its Consumer Credit division will see underlying profit in 2017 drop by almost half on the back of one-off costs incurred as part of the restructuring of the unit. This led to the stock trading down over 17% during the day.
Europe
European . shares were little changed, paring an earlier decline, as gains in Italian lenders and miners offset losses in financial-services companies.
Asian Shares
Asian shares rose, shrugging off a 2% dip overnight in crude prices and picking up some momentum on prospects of a weaker dollar as the Fed debates the pace of U.S. economic growth and inflation.
U.S. Shares
U.S. shares fell amid declining energy stocks as oil prices were down, adding to investor concerns about low inflation while healthcare and technology stocks helped lift the Nasdaq.
Queens Speech
A host of proposed new laws designed to prepare the UK for a “smooth and orderly” departure from the EU were announced in the Queen’s Speech. Of 27 bills, 8 relate to Brexit and its implications for key sectors of the economy. As well as a bill to convert Eeuropean laws into UK law, there are measures on trade, immigration, fisheries, nuclear safety, agriculture and sanctions. But other key manifesto plans have either been axed or delayed after the Conservatives lost their majority. Proposals to axe the winter fuel allowance for well-off pensioners, scrap the triple lock on pensions, expand grammar schools and end free school lunches for all infants have been dropped, while other proposals, such as a cap on energy bills and reforms to social care funding, will be put out to consultation.
Letting Agents fees
More than six months after first suggesting the idea, the government has announced plans to ban fees to lettings agents in England. A new Tenants’ Fees Bill was announced in the Queen’s Speech, which will stop tenants having to pay money to agents. The commitment was announced by the Conservatives in the 2016 Autumn Statement. ARLA Propertymark, which represents letting agents, expressed their self interest by claiming the new rules would cost 4,000 jobs. However the measure is likely to pass into law, as all the main parties had it in their election manifestos. The average amount paid in fees is currently £223, according to government figures. The chancellor, Philip Hammond, previously said that 4.3m households pay such fees every year.
BOE disharmony
Bank of England chief economist Andy Haldane has said he may vote for a rate rise in the second half of the year. He said leaving a rate hike until too late risks steeper rate rises in the future. Sterling briefly surged above $1.27 after his comment, after having dipped below $1.26 prior to Wednesday’s Queen’s Speech. Mr Haldane’s comments were more hawkish than those made by Governor Mark Carney. On Tuesday Mr Carney said “now is not yet the time to begin” rate rises. In August last year the Bank cut interest rates to 0.25% after signs of a slowdown following the Brexit vote.
Electric Charging Points
Petrol stations and motorway services will be required to install electric charge points, under plans outlined in the Queen’s Speech. The measure forms part of a government push to increase the number of electric vehicles on UK roads. The Automated and Electric Vehicles Bill will also contains plans to push driverless car technology. It is planned to include an extension of car insurance to cover the use of automated vehicles. There are several trials of driverless cars ongoing in the UK. Car insurance will be extended to automated vehicles “to ensure that compensation claims continue to be paid quickly, fairly and easily”, the bill says. Lawyers have long argued that getting the legal framework right is essential if automated cars are to become popular.
Pension Advice
The UK’s Financial Conduct Authority published new proposals to tighten the rules on advice given to consumers around transferring out of final salary pension schemes. Since the 2015 introduction of pension freedoms by the UK government, the FCA noted there are “historically high” values for transfers which allow customers to cash out of ‘gold plated’ defined benefit plans. Some employers also offer incentives to employees to transfer out of these relatively costly schemes. The law requires anyone looking to transfer safeguarded benefits worth over £30,000 to seek “appropriate independent advice”.
Brexit & ex Pats
Only days after the opening of the formal Brexit talks, Theresa May is looking to make a bid to break the log jam over the status of expat citizens following the UK’s withdrawal from the European Union. The UK prime minister will use the European Council summit in Brussels to brief her counterparts on the plans to offer certainty to the three million EU nationals living in the UK, an issue that she has identified as her first priority for early agreement in the talks under Article 50 of the EU treaties. Foreign Secretary Boris Johnson said he hoped leaders of the 27 other nations would match her “generous” proposals with similar offers to the one million British expats on the continent.
Advertising
Advertisers will pull hundreds of millions of pounds in spending from Google and Facebook this year over concerns about their adverts running next to inappropriate content such as extremist sites and fake news. Sir Martin Sorrell’s Group M, which buys more than $75bn of advertising space on behalf of clients globally, has slashed its growth prediction for UK digital advertising and has blamed some of the adjustment on an advertiser backlashover the inability of Silicon Valley giants to stop ads appearing around inappropriate content.
House prices cause inheritance tax boom
Funds raised from Inheritance Tax have broken the £5bn barrier for the first time, according to HMRC figures. A record £5.1bn was collected – a jump of 9% on the previous year – driven by the sustained period of rapid house price growth between 2014 and 2016 and a rise in share prices. The Office for Budget Responsibility expects inheritance tax receipts to rise to £6.2bn by 2020-21. Despite the record revenue, IHT receipts amounted to just 0.25% of GDP in the 12 months to May. Currently estates worth up to £325,000 can be bequeathed without paying inheritance tax, with a rate of 40% payable above the threshold. In April, the government began introducing an additional tax-free allowance. By 2021 it will allow home owners to leave an extra £175,000 in property wealth. This means a new allowance for property owners of £500,000 – or £1m for couples.
Employers look for new ways to reward staff
A survey by the Bank of England has found that business services companies have been “taking on more apprentices and trainees to address current or future recruitment difficulties”. Employers are also singling out staff they want to reward rather than handing out company-wide pay deals to cope with skills shortages, the Bank said. A decrease in the number of new incoming EU migrants was putting extra pressure on recruiters, but this was because UK pay has been effectively cut by a lower exchange rate.
SME’s fail to auto enrol
Nearly 800,000 UK SMEs have yet to auto-enrolment compliant, according to new figures released by the Pensions Regulator. With the current schedule for business owners to auto-enrol their employees coming to an end, all small businesses that existed prior to April 2012 have now passed their staging date. The regulator has warned that new businesses which start trading from October 2017 and employ staff will have instant pension responsibilities. The regulator has named and shamed those businesses found to be non-compliant and which were issued with either a Fixed Penalty Notice or Escalating Penalty Notice.
Experts question stamp duty policy
Following the release of a Lloyds report showing that house sales dipped 7% in 2016 and HMRC figures revealing a 3.3% fall in sales between April and May, experts have questioned the Government’s stamp duty policy. Jamie Whyte, research director at the Institute of Economic Affairs, commented: “Taxes on transactions, such as stamp duty, are highly damaging and the slowing of housing sales is a symptom.” Robert Fraser of Fraser & Co said stamp duty is hitting the property market and the Government’s tax take, adding: “Lower receipts, reduced transaction volumes and a slower rate of house building have come to define a policy that prevents the housing industry from performing its role effectively.”
Divorcees worse off than married peers
Divorcees are more than twice as likely to be left with no savings or investments than married peers, according to figures compiled by the Office for National Statistics (ONS), which revealed 32% of divorcees have no savings or investments, compared with 14% of those who are married. Divorcees or separated people are also far more focused on short term financial goals, according to insurance giant Zurich. Divorce rates are on the wane however, City AM notes, with a 9.1% fall in the number of legal splits during 2015 in England and Wales.
The Budget deficit narrows to £6.7bn
The UK’s budget deficit in May stood at £6.7bn, down £300m compared with the same month last year, the ONS said, helped by a recovery in value added tax receipts. For the financial year-to-date, borrowing stands at £16.1bn, the lowest since the comparable period in 2008. Total tax receipts were up 5.1% on the same months in the previous year, but the OBR says revenues need to rise 3.1% for the full year to give the Chancellor room for extra spending. Yael Selfin, chief economist at KPMG in the UK, said: “A slowing economy, a potential hefty exit payment to the EU, and an eventual gradual rise in borrowing costs are all coming the UK’s way. Taken together, this may leave little room for the government to satisfy public demands for an end to austerity.”
Oil
Oil prices rose after U.S. crude and gasoline stockpiles fell, but worries over whether OPEC-led output cuts would be able to rein in a three-year glut continued to drag.
Gold
Gold rose for a second straight day, supported by an easing dollar and weakness in U.S. Treasury yields.
Previous News pages
Business News 21st June 2017
Business News 20th June 2017
Business News 19th June 2017
Business News 16th June 2017
Business News 15th June 2017
Business News 14th June 2017
Business News 13th June 2017
Business News 12th June 2017
Business News 8th June 2017
Business News 7th June 2017
Business News 6th June 2017
Business News 5th June 2017
Business News 2nd June 2017
Business News 1st June 2017