Business News 27th June 2017

We hope you enjoy reading the business news compiled by the Credit Protection Association on Tuesday 27th June 2017 for its members and visitors.

Market Round up.

Yesterday UK equities gave a positive reception to theConservatives deal with the DUP which secures a 13 seat working majority in exchange for an investment to £1bn in Northern Ireland for schools, hospitals, infrastructure and broadband over the next two years. The deal, which comes 2 weeks after the election resulted in a hung Parliament, will see the 10 DUP MPs back the Tories in key Commons votes. DUP leader Arlene Foster said the “wide-ranging” pact was “good for Northern Ireland and the UK” but one critic said it was a “straight bung”. While the market was up, the pound suffered further losses against the Euro. Oil prices remain weak with WTI trending lower to $42.80/ barrel. European and U.K. shares logged broad gains, lifted by Italian banks after Rome stepped in to shut down two failed lenders, and as Nestlé SA surged after a hedge fund snapped up a major stake in the consumer-products giant. Asian Markets rose lifted in part by a stronger U.S. dollar, though markets in Australia bucked the trend due to declines in utility and mining stocks. The S&P 500 and Dow were slightly higher but gains were muted by a fall in technology stocks which nudged thenasdaq lower as investors turned to more defensive sectors. Oil prices rose for a fourth consecutive session as investors covered short positions, though worries over a festering supply glut kept a lid on prices. Gold edged down on a firmer dollar ahead of a speech by Federal Reserve Chair Janet Yellen, which may give clues on the pace of possible interest rate hikes by the U.S. central bank.

ATM’s

Happy 50th birthday to cash machines! – I wonder how much longer they will go as people continue to inaccurately predict the end of physical cash and a move to a cashless society. Such a move would hinder the black economy. However the general public still seems pretty much in love with the stuff and today, the Bank of England’s chief cashier said cash will remain a part of our day-to-day lives for decades. There are now about 70,000 cash machines across the UK, and 176 million cards in the UK that can be used to withdraw cash at them.

EU Demands Further U.K. Guarantees for Citizens After Brexit

The European Union demanded Britain go further to guarantee the rights of millions of EU citizens after Brexit, in a blow to Prime Minister Theresa May’s hopes for a swift deal. Michel Barnier, the bloc’s chief negotiator, knocked back May’s offer to protect work and residency rights for its citizens living in Britain less than two hours after she set it out in a detailed 20-page report on Monday. More ambition, clarity and guarantees needed than in today’s U.K. position,” Barnier said on Twitter. The bloc’s goal is for the “same level of protection as in EU law,” he said. The response sets up a clash which threatens to hold up crucial talks on a new trade deal between Britain and EU. Both sides want an early settlement on citizens’ rights and have agreed they won’t start talking about a free trade accord until this issue, among others, is agreed.

Draghi Defends ECB Stimulus Saying Jobs Matter Most for Equality

Mario Draghi took his defence of his stimulus measures to students in Portugal, where he argued that young people will benefit from the revival of euro-area growth. Youth unemployment “is declining but it’s still very high,’’ the European Central Bank president said at ISEG Lisbon School of Economics and Management on Monday. “The millennials that found a job because of our policy, I’m pretty sure they are okay” with the ECB’s strategy. Four years into an economic expansion, the euro-zone economy is looking so robust that some policy makers are urging the ECB to start planning to wind down its 2.3 trillion-euro ($2.6 trillion) bond-buying plan after the end of this year. Yet they didn’t even discuss such a tapering strategy when they met this month, with Draghi noting the low-quality nature of the new jobs being created and calling for patience.

Business groups say UK’s plans for EU nationals lack clarity

Business groups have reacted to Theresa May’s proposals on EU citizens’ rights post-Brexit with frustration. Employers tell the FT the plans would lead to a new administrative burden.

Financial Times, Page: 3

Google hit with record EU fine

Google has been fined 2.42bn euros (£2.1bn) by the European Commission after it was ruled that the company had abused its power by promoting its own shopping comparison service at the top of search results. The amount is the regulator’s largest penalty to date against a company accused of distorting the market. The ruling also orders Google to end its anti-competitive practices within 90 days or face a further penalty. The US firm said it may appeal. However, if it fails to change the way it operates the Shopping service within the three-month deadline, it could be forced to make payments of 5% of its parent company Alphabet’s average daily worldwide earnings. Based on the company’s most recent financial report, that amounts to about $14m a day.

Banks takes action over bad loans

The Bank of England has forced banks to find a further £11.4bn in the next 18 months to beef up their finances against the risk of bad loans. Banks will have to set aside £5.7bn in the next six months in case future economic shocks mean some borrowers cannot keep up their repayments. The Bank’s Financial Policy Committee (FPC) suggested lenders had become complacent about their lending.

Record number of judicial reviews for HMRC

Research by the law firm RPC reveals HMRC received a record 90 applications for judicial reviews last year. RPC found the number of judicial reviews, some of which represent thousands of individuals, to be steadily increasing – having risen from 76 applications in 2015 and 42 in 2014. The rise is partly credited to HMRC’s use of Accelerated Payment Notices, which require individuals or businesses suspected of tax avoidance to pay the disputed amount in full within 90 days and without the right of appeal. While judicial reviews against HMRC are often by “ordinary taxpayers” over relatively negligible sums, RPC also noted an increasing trend of larger corporates bringing judicial reviews against the department’s decisions.

SFO calls in robot to solve cases

The Serious Fraud Office has begun using a robo-investigator to trawl case files. Ravn artificial intelligence software was used by the SFO to save thousands of man-hours in its investigation into corruption at Rolls-Royce, which led to a £671m settlement in January. Bosses believe the technology will give lawyers more time to focus on complex and better paid work, although Deloitte forecasts that it could lead to 114,000 job losses in the sector within 20 years.

European banks to launch blockchain trade finance platform

IBM has been hired to build and host a new blockchain system for providing SMEs with cross-border trade finance from Deutsche Bank, HSBC, KBC, Natixis, Rabobank, Société Générale and UniCredit.

Growth in personal debt slowing

The British Bankers’ Association has said the growth in borrowing on loans, credit cards and overdrafts slowed in May. Personal debt grew at an annual pace of 5.1% in May compared with 6.4% a month earlier. However, individuals are putting little money aside in savings. Personal deposits in the major UK banks grew at a rate of 2.6% in the year to the end of May – the slowest annual growth rate in saving since December 2011.

UK top destination for foreign workers

Britain remains the most popular place to move to among foreign workers, according to a survey by Deloitte. Workers in other countries were asked to list the most attractive countries to move to, with Britain named in the top three in 57% of respondents’ answers. By contrast, 30% of lists included the US, 21% Australia and 19% Canada. However, the study also found 48% of migrant workers see Britain as less attractive as a result of the referendum, with 65% of highly-skilled EU workers agreeing with that sentiment. Writing in the Telegraph, Deloitte’s senior partner David Sproul says that the best and brightest must be welcome post-Brexit.

Consumer Confidence

UK consumer confidence deteriorated notably in the wake of hung parliament, survey results from YouGov and the Centre for Economics and Business Research showed. The overall consumer sentiment index dropped to 106.9 in June, its second-lowest level since the summer of 2013. The index declined to 105.2 in the period after the general election, in which Prime Minister Theresa May lost her majority, from 109.1 in the week before it. Confidence was driven down by weakened household finances and cooling property prices. However, the data suggests that the job security and business activity measures, both for the last 30 days and the next 12 months, are proving relatively resilient.

Bumper year for Royals

The Queen is to receive an 8% increase in her official funding after the Crown Estate made a record £328.8m profit in the year to the end of March 2017. It means the sovereign grant will rise from £76m in 2017-18 to £82.2m next April. Meanwhile, Prince Charles’s income has risen to a record £22.5m a year, thanks to his Duchy Originals food range. At the same time, the Prince has seen his tax bill drop – to £4.75m from £5m the year before – because of higher business expenses.

USA not A OK

A health care reform bill proposed in the US Senate will leave 22 million more Americans without insurance within a decade, a non-partisan analysis said Monday. The figures released by the Congressional Budget Office will provide fodder to opposition Democrats, who uniformly opposed the measure, which they fear would hurt many Americans reliant on government insurance and would roll back policies they had achieved under former president Barack Obama. The total number of uninsured in 2026 would stand at 49 million compared to the 28 million estimated under current law. The measure would also save money for the government, reducing direct spending by 1 billion dollars from 2017-2026 and reducing the deficit by 321 billion dollars over the period. The reductions would come largely from cuts to Medicaid, the government insurance scheme for the poor, and from a reduction in tax subsidies to those who directly buy individual private insurance