Business News 2nd June 2017

We hope you enjoy reading the business news compiled by the Credit Protection Association on Friday 2nd June 2017 for its members and visitors.

Insolvencies Rise

In the first quarter of 2017 3,967 businesses ceased trading. This is an increase of 4.5% on the last quarter. 16.4% of these new insolvencies came from the construction industry, with 13.2% from retail and food and drink. Nearly 4,000 businesses ceased trading as increased financial uncertainty gripped the UK in the first quarter of 2017. Marginally over two thirds of the 3,967 insolvencies  were voluntary (68%). Do you trade with companies in the construction or retail, food and drink sectors? Then monitor your customers using the CPA monitoring service to be alerted of any change.

The Economic Voice

SMEs spend 3.6 hours a month on finance

A report by KashFlow reveals UK small businesses are spending just 3.6 hours a month managing their finances. The study, of sole traders and owners of businesses with less than ten employees, also reveals that 87% rate themselves as either “really good” or “not bad” at doing things like keeping on top of cashflow, managing payments and staying compliant. Only 6% rated their finance management abilities as “not good.”

Small Business   Is4Profit

High earners in 60% ‘tax trap’ set to double

Projections suggest that the number of high earners caught in a hidden 60% “tax trap” could double by the end of the next tax year. The quirk means those earning £100,000 a year lose their tax-free personal allowance and face a marginal rate of 60% on earnings between £100,000 and £123,000. Data from the IFS shows it will affect at least 800,000 people this year, up from 588,000 in 2010-11. If the trend continues, up to a million people will be dragged into the tax band by the end of next tax year, as wage inflation sends incomes above the tax threshold and the tax band widens in line with the personal earnings allowance.
The Daily Telegraph, Page: 2 Financial Times, Page: 2

Shrinking tax base causes concern

After data from HMRC revealed a narrowing UK tax base, the Guardian’s Phillip Inman suggests that the Conservatives should abandon plans to increase the personal allowance. He says doing so will further shrink the tax base by taking even more people out of the system. He also warns that Labour’s plan to increase taxes will squeeze PAYE taxpayers, as the wealthiest are likely to move money offshore or set themselves up as companies. Elsewhere, the Telegraph’s Allister Heath says the HMRC figures suggest that lower tax rates can create faster growth and increased business creation, which will produce far more taxable income.
The Guardian, Page: 28 The Daily Telegraph, Business, Page: 2

Super-rich ‘evade nearly a third of their due tax’

Researchers claim that the richest 0.01% of households, involving those with more than £31m assets, evade paying 30% of their taxes on average. The study, based on data revealed in the Panama Papers and the leaks concerning the HSBC Swiss private bank, found that “the probability to hide assets rises very sharply with wealth”. Researchers from the Norwegian University of Life Sciences and the University of Copenhagen matched people named in the leaks with public wealth records.
The Guardian, Page: 27 The Independent, Page: 62 The Economist

Labour proposal ‘will leave 2m homes liable for IHT’

The Conservatives say Labour’s plan to reduce the IHT threshold from £850,000 to £650,000 will mean an extra 1.2m homes could be liable for the tax. The Tory proposal to raise the threshold to £1m by 2021 would mean 725,000 homes are liable, but this would rise to almost 2m by 2021 under Labour. Meanwhile, research by Savills estate agency has shown that Labour’s IHT rises will hit more than 48,000 London homes owned by the over-65s.
Daily Mail, Page: 1-2 Evening Standard, Page: 6-7

Car debt adds to UK’s Brexit vulnerability

Auto finance is driving up the stock of non-mortgage debt, which includes credit cards and personal loans and hit 197 billion pounds at end-March which is close to the 2008 financial crisis peak, and household debt as a proportion of disposable income is rising.  Such big ticket items are more prone to economic shocks and therefore any economic uncertainty from Brexit is likely to have a big impact on this sector of the economy.

Reuters UK

 London is capital for credit card debt in the UK

The capital has the highest level of credit card debt of all the cities in Britain, according to a new analysis. The high proportion of young people in the capital is one of the driving force behind the high debt levels. Young, employed renters  are more likely to adopt more debt. Britons are more dependent on credit than 20 years ago. Theresearch shows that half of young people can’t afford an unexpected bill or expense without reverting to borrowing or going to the bank of mum and dad


UK Manufacturing slows

UK manufacturing activity slowed as expected in May, according to a closely followed survey, but economists disagreed over whether it would be enough to buoy the overall economy. The UK manufacturing purchasing managers’ index from IHS Markit/CIPS slipped to 56.7 in May from the three-year high of 57.3 the previous month, but above the consensus estimate of 56.5. With a PMI above 50 indicating growth, the sector seemed to have remained resilient in May, Markit said, with production and new orders both expanding at above-average rates, with good domestic demand and a solid increase in new export business. Some economists suggested this was more to do with a global upturn than a benefit from sterling’s ongoing weakness since the Brexit vote. The output balance softened to 57.4 in May from 58.2 in April and export orders fell back to 53.5 from 55.6. However Britain’s manufacturers still had a strong month in May, with orders rising on the back of local and foreign demand. The PMI from IHS Markit came in at 56.7 – down from 57.3 in April, but this is still above the 50-level that indicates growth.

US Markets

All three main stock indexes closed at record highs as a strong read on private-sector employment helped to bolster confidence in the economy ahead of Friday’s closely watched jobs report.

Asian Markets

Asian stock markets rallied as investor sentiment was boosted by signs of continued improvement in the U.S. job market. Tokyo stocks jumped to the highest level in nearly two years.

Trump & Climate change

President Donald Trump on Thursday confirmed he will withdraw the United States from the landmark 2015 global agreement to fight climate change, spurning pleas from allies in an action that fulfilled a major campaign pledge. “We’re getting out,” Trump said at a ceremony in the White House Rose Garden in which he decried the Paris accord’s “draconian” financial and economic burdens. He said American withdrawal “represents a reassertion of American sovereignty.”He said moves to negotiate a new “fair” deal that would not disadvantage US businesses and workers would begin. Mr Trump said during last year’s presidential election campaign that he would take the step to help his country’s oil and coal industries. Opponents say withdrawing from the accord is an abdication of US leadership on a key global challenge.


Oil prices dropped amid worries that U.S. President Donald Trump’s decision to abandon a global climate pact could spark more crude drilling in the United States, stoking a persistent glut in global supply.


Gold fell to hit its lowest in a week, with stock markets climbing and the dollar firming

Previous News pages

Business News 1st June 2017

Business News – 31st May 2017

Business News – 30th May 2017

Business News – 26th May 2017

Business News – 25th May 2017

Business News – 24th May 2017

Business News – 23rd May 2017

Business News – 22nd May 2017

Business News – 19th May 2017

Business News – 18th May 2017

Business News – 17th May 2017

Business News – 16th May 2017

Business News – 16th May 2017

Business News – 12th May 2017

Business News – 11th May 2017

Business News – 10th May 2017

Business News – 9th May 2017

Business News – 8th May 2017

Business News – 5th May 2017

Business News – 4th May 2017

Business News – 3rd May 2017

Business News – 2nd May 2017