Business News 28th September 2017

CPA’s daily bite-size summary of the business news on Thursday 28th September 2017, filled with stories to inform and interest business people.

Markets Round up

UK equities advanced yesterday despite a day of mixed corporate news with the FTSE 100 rising 0.4% to 7313.5 and the 250 rising 0.3% to 19,569.5. Banking stocks were up on yesterdays Janet Yellen speech which indicated rising US interest rates. Expectations of a December rate hike have grown. The Euro Stoxx 50 climbed 0.5% to 3555. The Germasn Dax was up 0.4% to 12657, the French CAC up 0.25% to 5292 but the Italian MIB surged 0.85% to 22622 and the Spanish IBEX exploded 1.76% to 10,369. In the US the S&P500 climbed 0.4% to 2507 while the Nasdaq jumped 1.15% to 6453.26 as markets responded positively to noise over the Trump tax plans. Then over in Asia, the Nikkei climbed almost half a percent to 20363 while the Hang Seng fell 0.8% to 27421.6. While indexes in China, Korea & Australia were relatively flat.

Oil prices prices dipped with WTI hitting $52 and brent down to $57.7, edging lower for a second day, although an unforeseen drop in U.S. oil inventories helped keep the market within sight of this week’s 2015 highs. Gold prices also dipped ro $1282 with rising expectations that the U.S. Federal Reserve will raise interest rates again this year droving gold to a month low, after its biggest one day loss in almost two years. Sterling continued to lose ground against the dollar, falling to 1.337 and fell against the euro also to 1.137.

Bombardier

The PM has complained to the United States about the 220% import tariff proposed by the US Department of Commerce on the C-Series jet whose wings are manufactured in Northern Ireland. The loss of this deal puts into jeopardy the UK’s aerospace manufacturing operations. The US government appears to have caved into pressure from Boeing that Bombardier received state subsidies (which are illegal in the EU) from the UK and Canada. The reality of this tariff jars somewhat with the UK/ US “special relationship” and optimistic talk earlier about a UK/US free trade deal.

Retail

British retail sales grew the most in two years in September, the latest Distributive Trades survey from the Confederation of British Industry showed. The retail sales balance rose to 42% in September, the highest since September 2015, when the score was 49%. A balance of 23% expect sales volume to increase next month. Further, survey showed that a net 12% placed more orders with suppliers in September. Orders are forecast to grow at a slower pace next month.

U.K. Consumer Confidence At Highest Level in Six Months

Consumer confidence in the U.K. rose to its highest level in six months in September, though it remains below pre-referendum levels. An index from YouGov and the Centre for Economics and Business Research rose to 108.6, up from 107.8 in August, as confidence in the outlook for house prices and business activity increased. Measures of household finances and job security fell, according to the report.

Copper & electric cars

This year represents the “tipping point” in an electric vehicle revolution that will drive global demand for copper, according to BHP Billiton. Arnoud Balhuizen, chief commercial officer at the global miner, declared that “copper is the metal of the future. “In September 2016 we published a blog and we set the question: could 2017 be the year of the electric vehicle revolution? The answer is yes, 2017 is the revolution year we have been speaking about.”

US Tax

Donald Trump vowed to make the US more competitive through a sweeping tax reform proposal as his Republican Party looks for a legislative victory in the face of repeated failures to repeal health care reforms instituted by predecessor Barack Obama. Trump proposed “making our taxes simple again”, lowering taxes on individuals and decreasing the corporate tax rate to 20% from 35% in a bid to make US companies more competitive. “American workers and American companies can beat our foreign competitors and start winning again,” Trump said in remarks in the central US state of Indiana.

Bank Of Englands anniversary

Theresa May is to mount a strong defence of free market capitalism as she marks 20 years of Bank of England independence. May, who started her professional life at the bank in 1977, will stress the value of an open financial system which has the right level of regulation. Speaking at a conference to mark the anniversary, the PM is expected to say that a tough approach to ensuring budgets balance is needed for prosperity. The remarks come a day after Jeremy Corbyn delivered a stinging attack on the way capitalism has operated in Britain in recent decades at Labour’s annual conference. Theresa May will defend Britain’s economic model as “the greatest agent of collective human progress ever created” as she seeks to underline the differences between her Conservative Party and Jeremy Corbyn’s Labour opposition. Free-market economies “led societies out of darkness and stagnation and into the light of the modern age,” the prime minister will say on Thursday in a speech to mark 20 years of Bank of England independence. “It is unquestionably the best, and indeed the only sustainable, means of increasing the living standards of everyone.”

RyanAir

The UK Civil Aviation Authority has threatened legal action against Ryanair Holdings over its recent flight cancellations for “persistently misleading passengers”. The CAA said it has launched enforcement action against Ryanair following the airline’s decision earlier this month to cancel thousands of flights. At that time, the CAA wrote to Ryanair to clarify their legal obligations, and sought assurances as to how and when passengers would be rerouted onto alternative flights.

Brexit

The UK launched on Wednesday a new trade dialogue with emerging markets in South America, including Colombia, Peru and Ecuador, to strengthen bilateral commerce and investment, and to maintain trade ties due to the Brexit. “By leaving the EU (EU), we must look abroad and be a beacon for free trade by forging independent trade agreements with growing economies around the world,” said the UK Trade and Investment Secretary Greg Hands in a statement. “That’s why, as an international economic department, we are activating new trade dialogues with emerging markets in Latin America.

Theresa May’s Brexit concessions have started to ease the deadlock. Even as both sides went into the fourth round of negotiations with fighting talk, European Union leaders are considering going some way to meet one of the U.K.’s demands. They are discussing bringing forward talks about the transition period that would follow Brexit according to bloomberg. The concession, while small, would help break the deadlock and make it easier for the UK to discuss the divorce bill. The U.K.’s goal of moving talks on to trade in October is however probably still optimistic.

Interest rate talk

An interest-rate increase should be considered good news for the U.K., rather than a source of fear, according to the Bank of England’s chief economist Andy Haldane. Speaking to Sky News, Haldane said he’s among the majority of policy makers who believe that the economy is “nearing the point” where a reduction in some stimulus might be warranted. The BOE’s key rate is at a record-low 0.25 percent and an increase would be the first by the bank in more than a decade. “This would be a sign of the economy healing, and therefore adjusting to that healing process,” he said. “So rather than being a source of fear or trepidation, this ought to be a good news story about the economy proving resilient.”

Wolfgang Schäuble to step down as German finance minister

Wolfgang Schäuble, the eurozone’s most powerful advocate of fiscal rectitude, is to step down as Germany’s finance minister, in what amounts to a momentous changing-of-the-guard in European financial policymaking. Mr Schäuble, who will now become speaker of the Bundestag, was reviled by countries like Greece as an architect of austerity. But he was also seen as the most passionately pro-European minister in Chancellor Angela Merkel’s government, a man deeply committed to closer EU integration. News of his move came just three days after elections in which Ms Merkel’s conservative CDU/CSU bloc suffered their worst result since 1949 and the rightwing, anti-immigration Alternative for Germany won seats in the Bundestag for the first time.

Japan parliament dissolved

Japan’s lower house was dissolved on Thursday ahead of an expected snap 22nd October election being called by Prime Minister Shinzo Abe, as he seeks to confirm his mandate in the face a rising challenge from a popular new conservative party. Abe, a conservative who returned to power in 2012, is hoping a boost in his voter support in recent months will help his Liberal Democratic Party-led (LDP) coalition maintain a simple majority. It currently holds a two-thirds “super” majority.

VOA cuts could leave firms exposed

The FSB has warned that cuts at the Valuation Office Agency could leave companies exposed to unfair business rates bills and an uphill struggle to overturn mistakes. The agency’s frontline casework teams are being merged from 11 regional teams into four, while its customer service, property data collection and valuation and technical advice teams will be national not regional divisions. The FSB said previous cuts at the agency contributed to an “increase in mistakes in assessments and unresolved appeals”. It also questioned how the agency would deal with the backlog of 224,000 appeals in the system relating to the revaluation of business rates in 2010.

SMEs call for tough action on bad banks

The SME Alliance of small businesses has called for bank chiefs to be punished when their firms rip off customers. An event to mark the Alliance’s third anniversary yesterday also heard demands for a tribunals system to handle disputes between businesses and lenders. Meanwhile, chairman of the FSB Mike Cherry has called for “the appointment of a Small Business Commissioner charged with taking swift and immediate action to tackle poor practice.”

Corbyn tells business to expect higher taxes

Jeremy Corbyn set out plans to take on landlords, big business and the establishment in his speech to the Labour Party conference in Brighton. “We are going to ask big businesses to pay more tax,” he told delegates. The Labour leader also said the UK should impose a tax on undeveloped land held by developers. In response, BCC director-general Adam Marshall, said Mr Corbyn’s “speech will have done little to reassure companies already worried about widespread state intervention, nationalisation, and a radical increase in taxes and costs”.

London transport official raises questions over Uber tax structure

Uber is facing questions from a Transport for London board member over its tax structure in the UK, and the fact it does not pay VAT on fares.

Corporate governance reforms: a risk to UK’s business reputation?

Writing in City AM, Connor Cahalane, a partner at law firm Mayer Brown International, asks whether the Government’s plans to create a stricter corporate governance regime for privately-owned businesses incorporated in the UK will damage the country’s business reputation. The Financial Reporting Council is developing a set of voluntary corporate governance principles for large private companies, and new legislation will also require these businesses to disclose their corporate governance arrangements on their website and in reports. Mr Cahalane argues that burdening privately-owned businesses with additional requirements runs a risk of making London and the UK appear over-regulated and uncompetitive when compared with other financial centres.

Silver self-employed cash in

Research by Intuit QuickBooks has found the UK’s self-employed over-65s earn £40,000 working an average 21 hours a week, compared to the average £33,000 self-employed salary for 28 hours’ work. It also found almost 75% of over-65s are either the same or better off financially working for themselves than when they were in full-time employment.

Macron to scrap wealth tax

President Macron has pledged to scrap France’s wealth tax for all assets other than property in order to encourage investment and curb the flight of wealthy French residents.

IMF says wage growth may never recover

The IMF has said wage growth may never recover to its level before the financial crisis because the structure of the labour market has changed. The Fund said that higher levels of “involuntary part-time employment” were partly to blame for pay rising more slowly than before 2008, and that the change may be permanent.

Catalans

In Catalonia, a high court judge ordered police to prevent use of public buildings for preparations for an illegal independence referendum on 1st October. The rebel administration is pressing ahead with the referendum even after Rajoy’s government seized 10 million ballots, deployed thousands of police and arrested more than a dozen Catalan officials.