Business News 4th July 2017

We hope you enjoy reading the business news compiled by the Credit Protection Association on Tuesday 4th July 2017 for its members and visitors.

Markets Round up

Both Europe and the UK started the new quarter with strong gains, lead by a rally in financials and energy stocks. It was one of those days that demonstrated that the FTSE100 index direction is primarily determined by the top 15 stocks. The FTSE100 jumped almost 1% helped by strengthening crude oil prices and further gains in the UK’s very large capitalisation stocks, including HSBC, Rio Tinto, BHP Billiton, Unilever, Royal Dutch Shell and BP.  US shares started early but closed at lunch in preparation for today’s July 4th celebrations. The only excitement being a glitch in the Nasdaq index as some testing went live and temporarily all the Nasdaq stocks were set to the same price. Financials and Energy continued to rally with the oil price. Better-than-expected auto sales and a strong report on U.S. factories also boosted stocks  Asian stocks headeded lower as earlier gains were quashed by tensions on the Korean peninsula after North Korea fired a missile that landed in Japanese waters, deepening concerns over the isolated nation’s nuclear capabilities.  Oil has however paused in its 8 day rally and Gold edged higher on the back of a weaker dollar although it is still near its recent lows.

Bank of England going on Strike

Staff at the Bank of England have voted overwhelmingly in favour of strike action over pay. Unite said 95% of its members working in the maintenance, parlour and security departments voted for strike action on 31st July, 1st, 2nd, and 3rd August in a dispute that centres on the pay settlement the bank has imposed on staff without the union’s agreement. The union said staff were angry that they have been given a pay rise below inflation for the second year running. The dispute was prompted by the imposition of a 1% increase in the pay pot for the pay year, which began in March 2017. The amount an individual will receive is then decided at the discretion of line managers, so employees could receive less than 1% and some will receive nothing at all. Unite regional officer Mercedes Sanchez called on BoE governor Mark Carney to “get his own house in order” as she branded the pay offer “derisory”.

UK Manufacturing slowing

UK manufacturing growth is slowing, according to a survey published on Monday that revealed activity in June was much weaker than expected but that inflationary price pressures eased. The UK manufacturing purchasing managers’ index for June from IHS Markit and CIPS came in at a three-month low of 54.3, well short of the 56.3 consensus estimate and down from May’s revised reading of 56.3. The main factor driving the slowdown in June was a steep easing in the rate of increase in new orders, with the consumer, intermediate and investment goods industries all affected. The new orders index tumbled to 54.9, its lowest level since July 2016, from 59.0 in May.

Hammond under pressure to abandon tax cuts

The Times reports that ministers are pressing the chancellor to delay or abandon a series of tax cuts to fund an increase in public sector pay. Philip Hammond is coming under pressure to scrap commitments to reduce corporation tax and raise the thresholds for the personal allowance and the 40% income tax rate. The policies have been announced by the Conservatives but are not due to take effect until later in the parliament. However, in a speech last night Mr Hammond said government must “hold its nerve” in the face of calls for a “different path” of higher taxes and borrowing. He also said Britain needs to have a “grown-up debate” about whether people are prepared to pay more tax to ease austerity. Writing in the Times, Paul Johnson of the IFS suggests that cutting corporation tax will prove easier than getting large tax rises through parliament. Meanwhile, the paper’s Patrick Hosking says that if tax rises or spending cuts are too difficult, then more government borrowing, however distasteful to Mr Hammond, may have to be the answer.

The Daily Telegraph   Financial Times   The Times, Page: 1-2   The Times, Page: 13   The Times, Page: 41   Daily Mail, Page: 22   Evening Standard, Page: 4   BBC News

North Sea oil revenues plummet

Figures from HMRC show North Sea oil industry revenues fell to -£312m in 2016/17. HMRC also said petroleum revenue tax revenues fell from -£562m to -£650m, while corporation tax reduced by more than 50% to £338m from £713m.

The Scotsman

Europe buoyed by flotations

Europe’s IPO market has raised €5bn alone in the final two weeks of the second quarter, according to figures from PwC. The European IPO market ended the second quarter with total proceeds of €15.6bn from 104 listings, 9% up on the same quarter a year ago, when 95 flotations raised €10.9bn.

The Times, Page: 40

Taking start-ups to another level

The Times interviews Ben Brabyn, head of Canary Wharf-based Level39. The aim of the operation is to link promising start-ups with the financial giants – such as HSBC, Barclays, Morgan Stanley and KPMG – that make up its wealthy neighbours. “The biggest challenge for entrepreneurs is getting access to customers,” Mr Brabyn says. “If we reduce the amount of time it takes for that difficult relationship to evolve between an early stage company and a huge global corporate, that can be the difference between success and failure.”

The Times, Page: 47

European directors boost UK SMEs

UK SMEs with an EU director have grown 33% faster than the average UK SME over the last five years, according to research by Opal Transfer. It found that UK SMEs with at least one director from an EU member country saw their turnover rise by 20% between 2011 and 2016. By contrast, UK-based SMEs generally saw their turnover grow by 15% in that time.

London Loves Business

Employees should consider ‘plan B’ for pensions

Salisbury House Wealth has advised employees to consider a ‘plan B’ for their retirement income, as defined benefit pension liabilities held by SMEs continue to rise. The firm says the value of DB pension liabilities for SMEs increased by 5.6% in the last year to £4.3bn in 2016 from £4bn in 2015.

Pensions Age

FSB: Shadow banking risk subsides

The Financial Stability Board says that the toxic parts of “shadow banking” no longer pose a systemic risk to the economy, thanks to the reform of off-market practices such as money market funds, special investment vehicles and monoline insurers. At a press conference in London, Board chairman and Governor of the Bank of England Mark Carney said: “We have fixed the issues that caused the last crisis. They were fundamental and deep-seated, which is why it was such a major job”.

Financial Times, Page: 6   The Times, Page: 40   The Guardian, Page: 17   The Daily Telegraph

UK Banks may be exposed to £20b in car loans

The value of UK car loans doubled from 2012 to 2016 going from £28billion to £58billion. The vast majority are PCP loans. In a PCP, there is no deposit, and the driver makes much lower monthly payments until the end of a fixed term. At that time, the driver must either make a large “balloon” paIn a downturn, drivers who fall on hard times can simply return the car and walk away from the rest of the loan. The dealer is stuck trying to sell a car in a recession, when prices are likely to be plummeting. That leaves dealerships and the banks funding them exposed to a highly volatile market. yment or return the car. The dealer either gets all the cash and interest generated by the loan or, in the case of someone who can’t afford the balloon payment, the dealer can sell the car again.

 Business Insider

BoE’s Vlieghe warns against premature rate rise

The most dovish member of the Bank of England’s Monetary Policy Committee is sticking to his view that now is not the time to raise rates, despite a growing sense in financial markets that the central bank is gearing up to increase the cost of borrowing. Bank of England policymaker Gertjan Vlieghe has cautioned over raising interest rates prematurely, arguing that the current environment is one where “a premature hike would be a bigger mistake than one that turns out to be slightly late”.

The Daily Telegraph


Japanese Foreign Minister Fumio Kishida is set to finalize a broad agreement on a free trade deal with the European Union this week, before its expected official announcement, Tokyo said. “It is extremely important to reach a broad agreement early and raise the flag of free trade amid protectionist moves seen worldwide,” Prime Minister Shinzo Abe told a cabinet meeting, according to Jiji Press. Kishida is scheduled to hold talks with EU Trade Commissioner Cecilia Malmstrom, who was in Tokyo over the weekend for two days of talks on the proposed trade pact.

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Business News 3rd July 2017

Business News 30th June 2017

Business News 29th June 2017

Business News 28th June 2017

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