HMRC go easy on struggling companies – business news 23 June 2021.
James Salmon, Operations Director.
HMRC go easy on struggling companies, lockdown savers stash away nearly £200bn, 5m people become millionaires, Government borrowing falls , Home working risks development and lots more news.
HMRC go easy on struggling companies to help with Covid debt
The Business Secretary Kwasi Kwarteng has written to insolvency and restructuring practitioners promising HMRC would take “a cautious approach to enforcement of debt owed to government that will have accrued” during the pandemic. The move comes after business groups including the Institute of Directors and restructuring body R3 warned ministers last month that there could be an influx of insolvencies this summer if the reduced emergency Covid support measures were coupled with an aggressive approach from HMRC. Kwarteng said using insolvency to enforce payment will remain a “last resort”. He added the “path back to full trading will be difficult for many companies, particularly those with accrued debt and low cash reserves”.
Lockdown savers stash away nearly £200bn
Bank of England figures show Britons have saved almost £200bn since the pandemic began. Households deposited an additional £10.7bn with banks and building societies in April, bringing the total deposited since 31 March 2020 to £193bn. It means savers currently have almost £1.7trn locked away in bank accounts, fuelled by record levels of savings over the past year.
More than 5m people become millionaires despite pandemic
A report from Credit Suisse reveals that the pandemic has been a boon for the rich, with aggregate global household wealth rising by about $28.7trn to $418.3tn after cheap money inflated asset prices. While many poor people became poorer, the number of millionaires increased by 5.2m to 56.1m globally. In 2020 more than 1% of adults worldwide were millionaires for the first time. Anthony Shorrocks, economist and author of the Global Wealth Report, explained that if asset price increases, such as house price rises, were removed from the analysis, “then global household wealth may well have fallen”. “In the lower wealth bands where financial assets are less prevalent, wealth has tended to stand still, or, in many cases, regressed,” he said.
Government borrowing falls in May as economy rebounds
The Office for National Statistics said on Tuesday that public sector net borrowing, excluding public sector banks, was estimated at £24.3bn in May, £19.4bn lower than the same period last year, and an improvement on the £28.5bn forecast by the Office for Budget Responsibility. However, it was still the second highest borrowing figure for May since monthly records began in 1993. Contributing factors were a reduction in Government spending, which dropped 12% to £81.8bn in May, and higher tax revenues from a rebounding economy. Overall, public sector net debt has risen to around 99.2% of GDP in May, the highest since March 1962.
Home working risks development of younger workers
Andrew Carter, chief executive of Centre for Cities, says in a piece for City A.M. that as older workers with more established careers embrace hybrid working models post-pandemic, younger workers face having their professional development stunted. During the course of the Covid lockdowns they “have been robbed of the chance to mix wiEU officials meet today to discuss the next steps after the U.K. asked for a longer grace period before a ban on certain meat products entering Northern Ireland from the rest of the U.K. th colleagues and forge the friendships and networks that will stand them in good stead for the rest of their careers,” asserts Carter. But the big picture not only sees the future career of young workers harmed, but the prospects for companies too as they “will end up with a less impressive cohort of workers as a result.”
Rich professionals are scammers’ favourite targets
The FT reports on how higher-income households are most at risk of being a victim of fraud, mostly because technology enables sophisticated scams to be conducted from half a world away with little risk of being caught.
Sausage Wars
British and European officials are increasingly optimistic the two sides will strike a temporary truce in the dispute over checks on goods moving into Northern Ireland. EU officials meet today to discuss the next steps after the U.K. asked for a longer grace period before a ban on certain meat products entering Northern Ireland from the rest of the U.K.
Google
The EU has opened a formal antitrust investigation into allegations that Google’s parent, Alphabet abused its market power in the advertising-technology market. The investigation will look at whether it unfairly favoured its own ad-tech business over competitors by restricting their access to user data that power its offerings
Morgan Stanley
Morgan Stanley has announced it will forbid unvaccinated staff and clients from its premises , relying on an honour system, and ease social-distancing protocols indoors.
Airlines take action
Tui AG announced it has joined Virgin Atlantic and British Airways’ parent company International Consolidated Airlines in supporting legal action against the UK government’s travel restrictions. The UK’s largest tour operator said the 3 firms have become interested parties in a challenge launched by Ryanair and Manchester Airports Group last week.
Berkeley Group
Berkeley Group today reported a jump in earnings during what was a strong year for the UK’s housing market, following its re-emergence from the first Covid-19 lockdown. Berkeley’s pretax profit in the year ended April 30 was 2.9% higher at £518.1 million from £503.7 million. Revenue rose 15% to £2.20 billion from £1.92 billion.
Green Vodafone
Vodafone today confirmed that its entire European operations, including mobile and fixed networks, data centres, retail and offices, will be 100% powered by electricity from renewable sources from 1 July 2021, marking a key step towards Vodafone’s goal of reducing its own carbon emissions to ‘net zero’ by 2030 and across the company’s entire value chain by 2040.
Travis Perkins
Travis Perkins expects full-year earnings to beat market expectations following a strong recent trading performance, it announced earlier today. The builders merchant raised its guidance for full-year adjusted operating profit of at least £300 million, significantly ahead of market expectations at around £259 million.
Monetary Policy Committee
The Government announced on Tuesday that former OECD chief economist, Catherine Mann, has been appointed as an external member of the Bank of England’s Monetary Policy Committee. Ms Mann, a former White House adviser to George Bush Snr, will replace Gertjan Vlieghe in September. She quit her role as global chief economist at investment bank Citi last month and her most recent research on global post-Covid prospects signal a dovish policy outlook. George Buckley, chief economist at Nomura, said: “The departure of both Vlieghe and most obviously Andy Haldane definitely leaves the MPC with a more dovish bias.” Meanwhile, analysts think the BoE is unlikely to change its view on the risk of inflation this week but would need to demonstrate concern so as to not appear complacent about the threat.
DS Smith
DS Smith reported declines in revenue and profit in the 2021 financial year, as the cardboard box boom was not enough to offset weak prices for paper. The London-based packaging supplier saw sales fall 1.1% in the year ended April 30, to £5.98 billion from £6.04 billion. Pretax profit dropped 37% to £231 million from £368 million.
EU constraining the City while it builds capacity
The Telegraph says EU financial services commissioner Mairead McGuinness has admitted that Brussels is attempting to hold back the City of London while Europe’s infrastructure is improved. Ms McGuinness told the City Week conference that Brexit had “laid bare” vulnerabilities in Europe’s financial system by exposing its dependence on the City and that the EU needed to “reinforce its capacity” so the concentration of critical infrastructures located outside of the EU could be limited. She added: “Our goal is not to move or steal business away from London but rather to build our own infrastructures, and that’s an important nuance.” McGuinness went on to say that future decisions on equivalence will be made gradually and political relations would also determine the EU’s financial services policy.
G7 agreement on tax a vital breakthrough
Jesse Norman, the Financial Secretary to the Treasury, writes in City A.M. on the importance of the G7 global tax agreement outlining how its announcement comes after years of leadership on the issue by the UK. He says it was a “vital breakthrough in the fair and effective taxation of multinationals” and he berates Labour politicians in particular for playing down the achievement. Norman concludes: “While there are still plenty of details to be fleshed out, there has been a wide-range of support for the agreements made, ranging from the CBI to Silicon Valley. But we should not underestimate the historical weight of what was agreed earlier this month, and what we will continue to take forward at the G20 in July.”
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