Staycation boom good for the economy – business news 9 June 2021.

James Salmon, Operations Director.

Staycation boom good for the economy, restrictions devastating to pubs, Furlough must end, Tax reforms bad for UK, Brexit grants shunned, airlines, international trade, bitcoin and more.

Staycation boom good for the economy

The south west of England is set to be one of the main beneficiaries of the staycation boom with UK holidaymakers deciding to forego a foreign holiday this year as Covid disrupts international travel. Kate Nicholls, chief executive of UK Hospitality, says: “If people are replacing a summer by the sea in Spain or Greece, they tend to think of a coastal location in the UK, and they want better weather so go to the south west.” Meanwhile, economists say the lack of international travel could boost GDP, with Martin Beck at Oxford Economics citing it as one reason he upgraded his growth forecasts recently.

Delay to easing restrictions devastating to pubs

Pub groups have warned that if the Government delays the current road map out of lockdown restrictions confidence in the sector will be further sapped. Patrick Dardis, chief executive of pub giant Young’s, said there is “no reason” for such delays while Greene King’s chief executive Nick Mackenzie added that figures show that “the entire sector is in a precarious position”, with smaller businesses facing a particularly hard impact.

Furlough must end before it stymies recovery

The Telegraph’s Matthew Lynn says the furlough scheme should be ended this week as employers are crying out for workers while the Government piles more debt on the country to pay people to stay at home. The latest figures show 10% of the total workforce is still on furlough but many of these people work in sectors that have opened up, Lynn says, adding that the scheme has “long since outlived its usefulness – and right now it is actively holding back the robust economic recovery we need.”

G7 reforms result in a net loss of tax for the UK

Analysis by Tax Watch contends that the G7 agreement on a global minimum corporation tax rate will see lower UK tax bills for US tech giants.

The think tank concluded that the tax rate for Amazon, Facebook, Google and eBay from Pillar One – which is aimed at making firms pay tax in the countries where they have users – would be below or at the same level as their current UK tax liabilities.

But with the local Digital Services Tax removed, the overall effect would be a tax cut. Pillar Two – the 15% global minimum corporate tax rate – will enable the UK to collect more tax from its own large corporations, but will have no impact on US-based companies, Tax Watch argues

Sunak wants G7 “carve out” for financial services

The UK is pushing to have the City of London exempt from the new global minimum corporation tax system approved by G7 finance ministers over the weekend. The FT explains that the rationale for excluding the financial sector was set out in October last year and is based on the premise that financial services were generally required to have appropriately capitalised entities in each jurisdiction and therefore paid the right level of local tax. Chancellor Rishi Sunak reportedly raised the issue at the talks in London last week and plans to make his case again at the G20 summit in Italy next month. A British official said EU countries are taking the same position

Traders shun complex Brexit grants

Fewer than 3,000 applications for the £2,000 Brexit support grants for SMEs have been received by HMRC since March, the Times reports. The Government is in danger of missing its target of getting support to 10,000 traders because the process, administered by PwC, is too complex, a spokesman for the Institute of Export and International Trade claimed, adding that demand from businesses for support with overseas trading remained strong with 12,000 firms having indicated an interest in applying for funding.


British Airways and Ryanair may have broken consumer law in not offering refunds to customers who couldn’t legally take flights during the pandemic, a watchdog has said. The Competition & Markets Authority said the airlines’ stance could have left customers out of pocket. BA offered vouchers and re-booking, and Ryanair offered re-booking, but both refused refunds, it said.

International trade

U.K. and European Union officials are due to meet in an attempt to defuse the row over Northern Ireland which is threatening to spill over into the Group of Seven summit later in the week. The U.K.’s top Brexit adviser, David Frost, is to attend the G-7 summit, a sign that the country is preparing for tough talks on the sidelines of the event over the situation in Northern Ireland.  It comes after the EU this week warned of “swift” and “firm” action should the U.K. again breach the terms of the Brexit agreement

The US and EU will reportedly commit to ending outstanding trade disputes and pledge to end tariffs before the end of the year when they meet next week. President Joe Biden and European leaders will agree to resolve disagreements, including a long-running dispute over aircraft, at a summit in Brussels on 15 June.


Bitcoin continues to come under pressure this week, with strategists warning of more pain to come and suggesting a technical breakdown called cause a fall to $20,000 per token with regulatory pressure likely as it was identified as a key to the rise in ransomware attacks.

Not so Fastly

Some of the world’s most-visited websites crashed for an hour yesterday because of an outage at Fastly, a cloud-computing platform used to help web pages load faster. Amazon, eBay, Paypal, Twitter and numerous news sites were among those affected by the failure in a content-delivery network.

More than 500,000 businesses file VAT returns late

Figures compiled by UHY Hacker Young have revealed that more than half a million VAT returns were filed late by British businesses last year – up 13% on the previous year. HMRC has offered a more flexible approach for businesses, allowing them to defer VAT payments during COVID-19, but there is no blanket exemption for all businesses. HMRC instead determines what qualifies as a “reasonable excuse” for late filing and payment. “For businesses that have filed their VAT returns late, it’s only a matter of time before the harsh reality of receiving a penalty kicks in,” said Sean Glancy, partner at the firm. He added: “Businesses shouldn’t take HMRC’s more sympathetic approach during the pandemic as a free pass. Where possible, they should try to keep on top of their VAT bills, as there’s no guarantee HMRC will accept their excuse for filing or paying late.”

Monthly M&A activity rose in March

Deals between UK companies fell in the first quarter of 2021 after a rash of dealmaking towards the end of 2020, ONS figures show. Domestic UK M&A was worth £3.8bn, a decrease of £5.3bn from the previous quarter last year. Outward M&A also decreased, by £1.9bn in the fourth quarter last year to £2.5bn. However, monthly M&A activity rose in March 2021 with Steve Ivermee, UKI Strategy and Transactions Leader at EY, saying this reflected a “brightening outlook for the UK economy”. EY research on corporate confidence in the UK reveals more than half of executives of large organisations in the UK are planning deals in 2021, compared with 45% in the US.

Haldane: UK housing market is “on fire”

The Bank of England’s chief economist Andy Haldane has said the UK’s housing market is “on fire” with the rise in prices likely to worsen pre-existing wealth inequalities. His comments come after figures from the Halifax revealed the average house price went up £3,000 in May, taking the average property price to a record high of £261,743. In the 12 months to May, the average house price has increased by £22,000. The price spike has been driven by the Government’s stamp duty holiday, reduced supply combined with increased demand from households with more savings after the lockdowns, Haldane said.

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