Business News 25th July 2017
This is the hopefully enjoyable and informative, bite size business news compiled by the Credit Protection Association on Tuesday 25th July 2017 for its members and visitors.
Markets Round up
The FTSE 100 fell 1% to 7378 and the FTSE 250 fell 0.7% to 19,616 on the back of the IMF’s downgrade of the US & UK economic forecasts mentioned in yesterdays “Business News”. The IMF had downgraded the UK 2017 GDP forecast to 1.7% (from 2%) and the US forecast was down 0.2% from 2.3% to 2.1%. European stocks were level at 3453 despite a fall in the Euro car makers following an investigation by the European commission that German automakers were colluding on technology. The S&P500 closed down 0.1% at 2470, while the Nasdaq rose 0.4% to 6411. Asian markets were mostly stronger too with Australia leading the rise as markets prepared for a major week of earnings and federal reserve news. Google owner Alphabet announced a fall in profits after trading driven by the provision for the European fine although it intends to appeal that. The world msci index fell overall 0.2% to 1955. Currencies were broadly flat with the pound at €1.1167 and $1.3013. Oil bounced however on news OPEC was cutting exports with Brent jumping to $49.32 and WTI to $47.03. Gold came of slightly to $1251.5.
OPEC
A group of 24 oil exporting countries is considering extending production restrictions beyond March next year, oil ministers recommended on Monday in St Petersburg. The Organization of the Petroleum Exporting Countries (OPEC) and other countries including Russia, started cutting their output in January to prop up prices. In May, they decided to uphold this policy until the first quarter of 2018. However, prices have hovered below $50 a barrel in recent weeks, far below the $100 a barrel three years ago. The extension should be kept as an “option should further action be required for the stabilization of the market,” ministers of the group said in a statement after reviewing their production deal in the Russian city. Russian Energy Minister Alexander Novak said OPEC members and the 11 other countries should do even more to carry out their plan of reducing their overall output by 1.8 million barrels per day, compared to last year.
Brexit
Liam Fox, one of the most pro-Brexit members of Prime Minister Theresa May’s Cabinet, staged another retreat on Monday by acknowledging it will be hard for Britain to negotiate a new trading relationship with the EU before it leaves the bloc in 2019. In another sign the U.K. will seek a transitional period, Fox said in Washington that “it would be nice to think we could get a full trade agreement by the time we get to March 2019, but that would be an optimistic view of recent free-trade agreements.” His comment came a week after he suggested politics, rather than economics, would be the main obstacle to any swift trade deal with the EU and a day after he shifted gears on the length of any implementation phase from a “few months” to potentially as long as 25 months. After meeting U.S. trade officials to discuss a possible pact, Fox said “we have a strong foundation on which to build” and that the immediate priority was to give “commercial continuity for U.S. and U.K. businesses.”Carolyn Fairbairn, director general of the Confederation of British Industry, said in Brussels that the priority should be an accord with the EU. The Government has come under fire over suggestions that a post Brexit UK-US trade deal could include the relaxation of UK food standards. Trade Secretary Liam Fox who is visiting the States this week to participate in trade talks, is reportedly relaxed about the prospect of chlorine soaked chicken finding its way onto UK plates. Asked whether he would be happy eating it yesterday, Mr Fox suggested that the British media was “obsessed” by the issue and asked whether reporters would be shunning US chicken during their visit.
Bloomberg
Companies risk fines for labour abuses lower on supply chain
The government’s first labour enforcement tsar, David Metcalf, has suggested that large companies could be held accountable for labour abuses committed by smaller companies further down the supply chain.
Financial Times, Page: 2
SMEs warned over cyber defences
Corporate recovery and business advisory firm Quantuma has warned that SMEs who ignore the threat of cybercrime face large fines. The warning comes after the Information Commissioner’s Office (ICO) hit Berkshire-based Boomerang Video Ltd with a £60,000 fine for failing to take basic steps to stop its website being attacked.
BoE warns over rise in consumer debt
The Bank of England has warned of a looming “spiral of complacency” about mounting consumer debt. Alex Brazier, a member of the bank’s Financial Policy Committee, said banks should be wary of moving from responsible to reckless lending and that they may be forced to hold more capital if consumer credit continues to grow rapidly. He said lenders had relaxed terms and conditions on some credit cards and personal loans and had increased the share of high loan-to-income mortgages. There had also been rapid growth of credit used to buy cars. Household debt now equals about 135% of household income. “Household debt – like most things that are good in moderation – can be dangerous in excess”, said Mr Brazier. “Dangerous to borrowers, lenders and, most importantly from our perspective, everyone else in the economy.” Outstanding car loans, credit card balance transfers and personal loans increased by 10% over the past year, meanwhile incomes have only risen by 1.5%.
The Guardian, Page: 1 Financial Times. The Daily Telegraph
Brexit is not to blame for shrinking chocolate bars
Using a five-year analysis, the ONS has confirmed that the trend for products to shrink so producers can avoid putting prices up has not been influenced by the vote to leave the EU. Separately, Deloitte’s latest Leisure Consumer report has found that consumers are prioritising spending on holidays over other leisure activities.
Financial Times, Page: 1 The Daily Telegraph, Page: 6 The Scotsman, Page: 3 Yorkshire Post, Page: 16
Plans to ban leaseholds on new-build houses in England
“Unfair charges” levied on buyers of new-build houses could be banned in England under a proposed crackdown. Leaseholds on new-build houses would be outlawed, while ground rents could be dramatically reduced, under government plans subject to public consultation. Ground rents can double every decade, crippling home owners and in some cases making a property impossible to sell. “Enough is enough. These practices are unjust, unnecessary and need to stop,” said Communities Secretary Sajid Javid. The proposals, which are subject to an eight-week consultation, apply only to England. Mr Javid said that there were 1.2 million cases of houses on leasehold, and the situation of escalating costs was one example of a “broken housing market”.
BBC News
Well-paid graduates pay 51% tax
Middle and high-earning graduates will pay an effective tax rate of above 50%, according to consultancy London Economics. Those entering into well paid professions such as medicine, engineering and banking will take home less than half of any income they earn over the £45,000 higher rate (40%) tax threshold. The rate they pay on earnings above that threshold will be 51%. For someone with an outstanding student loan, for every pound earned over £45,000, 40p is deducted for income tax, nine pence for their loan payment and two pence for national insurance – exceeding the 45% income tax and 2% national insurance on earners on salaries of over £150,000.
The Daily Telegraph
Instilling fear in taxpayers increases payment rates
Researchers say taxpayers can be “nudged” into paying their taxes with the right messages. If HMRC used phrases such as “nine out of 10 people in the UK pay their tax on time”, payment rates would increase significantly, academics at Warwick Business School say. The researchers add that if HMRC were more specific about the penalties that would be faced for non-payment even more tax would be paid on time. Ivo Vlaev, co-author of the study, said: “Framing people’s actions as minority behaviour triggers a subconscious feeling of being an outsider, which creates a fear that you don’t belong anymore. A motivation emerges to affiliate with the majority group, which in this case is people who pay their taxes.”
AOL
Europe’s top private banks boost UK operations
UBS, Credit Suisse, Pictet and Société Générale plan to accelerate investments in the UK. They consider the UK to have a bright outlook for private banking and intend to hire extra staff and open new regional offices.
Financial Times, Page: 17
Barmen, accountants and builders most intimidating
Research of 2,000 UK adults carried out by Fletchers Solicitors has revealed that 68% of Britons rated hospitality professionals, such as chefs and bartenders, as the most intimidating profession. Financial service professionals (64%) such as bank managers, accountants and book-keepers, followed in second place, trades people (59%) including builders, plumbers and electricians ranked third. However, the research revealed 73% of Britons feel healthcare workers including doctors and nurses are the most likeable professionals.
Yorkshire Post, Business, Page: 8
Previous News pages
Business News 24th July 2017
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