Business News 22nd June 2017

We hope you enjoy reading the business news compiled by the Credit Protection Association on Friday 23rd June 2017 for its members and visitors.


Wow has it been a year already? It is, of course, the one year anniversary of when 52% of the British people who opted to vote, chose to leave the European Union. So much has happened since but little prorgess has yet been made.

Theresa May looked to strike a conciliatory tone with her Europeam counterparts regarding Britain’s exit from the bloc, as an EU summit began on Thursday. The two-day summit comes after negotiators for the EU and Britain met on Monday for their first formal talks in the two-year Brexit process. “I am very pleased to be here at the European Council today following the constructive start of our negotiations for the UK to leave the EU,” May said. “Today, I am going to be setting out some of the UK’s plans particularly on how we propose to protect the rights of EU citizens and UK citizens as we leave the EU,” she added. May’s initiative to address the issue of citizens’ rights – a core issue for EU negotiators – can be seen as offering an olive branch to the EU after her premiership was weakened by a poor election result earlier this month. European Union citizens living in Britain will be allowed to stay after the country’s exit from the bloc, UK Prime Minister Theresa May told EU leaders, according to a senior British official. Negotiators aim to reach an agreement over issues such as citizens’ rights, the status of the Irish border and settling Britain’s financial contributions to the EU over the coming months in order to ensure a smooth transition.

SME owners lean towards the positive on Brexit outlook

Research by the Association of Accounting Technicians has revealed more small business owners are positive (22%) than negative (18%) about the current impact of the Brexit vote on their business. Two in five (40%) SME owners said they were optimistic that Brexit would ultimately be a success, whereas 36% were pessimistic about its chances. Around a quarter (26%) believed Brexit would ultimately have a positive impact on their business, about the same number as those that felt it would have a negative impact (24%). Separately, KPMG’s head of Brexit has warned that businesses are in denial over Brexit, with some refusing to acknowledge the “significant risks” that will accompany the UK’s departure from the EU. A “band of firms” are yet to protect themselves from the imminent Brexit fallout, in what is becoming “an increasingly risky and untenable strategy”, said Karen Briggs.


The Football Association said it has ended all partnerships with betting sponsors. In a statement, the FA said it was also cutting short a £4m per year deal with Ladbrokes Coral Group after just one year. The decision came after a three-month review into game’s relationship with gambling and new rules will come into play immediately. “We would like to thank Ladbrokes for both being a valued partner over the last year and for their professionalism and understanding about our change of policy around gambling,” the FA’s Chief Executive Martin Glenn, said.

Conservatives vow to continue cutting corporation tax

Theresa May has vowed to continue with plans to cut corporation tax, despite Labour’s election vote-winning pledge to raise business taxes to better fund public services. Meanwhile, Paul Johnson of the IFS suggests that the effects of Labour’s proposed tax rises would not only be confined to business and the wealthy. He says that in the end, taxes on companies have to be paid by people through higher prices, lower wages or less valuable investments, including those held in the pensions of private sector workers.

Order books at a high

UK total order books strengthened to a near three-decade high in June, the Industrial Trends Survey from the Confederation of British Industry showed. The total order books rose to +16% in June, the highest since August 1988. At the same time, the export order book balance came in at +13%, the strongest since June 1995. Manufacturers expect output to grow at the same robust pace in the coming quarter, with 37% predicting growth, and 9% a decline, giving a rounded balance of +27%. Average selling prices are still expected to rise in line with the level seen in May. The weaker pound has certainly pushed up demand for British-made goods!

US unemployment figures

First-time claims for US unemployment benefits saw a modest increase in the week ended June 17th, according to a report released by the Labor Department on. The report said initial jobless claims inched up to 241,000, an increase of 3,000 from the previous week’s revised level of 238,000. Economists had expected jobless claims to edge up to 240,000 from the 237,000 originally reported for the previous week. The Labor Department said the less volatile four-week moving average also crept up to 244,750, an increase of 1,500 from the previous week’s revised average of 243,250. Continuing claims, a reading on the number of people receiving ongoing unemployment assistance, also climbed by 8,000 to 1.944m in the week ended June 10th.

House Prices

British households perceived that the value of their home increased in June, albeit at a slower rate than in the previous month, survey figures from IHS Markit and Knight Frank showed. The Knight Frank/Markit House Price Sentiment Index, or HPSI, declined to 53.3 in June. Any figure over 50 indicates that prices are rising. However, while it remains in positive territory, the index has been steadily ticking down for the last three months which suggests that the perceived rate of house price growth is slowing. On a regional basis, households in the South East reported the biggest rise in June, followed by the these in the East of England and London. The future HPSI, a measure of expectations on house prices dropped to 61.3 in June from 64.5 in May.

BoE’s Forbes backs rates increase

Kristin Forbes, an outgoing member of the BoE’s monetary policy committee, has used her valedictory speech to suggest that the current inflationary spiral needs to be choked off with an immediate increase in interest rates. However here replacement has struck a more dovish tones in previous comments.

Higher stamp duties having an impact

Taxes and limits on lending to landlords are squeezing the buy-to-let end of the housing market, causing banks and building societies to predict a sharp fall in lending. The Council of Mortgage Lenders predicts that landlords will borrow £35bn this year, and £33bn in 2018, below both the £40.6bn lent in 2016, and the £38bn forecast for this year by the CML. Paul Smee, the Council’s director general, attributed the fall to the extra stamp duty surcharge of 3%.

Hinkley is “not value for money”

The Hinkley Point C project has come under fire from public auditors who called it “risky and expensive”. According to the National Audit Office (NAO) the £18bn project budget was “marginal” and the deal was “not value for money”. Crucially, the auditors have criticised the Government, saying they had not sufficiently considered the costs and risks for consumers. The Government responded by saying that building the plant was an “important strategic decision”. Critics of the deal have warned of escalating costs and the implications of allowing nuclear power plants to be built in the UK by foreign governments. In a somewhat untimely manner, the report comes nine months after the government granted final approval for the project.

US Healthcare

US Senate leaders have unveiled a draft of legislation to replace the Affordable Care Act, proposing to kill a tax on the wealthy that pays for it and reduce aid to the poor to cut costs. The draft bill’s fate was immediately thrown into question, however, by a statement from several conservatives, who said they were “not ready to vote” for it. The emergence of the sceptics underscored the difficulty for conservatives to steer the legislation down a narrow path to passage.

UK markets

Yesterday markets were slightly down again as oil continued to fall even after a larger than expected fall in U.S. inventories overnight. Continued concerns of oversupply dominated the Oil markets with some suggesting we are in a “bear” run for Oil. Pharmaceutical stocks dominated the UK market with GlaxoSmithKline benefiting from being awarded over $235m in a US court case over the patent for its blood pressure drug Coreg. Shire was also well bid after getting a second drug approved in 2 days.

Asian Markets

Asian shares moved sideways overnight following the lacklustre cues from Wall Street and the slight gain in crude oil prices off ten-month lows.

U.S. Markets

U.S. shares changed direction to close on the whole lower as weak financials and consumer staples shares eclipsed a rally in the health-care and biotechnology sectors.


Oil prices edged up, recovering some of the steep falls earlier in the week, but crude is still set for the worst first-half decline in two decades despite ongoing production cuts.


Gold prices edged higher as the dollar softened and risk aversion due to geopolitical events buoyed the safe-haven appeal of the metal.

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Business News 22nd June 2017

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