Business News 6th July 2017

We hope you enjoy reading the business news compiled by the Credit Protection Association on Thursday 6th July 2017 for its members and visitors.

Markets Round up

The FTSE100 was largly flat today as the market remained muted, weighed down by weak healthcare stocks and utilities, although gains among basic resources stocks after an upgrade helped cap losses. . Tesco’s was a strong performer today trading up over 3%, following a strong update from takeover target Booker. The company said that the takeover was proceeding and that they had a positive start to the year but under the takeover code could not give any update on future performance. The yen was the only major currency to gain against the dollar. Asian shares  retreated after minutes from the Federal Reserve’s last meeting showed a lack of consensus on the future pace of U.S. interest rate increases.  Oil held steady near eight week lows after U.S. stockpiles fell. U.S. crude inventories fell 5.8 million barrels last week, API said ahead of more official EIA data today that’s forecast to confirm the drop. While that’s a bullish sign for the market, prominent oil bull Andy Hall warned rising shale drilling will help sustain a glut in 2018. Crude may be stuck at $50 a barrel or below as the market has materially worsened. The euro has weakened ahead of the ECB releasing minutes from its last meeting. Gold and Treasuries were steady.


UK productivity has fallen to the same levels recorded before the financial crisis. Figures released yesterday by the Office for National Statistics (ONS) showed hourly output falling by 0.5% in the first quarter of 2017, pushing it 0.4% below levels recorded back in 2007. Speaking on the back of the announcement yesterday, the Head of Productivity at the ONS said ‘UK labour productivity growth has struggled since the 2008 economic downturn, and the fall in the first quarter of 2017 brings to an end a recent run of quarters of positive growth’.  Low productivity – especially in comparison to key competitors like France and Germany – has been a feature of the UK economic landscape for over a decade. It matters because poor productivity leads to low growth, smaller wage packets, and fewer taxes for exchequer. This in turn can have knock-on effects for public spending, which impacts everything from the deficit to public sector pay says the Institute Of Directors.

Another MPC member speaks out

Having confounded expectations for a sharper slowdown or contraction, the British economy did not need as much monetary stimulus as it was now receiving, the Monetary Policy Committee’s Michael Saunders said. Nonetheless, in his interview,  Saunders stressed that raising Bank Rate to 0.50% would still leave policy “pretty loose”. “If rates were to rise to 0.5%, policy would still be pretty loose. We would still be providing plenty of stimulus, continuing to support output and jobs,” he said.


Labour leader, Jeremy Corbyn is set to make a speech to business leaders in London  today in which he will look to position himself as a techno-optimist when it comes to the challenges presented by automation. Mr Corbyn will say he does not accept the idea that technological change will leave the majority of people unemployed. However, he will stress that steps should be taken to combat the ‘churn’ in the jobs market over the next few years. He will tell businesses however that managing the effects of automation cannot simply be left ‘to the market’. He will emphasize the UK also needs ‘public institutions, public investment and public enterprise to work with business to manage the social and economic effects of rapid technological change so that it benefits the many not the few’. In particular, he will also highlight the need for individuals to have access to training throughout their working lives as the key to future productivity.  Seperately a report by PwC and TheCity UK on the future of financial services has found that Britain could add £43bn to its economy by 2025 by developing its regions and focusing on new technology. Amongst the proposals put forward is the introduction of a “skills visa” to shore up the UK’s position as a financial technology hub. The report also stresses that banks, insurers and asset managers must “focus on rebuilding trust, embedding more ethical and customer-centric behaviours”.

Inflation puts pressure on low-income families

Millions of families are struggling to make ends meet because of rising costs, higher inflation and a freeze on benefits, a study by the Joseph Rowntree Foundation has revealed. The think-tank said that despite an above-inflation increase in the national minimum wage, low-income families were falling further behind a minimum income standard. Separately, HMRC has warned that more than a million hard-up families risk having their tax credits stopped if they miss the July 31 deadline to renew claims.


London will retain most euro business post-Brexit, Barclays Chairman John McFarlane said. “The right thing for the European Union and for the U.K. is to retain a significant proportion” of euro-related business in London. Cross-border, mostly electronically executed activities like euro clearing are less likely to be forced to move than other bank businesses, he said. The Financial Times say today that Brussels will be unable to take the Euro clearing trade from London anyway without significant infrastructure investment to move undersea cables that facilitate the trade.


One of Donald Trump’s regular claims is that China has been “stealing” manufacturing jobs from the United States, with low wages and poor conditions giving Chinese firms an unfair advantage. Recent analysis by The Economist intelligence Unit shows that, in fact, the days of Chinese wages being low are long gone. A shrinking workforce and fast productivity growth has meant that average monthly wages in China are now higher than in almost every country in Latin America and surpass those in a number of EU countries as well. Anyone who talks to people with operations in China won’t be surprised: rapidly rising wages are a common business challenge.


The US Federal Reserves plans to reduce its massive balance sheet but failed to provide a specific timeline to begin the process, the minutes of the June Federal Open Market Committee showed. “Several” policy makers were in favour of starting the reduction of its $4.5trn balance sheet within a “couple of months”, the minutes of the meeting the US central bank’s policy-setting body said. The market consensus is toward a start in September, which would likely push another interest rate hike to the end of the year despite the Fed’s optimism that stubbornly weak inflation will pick up.

FCA running record number of investigations

The FCA has revealed that it is running a record number of investigations, but last year saw a fall in both the number and total amount of fines it levied. The regulator said it had applied 15 penalties totalling £181m in the 2016/17 financial year, compared with 34 fines worth £885m the previous year and 43 fines worth £1.4bn in 2014/15. The FCA’s report also showed almost one in five takeover announcements last year was preceded by suspicious or otherwise unusual share price movements, casting doubt over efforts to stem insider trading.

HMRC doubles overseas investigations

HMRC has almost doubled its requests for help from foreign governments over the past five years, as it steps up its pursuit of people and companies hiding income and assets offshore. Figures obtained by Pinsent Masons show requests from HMRC have increased from 591 in 2012 to 1,096 in 2016. Pinsent Masons’ Paul Noble adds that now is the time for those with tax irregularities involving overseas income and assets to “correct any historical non-compliance, as draconian penalties of between 100% and 200% of any unreported tax will bite after 30 September 2018.”

Interesting Investment advice (take with a pinch of salt, a movie and a pint).

Betting on the future of driverless cars is a fool’s gambit and investors ought to focus on what drivers will be doing if their hands aren’t on the steering wheel, according to Morgan Stanley. The bank’s analysts are recommending investing in companies involved in snacking (Buffalo Wild Wings), movie-watching (Walt Disney) and brews (Constellation Brands). “If you never had to drive again, how much more would you drink?” said Adam Jonas.

Indulge Me

 It was 60 years ago today. John Lennon, 16, and Paul McCartney, 15, met for the first time at a church fete in Woolton in Liverpool in 1957. Lennon’s band, the Quarrymen, were performing — amazingly, a recording survives of the set. The two teens impressed each other, and McCartney showed Lennon how to tune his guitar properly. Lennon, after some discussion with his bandmates, asked McCartney to join the group a couple of weeks later, forming the core of what would become the Beatles.

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Previous News pages

Business News 5th July 2017

Business News 4th July 2017

Business News 3rd July 2017

Business News 30th June 2017

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Business News 22nd June 2017