Post-lockdown spending spree – business news 11 March 2021.
James Salmon, Operations Director.
Higher-earning Brits set for post lockdown spending spree, Brexit boosts Britain’s investment prospects, knocks revenues at third of manufacturers, mixed feelings after evictions ban extended and pandemic accelerates a long-term move towards home working plus more.
Higher-earning Brits set for post-lockdown spending spree
Britons have amassed some £160bn in excess savings, according to new calculations by Deutsche Bank economists, who predict £16bn of this will be spent as lockdowns ease, double what the OBR expects to be pumped into the economy. Deutsche analyst Sanjay Raja said he wouldn’t be surprised if the figure hit £20bn. However, Raja pointed out that many on low incomes bore the brunt of the pandemic and were more likely to be going into debt: “These households, some may be on furlough and their costs are similar to before but their income is lower, are still reliant on credit, welfare, debt or family”.
Brexit boosts Britain’s investment prospects
A survey of 5,000 global business leaders by PwC has found that Britain is a more attractive investment proposition for multinational companies than it was before Brexit. Writing in the Times, Kevin Ellis, chairman of PwC UK, says: “The UK’s positive standing highlights what matters most to global business leaders. The EU trade deal drew to a close much of the uncertainty around Brexit. It’s hard to overestimate the importance of political certainty and stability when it comes to CEO decision making.” America, China and Germany remain the top three target but the UK has overtaken India as the world’s fourth most promising growth opportunity. Mr Ellis added that the UK’s tax regime is still competitive despite plans to increase corporation tax. PwC also found that business confidence was rebounding quickly with a three-year forecast showing continued growth in positive sentiment
Brexit knocks revenues at third of manufacturers
Since Britain left the EU in January more than a third of manufacturers have lost revenue according to Make UK, heightening worries over border delays and red tape. Separately, Brussels will make UK food manufacturers producing multi-ingredient products fill out new health assessment forms from April 21st, adding extra costs to exporting to the EU.
Mixed feelings after evictions ban extended
The Government has extended the ban on housing evictions enforced by bailiffs in England until May. But ministers indicated this could be the final such extension, promising a “new approach” from June. The current ban was due to expire at the end of March. The Government also extended the ban on commercial evictions until 30 June, which it says will help firms as they re-open after lockdown. But the British Property Federation criticised the move with its CEO Melanie Leech declaring: “The scandal of those well-capitalised businesses who can pay rent, but have chosen not to, cannot be allowed to continue.” Kate Nicholls, UKHospitality chief executive, said on the other hand that the move was “a sensible and positive step.”
CBI: UK needs tax system that rewards green alternatives
The CBI has called on the Government to institute wholesale reform to the UK’s tax system in order to hit its 2050 net zero target. Instead of tinkering with individual taxes, the business lobby group said ministers should instead pursue “fundamental change with a holistic, coherent tax plan” in consultation with business and the private sector. The CBI has set out nine principles which it says should guide the development of a new tax system with a “polluter pays” policy at the heart of the prospectus. CBI chief economist Rain Newton-Smith said: “A tax system which discourages polluting behaviours and rewards greener alternatives is critical to unlocking the right kind of investments.” Jason Collins, head of tax at Pinsent Masons, agreed stating: “Activity in environmental taxes and green tax incentives has been marginal at best, window dressing at worst.”
Pandemic accelerates a long-term move towards home working
The chief economist at Deloitte, Ian Stewart, has suggested people in jobs they can do at home are planning to return to work in the office for at least two days a week after restrictions are lifted. Mr Stewart told the Treasury select committee that a poll of 800 clients found very few people want to work entirely at home or in the office, but on average they would like to work in the office around two days a week. He added: “I think there is going to be a step change. There has been a long-term move towards greater flexible, agile home working. This is going to cause a significant acceleration of it.”
Air duty
PM Boris Johnson has said he wants to cut air passenger duty on domestic flights in a bid to boost travel connections across the UK. A consultation will examine options including creating a new lower domestic rate or exempting return flights. The move is likely to be welcomed by struggling airline operators hit by Covid, but worry environmental groups
Government defends “super-deduction” scheme
Following concerns that the Government’s £25bn “super-deduction” scheme could wipe out any taxes paid by large companies such as Amazon, the secretary of state for digital, culture, media and sport defended the policy. Oliver Dowden said: “It is a good thing if companies are going to be investing in tech: that’s the point, to encourage companies to invest heavily while many of them, particularly in the tech sector, are sitting on very large amounts of cash. That will help drive tech growth. I don’t have a problem with that but I do want to make sure that everyone pays a fair share.” Mr Dowden went on to argue that there needed to be a “global approach” to resolving Amazon’s low UK tax bill, citing “complex intellectual property-licensing regimes”. He said: “It has to be done at an international level and the chancellor is making it a priority for the G7.”
Financial services vacancies beginning to recover
Research from the Association of Professional Staffing Companies (APSC) has found that vacancies in the financial services sector are well on their way to recovery after a sharp slump at the start of the pandemic. APSC found that hiring fell by 58% in the second quarter of 2020 as Covid battered employment prospects. Accountants were the least impacted of all financial professionals, while recruitment marketing was hit the hardest – down 41% compared to 2019. However, numbers improved towards the end of the year, with recruitment levels up 15.2% year-on-year in December 2020. The insurance sector dominated hiring within financial services in 2020, accounting for almost a third of the total vacancies. In contrast, the hardest-hit sector, consumer finance, saw jobs plummet 43% year-on-year. Fintech was the least impacted division, as roles dipped only 12.6% compared to the same period in 2019.
83% pensions gap between men and women
According to The British Seniors State of Retirement Report, women have 83% less than men in their retirement pot, while nearly half of women over 50 believe they will struggle financially when they retire. The research found that women have an average total retirement pot of £113,520, compared to £206,990 among men – a disparity of £93,470.
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