Credit and debit card spending rises – business news 14 May 2021.
James Salmon, Operations Director.
Credit and debit card spending rises, hospitality sales bounce back, international sales boost SMEs, Economy set to boom, job ads increase, UK sees Europe’s highest sin taxes, City does not expect equivalence and more news.
Credit and debit card spending rises – ONS
Office for National Statistics (ONS) data show that spending on credit and debit cards was 106% of its February 2020 level in the week to May 6, exceeding the 99% recorded the week before. This was driven by consumers spending more on activities including travel and eating out amid the loosening of coronavirus-related restrictions. A separate ONS report also revealed that a net 7% of 34,940 firms surveyed by the Office for National Statistics reported an increase in turnover in March compared with March 2020.
Hospitality
Pub & Restaurant Sales bounced back in April, reaching almost 75% of pre-pandemic levels in a confidence boost for the sector ahead of its full reopening. Managed pub & restaurant groups recorded a 26% drop in like-for-like sales compared to April 2019.
International sales boost SMEs
Analysis from Mastercard shows that online and international sales helped SMEs survive the pandemic. Some 66% recorded an increase in online sales from overseas, while 73% said the ability to receive online cross-border payments helped them survive in the pandemic. It was also found that 68% of SMEs plan to do more business internationally. The Mastercard poll saw 1,532 firms across ten countries surveyed between November and December last year. It was found that 75% of small businesses felt the pandemic had a negative impact on their cash flow, while 55% are optimistic about their chances of recovery this year.
Haldane: Economy set to boom
Senior Bank of England (BoE) policymaker Andy Haldane believes Britain’s economy will “power through in the months ahead”, adding that he expects to see it “moving swiftly from bounce-back to boom”. The Bank’s chief economist said there is likely to be “little or no” rise in unemployment this year, suggesting that as many jobs could be created as lost. Saying that “spring has sprung” for the economy, Mr Haldane commented: “A year from now, it is realistic to expect UK growth to be in double digits, activity to be comfortably above pre-Covid levels and unemployment to be falling”. Elsewhere, BoE governor Andrew Bailey has said he does not think factors pushing up inflation in the coming months will continue in the longer term. Offering that whether inflation is set to persist or not is the “big question”, he said: “Our view is that on the basis of what we’re seeing so far, we don’t think it is.”
Job ads increase
Figures from jobs website Adzuna show that online job adverts are on the rise in Britain, with the reopening of pubs, restaurants and other hospitality businesses driving the increase. Online job ads hit 107% of the level recorded in February 2020 on May 7, a four percentage point increase from two weeks earlier. While most sectors have seen an increase in job listings, the biggest rise has been in hospitality, with a 46 percentage-point climb in job ads recorded since early April.
UK sees Europe’s highest sin taxes
Analysis suggests that the UK charges more in so-called “sin taxes” than any other major European country. The Nanny State Index published by the Institute of Economic Affairs shows that the UK has tougher levies on alcohol, tobacco, e-cigarettes and junk food than many of its neighbours on the continent. Britain was 12th on the list overall and the highest large economy. Germany was named as the country with the most relaxed rules. Britain had the joint fifth highest taxes on soft drinks in Europe, the seventh highest rate of tobacco duty, and the ninth highest alcohol taxes.
Ireland facing €6bn tax crackdown hit
The International Monetary Fund (IMF) says a rethink of corporate taxes could see Ireland’s state revenues take a €6bn hit. US President Joe Biden has outlined plans for a 21% minimum rate on the international earnings of US companies, a change the IMF says could cut Ireland’s €11.8bn corporate tax revenues in half. An “extreme scenario”, warns the report, could see Ireland’s 10 largest corporation tax contributors leave the country. It is noted that the EU has backed plans to target tax havens and believes minimum taxation levels should be decided by the OECD.
Developers face ‘use it or lose it’ tax
Developers will face new “use it or lose it” taxes for failing to build homes on land that already has planning permission, with Housing Secretary Robert Jenrick said to be considering a levy as ministers look to encourage higher rates of building. It has been suggested that housebuilders could be forced to pay full council tax on all the properties in a project from one to two years after securing planning permission, regardless of whether they have been built. The CPRE has demanded levies on developers who fail to build, with Tom Fyans, campaigns and policy director at the countryside charity, saying: “In the eye of an affordable housing crisis we need a ‘use it or lose it’ approach.” Local Government Association analysis shows that since 2010/11, around 2.8m homes have been approved for construction but only 1.6m have been built.
House price growth accelerates
UK house price growth accelerated in April due to a slowdown in the supply of new homes coming to market, according to Royal Institution of Chartered Surveyors (Rics) research. The survey saw 75% of respondents report an increase in house prices. This is up from 62% in March. The poll saw 47% of respondents say they expect prices to rise over the next quarter, up from 43% in the previous month, while 68% said house prices will continue to climb over the next 12 months. Rics chief economist Simon Rubinsohn said: “Housing supply, or more pertinently, the shortfall in supply relative to demand is the key theme coming through loud and clear from respondents”.
City does not expect equivalence
The UK’s financial services sector will not get access to EU markets for the foreseeable future following Brexit, industry officials have warned. Nick Collier, the City of London’s representative in Brussels, told the Trade and Business Commission: “I don’t think equivalence is particularly an issue as we don’t think there is going to be any equivalence being granted by the EU”. Emma Reynolds, managing director at TheCityUK, said the EU was pursuing an agenda of onshoring jobs from the City, adding that the body’s member firms “are not optimistic about further equivalence being granted”. Ms Reynolds, added: “The advantage to the UK to now being outside the EU is that regulators and the Government have that agility to tailor regulation to the UK’s market”.
Tax deduction boosts BT’s fibre roll-out
BT has expanded the roll-out of its fibre broadband network, saying around 25m homes will be connected by 2026, up from a previous forecast of 20m. The firm said investment in the drive was made possible in part by the Government’s super-deduction, a tax break designed to unlock investment from big companies. The tax deduction will allow BT to pay only “minimal” corporation tax in the UK in the next couple of years, said finance chief Simon Lowth, with it noted that the firm has paid between £200m and £300m in recent years.
Sage Group
Sage Group has seen its operating profits and revenue drop for the first half of the year, but the company expect organic recurring revenue growth to be strong for the financial year, driven by growth in its cloud business. For the six months ending 31 March, the company reported an operating profit of £203m, down 30% from the first half of 2020. Revenues and operating profit margins are also down.
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