Economic Bounce-back – business news 25 February 2021.
James Salmon, Operations Director.
Lifting restrictions should see economic bounce-back, the future promises a ‘hybrid’ approach of working, is corporation tax to increase and other business news.
Lifting restrictions should see economic bounce-back
The governor of the Bank of England told MPs on Wednesday that the economy was performing better than expected considering the Covid restrictions, citing the adaptability of the British people. Andrew Bailey said the Prime Minister’s reopening roadmap should result in the economy growing rapidly over the next six months, getting GDP back to its pre-Covid levels by early 2022. Ben Broadbent, Deputy Governor for Monetary Policy, added that experience from last summer suggested that when restrictions are lifted there should be a bounce-back in spending.
The future promises a ‘hybrid’ approach of working
The Scotsman considers the future of work since the pandemic has altered practices so acutely. A report from specialist recruiter Robert Half found that about 90% of UK firms expect hybrid workforces to become a permanent part of working life. The report comes after PwC said in December that it was reviewing the layout and technology of all of its offices to ensure they were “best equipped for a hybrid working world”. KPMG later said it was “preparing for a future of hybrid working,” and this year will spend a further £44m to transform its offices and invest in new home working technology for staff.
Sunak to use US example for corporate tax increase
Rishi Sunak is expected to announce a sharp rise in Britain’s corporation tax rate with officials suggesting the rate could rise to 25% or more over the course of the parliament. The Chancellor will point to US plans to hike the tax and the fact that the UK’s rate will remain competitive within the G7. Meanwhile, Labour leader Sir Kier Starmer indicated that his party would oppose any rise in corporation tax. Sir Kier, who stood on a 2019 manifesto to raise corporation tax to 26%, told MPs it was “not the time for tax rises for families and for businesses.” After a backlash, the position was softened with a Labour source saying last night that the party would back a steady minimal increase later in the parliament. The Mail reports that the Chancellor is expected to shelve plans to raise fuel duty and intends to extend the stamp duty holiday until the end of June. The Express leads with news that senior Tory figures and business groups are urging Mr Sunak not to increase the tax burden and focus instead on freeing businesses to spur a recovery.
New freelancers could miss out on Covid payout
The Government has considered extending the self-employed income support scheme to new freelancers, the Telegraph reports, but civil servants raised concerns over the number of freelancers yet to file their returns. Reportedly, some 1.5m people are yet to sort out their taxes, after HMRC said no one would face fines as long as they filed by the end of February. Andy Chamberlain of IPSE, a freelancer trade body, said: “It would be a major kick in the teeth for people who have taken advantage of lenient tax return rules to be penalised.”
Barclay sets out free port rules
Stephen Barclay, the Chief Secretary to the Treasury, told MPs on Wednesday that free ports planned for the UK would not be allowed to provide tax breaks to those wanting to import luxury goods. Those bidding to host the ports must demonstrate that they will help regenerate the local area, Barclay added, while other officials warned that ministers had the power to “de-designate a tax site if there is lots of non-compliance”.
Surge in phone scams recorded
Reports of fraudsters calling taxpayers pretending to be from HMRC surged 200% between December and January – from 10,997 to 33,053 – the Revenue said. Scammers usually offer fraudulent rebates but they have also threatened legal action over unpaid tax or sent emails or texts offering fake government support or grants.
City lobby group calls for tech boost
TheCityUK has called for the launch of a tax simplification programme in Rishi Sunak’s Budget, which it says would “have a positive impact on inward investment and the overall attractiveness of the UK’s business environment”.
KPMG close to selling UK restructuring business
KPMG has entered into exclusive talks with private equity firm HIG Europe about the sale of its UK restructuring business, according to Sky News. Reports indicate that HIG has lined up John Connolly, the former chairman of Deloitte, to chair the business. If the deal goes ahead, it will represent the most valuable disposal to date by one of Britain’s big four auditors. The news comes a week after Deloitte confirmed that it was selling its restructuring arm to Teneo. Sky News notes that the Big Four have all submitted plans to the Financial Reporting Council demonstrating how they intend to ‘operationally separate’ their audit and consulting arms during the next four years.
Ratesetter may need more financial support
Ratesetter faces “material uncertainty” over its status as a going concern, according to its latest accounts. EY said that the company “may not have sufficient capital to continue to meet its regulatory capital requirements” unless Metro Bank, which bought the peer-to-peer lender last year, injects more funds.
Primark
Associated British Foods said it expected to reopen 83% of Primark stores by 26 April, and forecast better-than-expected first-half performance for its grocery, sugar, agriculture and ingredients businesses. Primark plans to open 15 new stores for the year. Five in Spain, three in the US, two in Italy, one in each of the UK, France and the Netherlands.
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