Business News 24th July 2017

This is the hopefully enjoyable and informative, bite size business news compiled by the Credit Protection Association on Monday 24th July 2017 for its members and visitors.

Markets Round up

The rally in stocks came to an end on Friday with the FTSE 100 falling 0.5% (35 points) to 7453. The FTSE 250 also stumbled 13 points (0.1%) to 19,751. European stocks fell even harder with German and French shares both down 1.7%. The Eurostoxx 50 fell 48 points to 3452, a fall of 1.4%. Oil fell 1.5% with Brent at $48.6  while gold climbed 0.6% to $1252. The US markets however were broadly level with the S&P 500 closing at 2472 down just 1 point and  the Nasdaq fell 2 points to 6388. The indexes where hit by a series of disappointing results from large stocks, most notably General Electric. European stocks were also reacting to the Euro climbing to a two year high against the dollar on thursday, driven by the ECBs dovishness. Currencies have been range bound since with the pound strengthening 0.2 cents against the dollar and Euro to $1.3012 and €1.1174 respectively.


U.K. officials are touring the world in a bid to line up post-Brexit trade deals. Trade Secretary Liam Fox will meet with his U.S. counterpart in Washington on Monday after acknowledging it will be a “difficult discussion.” He will then travel to Mexico and Texas.Fox reckons removing commercial barriers with the U.S. could generate an additional £40 billion ($31 billion) in trade with the U.K. by 2030. He will tell American lawmakers that 700,000 U.S. jobs are supported by trade with Britain. Still, U.S. negotiators have more experience and could bulldoze the U.K. on issues such as agricultural and financial regulation. There is already a split in Prime Minister Theresa May’s cabinet about allowing imports of chlorine-washed chicken from the U.S., according to todays Daily Telegraph.  Speaking on Sunday, opposition Labour Party leader Jeremy Corbyn questioned why the U.K. is so willing to strike a trade deal with the U.S. when President Donald Trump intends to withdraw from the Paris climate agreement. In an interview with the BBC’s Andrew Marr, Corbyn also ruled out continued British membership of the EU single market after Brexit. With Fox in the U.S., Foreign Secretary Boris Johnson, who visited Japan last week, will be in New Zealand and Australia. Under EU rules, member states are not allowed to negotiate free-trade agreements, so the preliminary talks will only lay the groundwork for any pact after the U.K. leaves.

FPB calls for small business commissioner

The Forum of Private Business has called for the appointment of a much-promised small business commissioner, after a government review of the impact of the UK’s groceries code adjudicator highlighted a reduction in unfair trading practices. FPB chief executive Ian Cass said: “When the government gets the right person in place they can make a real difference to business.”

The Press and Journal, Page: 33

Growth outlook for UK slips

The IMF has cut its growth forecast for the UK this year after the economy’s weak performance in the first quarter. The IMF said it expects the UK to expand by 1.7% this year, 0.3 points lower than when it last made predictions in April. The IMF left its growth forecast for the UK in 2018 unchanged at 1.5% but said one risk facing the global economy was that Brexit talks would fail. Meanwhile, an analysis by the Guardian has found that the sharp fall in sterling since the EU referendum has yet to bring about the expected improvement in the trade deficit.  May’s government sought to look on the bright side. The revisions “underscore exactly why” the U.K. needs to “get the very best deal with the EU,” a Treasury statement said, noting that unemployment is currently at its lowest since the 1970s. Meanwhile, and some might say ironically, the outlook for several eurozone economies is brighter than initially thought, with countries including France, Germany, Italy and Spain seeing growth forecasts revised up.

The International Monetary Fund is however leaving its projections for global output growth unchanged at 3.5% this year and 3.6% in 2018 “The recovery in global growth that we projected in April is on a firmer footing,” said Maurice Obstfeld, chief economist at the Washington-based crisis lender. “There is now no question mark over the world economy’s gain in momentum.” Recent data including faster growth in trade suggested that the world economy was entering its “broadest synchronized upswing” of the last decade, he said.

The Guardian, Page: 11

Slow growth could push up unemployment

PwC’s Andrew Sentance says inflation is likely to rise above 3% later this year as the weakness of sterling continues to feed through into the prices paid by consumers. He also warns that if slow growth continues through this year, unemployment is likely to start edging up from its current low of 4.5%.

The Guardian, Page: 10-11

Sage offers a voice for SMEs

The Chronicle interviews Sage’s UK MD Alan Laing. He says that as well as providing SMEs with the administrative tools they need to run their businesses, Sage intends to act as a voice for SMEs with Government and other authorities. “We don’t want to be paternalistic nor arrogant, but worldwide we have lots of businesses that are supported by our products and we know about their challenges,” says Mr Laing.

Chronicle Live

Importers forced to raise prices

Exporters have benefitted from the fall in sterling, but firms that only import are suffering, according to a study for American Express. Some 61% of importers have raised prices by an average of 9% in the past 12 months, the survey found. By contrast, nine in ten SME exporters were doing well from the pound’s fall, increasing their profit margins by 16%. Firms that both export and import were the most confident, with 95% saying sterling’s slump had boosted business and increased profit margins.

The Mail on Sunday, Page: 80

Councils hit back in rates relief row

Local authorities have denied they are to blame after emergency financial assistance for SMEs hit by rises in business rates failed to materialise. A group of London councils has said responsibility for the failure lies with the government for coming up with the £300m rates relief package at the “eleventh hour”. The government had criticised local authorities over how long it is taking to get the money out to those worst affected by the business rates revaluation. But in a letter to Marcus Jones, the local government minister, Claire Kober, chairwoman of London Councils, said the government had left local authorities in the dark over key aspects of the emergency relief, and that support for making changes to billing systems had been inadequate.

The Times, Page: 43

Wealthy people look a million dollars

A new study suggests people can determine whether other men and women are rich or poor simply by looking at their faces. Thora Bjornsdottir and Nicholas Rule, from the University of Toronto, found that young adults could tell more than 60% of the time whether an online dating photo belonged to someone who earned more than $150,000 (£115,000) a year, or less than $35,000 (£27,000). The scientists also concluded that rich people tend to feel better about their lives than the poor do, and over time this difference becomes apparent, even in their resting expressions.

The Times

R&D credits are a grey area for collaborators

The Sunday Times publishes a letter highlighting the barriers facing SMEs when it comes to R&D tax credits. The author says the process of applying for R&D tax credits is in some cases simple, but entrepreneurs working with other companies on product development are being put off applying for the scheme because of ambiguities regarding this area.

The Sunday Times, Business and Money, Page: 11

Perks of the job are back on offer

Staff perks have topped the £8bn mark for the first time this decade, according to UHY Hacker Young. It found the value of taxable benefits employees received as part of their remuneration packages has increased by more than 5% to £8bn in 2015/16 from £7.6bn in the year earlier. Average wages rose just 2.2% over the same period. Company cars are the highest value perk, with their worth increasing 18% over the last five years to £4.3bn.

The Mail on Sunday, Page: 77

Employers urged to boost staff wellbeing

The chief executive of Public Health England has urged employers to boost staff wellbeing by introducing measures such as workplace running clubs and lunchtime yoga classes. Duncan Selbie also said standing desks to improve posture and staff uniting to try to quit smoking were useful ways businesses can improve employee fitness. In an interview with the Observer, Mr Selbie said Britain’s 5.5m SMEs could do much more to tackle the £29bn annual bill for sickness absence while improving productivity and increasing profits at the same time.

The Observer, Page: 10

Buy To Let (BTL) investment returns dwarfed by pensions

Investing in a pension could now double the returns of bricks and mortar over 20 years following tax changes affecting buy-to-let landlords. Research by online investment company IG found that investing £200,000 into a BTL property could see the money grow by 237% over two decades once CGT is taken into account. However, a 40% tax payer could see potential returns up to 435% if they put the £59,700 sum needed for a deposit on that property into a tax efficient self-invested personal pension instead. Separate research by the National Landlord Association has shown over 75% of landlords admit to being reliant on their BTL property to fund their retirement, and the trade body warns this over-reliance could create the next pension crisis.

The Mail on Sunday

Cable considers wealth taxes to win back voters

Vince Cable has said radical new taxes on wealth could ease inequality in Britain, as he vowed to win over voters from Labour. The new Lib Dem leader said he wanted to look at ideas such as aligning CGT with income tax to ensure the richest pay more. He also said he was interested in exploring the concept of a land value tax to replace business rates. Sir Vince also suggested Jeremy Corbyn’s tax policies would be ineffective in tackling inequality, arguing: “Most of his tax policies do involve higher marginal tax rates on high earners, but as far as I know he didn’t say anything at all about wealth and property, which is actually the real source of inequality”.

The Observer, Page: 4

Profit warnings drop in Q2

Profit warnings by listed companies dropped in the second quarter, despite weaker growth, EY said. There were 45 such warnings, down by 40% on the first quarter and by a third on the second quarter of last year. However, EY also cautioned that the “low level of profit warnings should not lead to complacency”, noting that listed retailers issued a record number of profit warnings in the second quarter. Meanwhile, Credit Suisse and Fathom Consulting have each predicted that the squeeze on household finances could push Britain into recession over the coming year. Fathom warned that a combination of inflation and stagnant wages will put the brakes on consumer spending.

The Sunday Times, Business and Money, Page: 2

White-collar crime prosecutions plummet

Prosecutions for corporate fraud and corruption fell 12% over the past year, according to the justice ministry. However, lawyers say the drop is linked to inadequate funding of inquiries, rather than less wrongdoing. Some 8,304 white-collar crimes were prosecuted last year, down from 9,489 in 2015 and 11,200 in 2011. At the same time, cases have increased fourfold over the past five years, the ONS has said. In 2011 there were fewer than 143,000 cases, whereas last year the figure was more than 641,500. Separately, the EU justice commissioner has warned that 17 national governments in the EU are failing to apply rules aimed at making it harder for terror organisations and criminal gangs to hide their money.

The Times, Page: 36   Financial Times, Page: 3    Financial Times, Page: 7

Lower taxes are best for business

The Telegraph’s Roger Bootle says the prospects for post-Brexit Britain will improve if the government embraces lower taxes. He says that if taxes were to rise at just the time that the UK was negotiating its way out of the EU, it would only act as a deterrent to business.

The Daily Telegraph, Business, Page: 28

Extra interest payments could cost £3.4bn

Research by Moore Stephens has found that British householders will face £3.4bn in extra interest payments a year if the Bank of England raises the base rate. The firm estimates there are £591bn of floating mortgages, with about 4.5m British households on tracker mortgages or standard variable rates expected to suffer a rate rise.

The Times (Saturday) , Page: 63

Millions lose out from pension age increase

Over 7m people will lose nearly £10,000 each after the government raised the state pension age to 68 from the year 2037. Analysis from the House of Commons library found that that the increase will save £74bn, equating to an average ‘loss’ for those affected of around £9,800 per person.

The Guardian   The Daily Telegraph, Page: 2   Daily Mail, Page: 2

Half of exporters yet to update trading plans

Research from Lloyds Bank Commercial Banking reveals 48% of Britain’s exporters have not reviewed their exporting strategies following the Brexit vote. Of those that have reviewed their strategies since the referendum, some 27% say they planned to look further afield to take opportunities outside the EU. But almost a third (30%) plan to focus on domestic opportunities instead.

The Independent (saturday), Page: 38   Small Business

Young and low earners save most money

The UK’s lowest paid and youngest earners are saving more of their income than wealthier families. Latest research has found that Britons are saving an average of 8% of their pre-tax income every year – around £1,800. Although 18 to 24-year-olds are putting aside just £1,160 a year, this equates to around 10% of their pre-tax income, says specialist bank Aldermore. The lowest paid are saving the largest proportion of their income – around 15%, for those on £10,000 or less a year.

The Saturday Independent, Page: 44

Pound’s slump costs HMRC millions

HMRC says it has lost £11m in ‘exchange rate losses’, in a scheme whereby it pays tax to countries across the EU, following the slump in the pound since the Brexit vote.

The Mail on Sunday, Page: 13

Inflation boosts government borrowing

Government borrowing increased last month as higher inflation lifted interest payments on the national debt. Public sector net borrowing, excluding state-owned banks, rose to £6.9bn in June, up £2bn from a year earlier. For the financial year to date, borrowing is up £1.9bn to £22.8bn, the ONS said. Meanwhile, the first quarter’s economic slowdown has failed to reduce tax receipts. Corporation tax fell by more than 4% compared to June last year, but all the other main sources of revenue were up more than that predicted by the OBR. John Hawksworth, chief economist at PwC, said: “Looking beyond the current financial year, we would expect the decline in the budget deficit to resume if current tax and spending plans are maintained.”

The saturday Guardian, Page: 21

Lifetime allowance breaches bring in £36m

The tax bill for savers exceeding their pensions’ lifetime allowance rose to £36m in 2015-16, up from £20m the year before. It means that over the past five years, the tax generated from breaching the lifetime allowance has tripled from £12m. The trend also looks set to continue, after the threshold was lowered to £1m in April 2016. “An increasing number of taxpayers who have done the responsible thing and saved for retirement are being caught out by this super tax trap. Many of these individuals are not particularly high earners,” said Tim Holmes, the managing director of Salisbury House Wealth.

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Business News 21st July 2017

Business News 20th July 2017

Business News 19th July 2017

Business News 18th July 2017

Business News 17th July 2017

Business News 14th July 2017

Business News 13th July 2017

Business News 12th July 2017

Business News 11th July 2017

Business News 10th July 2017

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