Business News 3rd October 2017

CPA’s daily bite-size summary of the business news on Tuesday 3rd October 2017, filled with stories to inform and interest business people.

Market Round up

The FTSE 100 strengthened 0.9% to 7438.8 and the 250 0.4% to 19,957.1. Travel companies took the market hire with Dart Group, Easyjet, Wizz Air, TUI and to a lesser extent IAG all ahead after the bankruptcy overnight of Monarch Airlines. Monarch accounted for c. 4% of the Gatwick passenger traffic. Homebuilder companies, Berkeley, Persimmon, Crest Nicholson and Taylor Wimpey are sharply higher following the PM’s pledge of £10bn for further Help to Buy funding. The move will assist younger buyers get on the property market. This follows recent government statistics showing an alarming drop in national home ownership from 70.9% in 2003 to 62.9% in 2016 and a drop to 20% amongst 25 year olds compared to 46% in 1997. In Europe The Euro Stoxx 50 climbed 0.22% to 3602.69, boosted by the weaker Euro. US shares climbed on the back of Manufacturing data with gun companies also rising following the Las Vegas shooting. Oil prices fell, pressured by a stronger dollar, as data showed a decline in OPEC’s September compliance with a production-cut agreement and a weekly rise in the number of active U.S. oil rigs. Gold was lower as a strengthening dollar weighed on the precious metal and U.S. equities looked set to test fresh records.

Las Vegas shooting

A gunman on the 32nd floor of a Las Vegas hotel-casino rained heavy fire down on a crowd of over 22,000 at an outdoor country music festival, turning the expanse into a killing ground from which there was little escape. At least 58 people died. It was the deadliest mass shooting in modern U.S. history. In addition to the dead, at least 515 people were injured, authorities said. Concertgoers screamed, ran in terror and scrambled for cover Sunday night in an attack that at first sounded like firecrackers to many but turned out to be dozens of bullets in rapid-fire bursts, perhaps from a fully automatic weapon. SWAT teams using explosives stormed the gunman’s hotel room
in the sleek, gold-colored glass skyscraper and found he had killed himself, authorities said. The gunman , identified as Stephen Craig Paddock, a 64 -year-old retiree from Mesquite, Nevada, had as many as 10 guns with him, including rifles, they said.

US Manufacturing

Growth in the US economy’s manufacturing sector unexpectedly improved in September, according to data from the US Institute for Supply Management. The ISM’s headline manufacturing index rose to 60.8 from 58.8 in August, beating consensus expectations for a reading of 58.1 and marking the highest reading since June 2004. Growth was driven by new orders, the index for which jumped to 64.6 from 60.3 in August. Meanwhile the employment index printed at 60.3 compared to 59.9 the month before and the production index increased to 62.2 from 61.0.

UK Manufacturing

Growth in the UK’s manufacturing sector eased back more than expected in September, according to figures released on. The Markit/CIPS manufacturing purchasing managers’ index fell to 55.9 from August’s four-month high of 56.7, missing economists’ expectations for a smaller decline to 56.4, with growth slower across the consumer, intermediate and investment goods industries. Still the index remained about the 50 mark that separates contraction from expansion and its long-run average of 51.7.

TAX

Employment shift threatens tax base

Anita Monteith, tax manager at ICAEW, has warned that the shift away from traditional employment patterns poses a threat to the UK’s tax base. She says that nearly 18% of tax income is through NI, with a significant sum coming from employers’ NICs. However, as increasing numbers of people adopt self-employed contracts, NIC receipts will fall, says Ms Monteith. She adds that the rise of home working will also have a big impact. Business rates are expected to contribute £30bn to the UK this year, but if workers base themselves at home, office workspaces can be smaller, leading to lower rates bills. “We must take a longer term look at our shrinking tax base, before it is too late,” concludes Ms Monteith.

City AM

Hammond hints at tax hike

Philip Hammond has indicated that he could raise taxes in his Budget next month. He told BBC Radio 4’s Today Programme: “We believe in keeping taxes low and fair,” but added: “I have the courage to do what’s necessary to support the British economy.” Meanwhile, writing in the Telegraph, former Conservative leader William Hague argues that the government should introduce a lower rate of income and capital gains tax for the under-30s. Another Conservative grandee, Sir Oliver Letwin, has said the party should be willing to raise taxes to pay for increased funding for social care.

The Sun, Page: 10 The Daily Telegraph, Page: 14 Daily Mail

FIRMS

Crowe Horwath’s David Mellor interviewed

Economia interviews David Mellor following his appointment as CEO of Crowe Horwath International. Mr Mellor says that Crowe Horwath differentiates itself from its competitors by its ability to give global reach on a personal scale. “We want to be trusted advisors to our client for the medium-to-long term. We’re not interested in selling a short-term solution and then losing the relationship,” he comments. He also identifies some of the biggest challenges and opportunists for the profession, including the growing influence of artificial intelligence. Looking ahead, Mr Mellor says Crowe Horwath is ready to add more member firms that “complement our existing members,” if and when the opportunities arise.

Economia

Monarch counts cost of collapse

Monarch – the UK’s fifth biggest airline – has been placed in administration. Blair Nimmo, from administrator KPMG, said its collapse was a result of “depressed prices” in the short-haul travel market, alongside increased fuel costs and handling charges as a result of a weak pound.

The Daily Telegraph, Business, Page: 1 The Times, Page: 8-9 The Times, Page: 42-43 Financial Times, Page: 1 Daily Mail, Page: 75 The Guardian, Page: 8

Management restructure at Mercer & Hole

Mercer & Hole has unveiled details of a new management structure at the firm. Current senior partner Paul Maberly becomes managing partner, with Gill Tallon stepping up to a new role of deputy managing partner. The firm, has also promoted Alison Palmer and Henry Page to partner.

Business MK

Begbies launches free advice site

Begbies Traynor has launched HandpickedAccountants.co.uk. The free online service is designed to help individuals and small business owners find recommendations to suitable and reputable accountants in their local area.

Yorkshire Post, Business, Page: 6

Johnston Carmichael expands Glasgow office

Johnston Carmichael is expanding its Glasgow office by half following the establishment of a new business solutions team and the strengthening of its audit, tax and restructuring services. Separately, the Scotsman reports that Johnston Carmichael has donated 50 laptops to The Circle, a social enterprise based in Dundee.

Insider The Scotsman, Page: 28

KPMG urged to do more to restore its standing in South Africa

South Africa’s central bank governor has said KPMG must do more to salvage its reputation in the country, warning that failure to do so could imperil its global business.

Financial Times, Page: 8

Confidence in logistics sector at five-year high

The latest UK Logistics Confidence Index 2017 from Barclays Corporate Banking and Moore Stephens shows confidence among the UK’s logistics sector has hit its highest level in five years.

Yorkshire Post, Business, Page: 1

Jobs lost in collapse of XBS

North-east company Xtreme Business Solutions (XBS) has collapsed, with the loss of 50 jobs. Joint administrators Iain Fraser and Tom MacLennan of FRP Advisory have been appointed.

The Press and Journal, Page: 33

Graduates leave London

The Standard’s James Ashton notes that PwC appointed 55% of its graduate intake to roles outside London this year, such as its blockchain team in Belfast.

Evening Standard, Page: 40

PwC’s Bowman elected Lord Mayor

PwC’s Charles Bowman has been elected Lord Mayor of the City of London Corporation.

Daily Mail, Page: 75

INDUSTRY

Professional membership worth it

Research from GAAPweb has found that 79% of respondents believed professional membership bodies supported their career in accountancy. Additionally, 74% of respondents stated that their memberships were good value for money and 83% said their membership met their requirements.

GAAP Web

CORPORATE

Former Tesco executives ignored warnings of profits hole

Three former Tesco directors facing charges of fraud and false accounting were repeatedly warned by their juniors that the supermarket was facing a multimillion-pound hole in its profits but carried on “conniving and manipulating figures”, a court has heard. Sasha Wass QC, a lawyer for the SFO, told the court that members of Tesco’s UK finance and commercial teams had repeatedly made it clear that the retailer was going to fall short of expected profits targets as it faced a competitive market. Ms Wass also revealed that former Tesco chairman Sir Richard Broadbent is to be called as a witness at the trial.

Financial Times The Guardian, Page: 22 The Times, Page: 49 Daily Express, Page: 2

SMEs

Angels have faith in entrepreneurs who invest

A study by the University of Edinburgh Business School and the University of Glasgow’s Adam Smith Business School indicates that entrepreneurs need to back their own business and put “their money where their mouth is” or risk being ignored by angel investors. The survey, which spoke to around 100 established UK investors, found that 87% of investors would deem a business “too risky” an investment opportunity if the entrepreneur had not made “a significant financial investment in their own venture.”

Startups Insider

Uppal appointed small business commissioner

Former Conservative MP Paul Uppal has been appointed as the UK’s first small business commissioner. Business Secretary Greg Clark said Mr Uppal’s experience made him “suited to champion small business and bring about a change in culture, creating a level playing field”.

Daily Express, Page: 45 The Daily Telegraph, Page: 7 The Times, Page: 48

FCA under pressure over scandal report

The Financial Conduct Authority is facing fresh demands to publish its review of Royal Bank of Scotland’s restructuring division, after it emerged it had commissioned the report with a view to making it public.

The Times, Page: 41, 44

PENSIONS

Moment of truth for pension savers

The Times’ Patrick Hosking questions whether savers who refuse to transfer out of their defined benefit pension schemes could be put at a disadvantage. He also says the government should be more vocal about the benefits of pension autoenrollment.

The Times, Page: 45

INTERNATIONAL

One-off tax for US companies repatriating cash

Gary Cohn, chief economic adviser to President Trump, has said American companies will be able to pay a one-time tax in the “10% range” to repatriate profits stored in overseas havens.

The Times, Page: 48

ECONOMY

Businesses tell Hammond to be bolder

Business leaders have accused Philip Hammond of doing too little revive the UK’s faltering economy. The CBI said his speech at the Tory party conference left businesses with “slim pickings”, while the British Chambers of Commerce urged him to be “much bolder” in promoting the country after Brexit. Stephen Martin, director-general of the Institute of Directors, added that the speech lacked “red meat” proposals to help the economy through the disruption of Brexit. During his speech, Mr Hammond said that Jeremy Corbyn’s Marxist plans are damaging the economy by scaring away investment in Britain.

The Daily Telegraph, Business, Page; 1 The Times, Page: 15 The Guardian, Page: 10-11

Salaries dip but vacancies hold steady

Advertised salaries for new jobs has fallen below £32,000 for the first time in three years, according to research by Adzuna. However, vacancies have remained above 1.2m, suggesting that the jobs market remains strong.

The Times

OTHER

Spy scandal engulfs Vatican auditor

Police have accused an auditor hired by the Vatican to clean up its accounts of spying on senior prelates. Libero Milone, 69, who previously ran Italian operations for Deloitte, was appointed in 2015 to shed light on the Vatican’s secretive bookkeeping. But he resigned in June and said last month that he had been ousted because he found out too much.

The Times, Page: 38