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Business News round up 20th October

TAX

Government plans tax breaks for business

The Express reports that the government is to offer British businesses tax breaks as an incentive to boost exports. According to a Whitehall source, firms which boost the country's overseas sales will be given an export tax credit. Rebates could also be given against corporation tax bills to reduce the costs of seeking new business abroad. "One of the ideas being considered is the introduction of an export tax credit to cover the cost of translation or advice or anything that adds to the cost of exporting," the source said. The Department for International Trade is understood to be studying the recommendations, along with America's IC-DISC (Interest-Charge Domestic International Sales Corporation) scheme for exporters, which hands tax breaks to SME manufacturers. The proposals have been backed by HSBC, which in 2013 recommended the idea of offering export tax credits to SMEs in its Manifesto For British Exports. Chief European economist Karen Ward, who has recently been appointed as Philip Hammond's key economic adviser, said such tax breaks had helped firms to raise exports by millions.

Reported In: Daily Express

BCC calls on Hammond to ease tax burden

The BCC is calling on Philip Hammond to help businesses thrive after the Brexit vote by boosting investment and ending repeated tax raids on companies. In its Autumn Statement submission, the group proposes an £18.6bn stimulus package to drive investment and ease the burden on UK businesses. It urges Mr Hammond to broaden tax breaks for companies, shake up the UK's "outdated and poorly designed" business rates system and inject more money into infrastructure projects such as housing and broadband. The BCC said the tax burden on businesses introduced by previous chancellor George Osborne was already "unacceptably high", with policies such as the apprenticeship levy and National Living Wage weighing heavily on companies.

Reported In: The Daily Telegraph

Criminal finances bill targets tax evaders

The government has introduced a new offence of corporate failure to prevent tax evasion with the publication of its criminal finances bill. The move is intended to address concerns that some firms have been "tacitly encouraging" staff to help clients dodge tax to boost profits. Previously, such corporate conduct was beyond the reach of criminal law and applied only to employees. The bill also introduces ‘unexplained wealth orders,’ which will enable the Serious Fraud Office, HMRC and other agencies to force an asset's owner to explain how they obtained the funds to purchase it. Security minister Ben Wallace said that further measures within the bill would seek to tackle money laundering and terrorist funding.

Reported In: The Guardian, Evening Standard

 

OUTLOOK

Risk of collapse remains high for Scots professional services firms

Nearly one-third of professional services firms in Scotland are still considered to be at a heightened risk of insolvency, with the fall in the value of sterling and uncertainty over the Brexit vote said to be exacerbating problems. Tim Cooper, chairman of R3 and a partner at HBJ Gateley in Edinburgh, noted a 2.1% fall in the number of professional services firms and accountants in Scotland facing a higher than normal risk of insolvency, but warned it still leaves a "high proportion" of firms facing a high risk of failure.

Reported In: The Herald

GOVERNMENT

Hammond outlines Brexit hopes

Chancellor Philip Hammond has denied suggestions which emerged over the weekend that his desire for a more measured exit from the EU has harmed the Prime Minister’s negotiating position by putting him at odds with other Cabinet members’ desire for a hard Brexit. He insisted the Treasury is being kept at the heart of discussions, and all options are open. With respect to trade deals, Mr Hammond believes the process of reaching agreements with other countries should prove much faster once the UK has left the EU, although he declined to say if the government wants to remain in the customs union. He also told the committee of MPs that high-skilled migrant workers will be welcomed in to Britain, including those from within the financial services industry.

Reported In: Bloomberg, The Independent, Financial Times, Daily Mail,   The Guardian   

 EMPLOYMENT

 Employment remains at record high

The ONS has reported that the UK’s unemployment rate remained at an 11-year low of 4.9% between June and August, with the number of people in employment rising by 106,000 from the previous quarter to a record high of 31.8m. Vacancies stood at 749,000 in the three months to September, only slightly down from 750,000 in the three months to August. The ONS also revealed that average wages were up 2.3% year-on-year, in line with expectations.

Reported In: The Independent, Financial Times, Daily Mail, The Guardian

 

Compensation denied to tribunal claim winners

Government figures have revealed thousands of workers who win employment tribunal claims are failing to receive a penny of compensation. According to the data, more than a third of successful claimants never receive any of their compensation, and less than half are paid in full. Proposed solutions to the problem include denying public contracts to the offending businesses, disqualifying directors, and allowing employment tribunals to enforce payment directly.

Reported In: The Observer

 

FINANCE

Bank branch closures hit small firms

The FSB has said that small firms face "tough challenges" because of the closure of bank branches. FSB chairman Mike Cherry said that many small businesses needed over-the-counter banking facilities. He added that the main reason for branch closures - the popularity of digital banking - presented its own challenges.

Reported In: BBC News   Daily Mail   The Guardian

Paris bids to lure London’s bankers

French business chiefs are stepping up their efforts to attract bankers to Paris from London amid ongoing Brexit uncertainty. Marie-Célie Guillaume, the director-general of Defacto - which manages Paris's La Défense business district - said the French government was considering tax breaks to attract more businesses, including making expats' bonuses tax-free for eight years.

Reported In: Evening Standard

 

INVESTMENT

Invest in infrastructure, urges ICAEW

The ICAEW has called on Chancellor Philip Hammond to commit to infrastructure investment in his Autumn Statement next month. In a letter to the Treasury, the group said priority should be given to infrastructure projects that can drive growth and provide a positive return to taxpayers.

Reported In: City AM

 EXPORTS

 WTO warns of lengthy trade negotiations

World Trade Organisation (WTO) chief economist Robert Koopman has said that it could take many years before the UK can establish new trade deals with fellow WTO members. Once Britain leaves the EU, it must submit its own tariffs for the approval of WTO trade partners, all of whom must agree to them. Trade deals usually take around five to six years to be agreed, and in the meantime, the UK would be subject to an average WTO levy of 5.3%.

Reported In: The Independent

 

LENDING

Mortgage lending and business borrowing fall

BoE figures reveal banks suffered a big drop in demand in the months following the Brexit vote as fewer Britons were prepared to take major financial decisions. A net balance of 44% of banks reported a fall in customer interest in mortgages. The drop came in prime lending, as well as among buy-to-let investors. However, a net balance of 18.2% of banks said they anticipated a rise in demand in the final three months of the year, the strongest forecast since early 2014. At the same time, banks became a little more cautious and risk averse in their lending, with a net balance of 1.8% trimming mortgage availability. Demand from businesses also fell sharply, with the biggest companies being the most reluctant to borrow.

Reported In: The Daily Telegraph, Independent i  

 

DISRUPTION

Construction sector in need of disruption

An independent study commissioned by the DCLG suggests the construction industry needs to drive new investment in technology and advanced manufacturing if it is to deliver the housing stock the UK requires while addressing an acute skills gap.

Reported In: Tech City News

 

MANUFACTURING

Industry warns of skill shortages amid Brexit opportunities

The Royal Academy of Engineering has set out its analysis of the opportunities and threats posed by Brexit, including a need to close a skills gap that is threatening the sector. Academy president Professor Dame Ann Dowling welcomed government indications that it recognises engineering’s contribution to the economy, but she stressed that ministers must be fully conversant with industry leaders during Brexit negotiations with Brussels.

Reported In: The Daily Telegraph, The Independent, Daily Mirror

 CONSTRUCTION

 Construction drops 1.5%, sparking recession fears

UK construction slumped in August, indicating that the industry is slowing down and could even enter a recession. Construction output dropped by 1.5%, an unexpected move after growth of 0.6% in July, according to the ONS. Year-on-year growth was up just 0.2%, while output in the three months to August fell 1.3%. Infrastructure construction led the fall, diving by 5.1% in the month.

Reported In: The Daily Telegraph, The Times, Business, The Guardian

 

REAL ESTATE

Half a million landlords facing higher taxes

The National Landlords Association says nearly half a million landlords will be forced to pay 40% tax for the first time from April next year, when the Government enforces its planned buy-to-let tax. More than a fifth of landlords who pay the basic rate of tax will be moved into a higher tax bracket. The changes, announced by the Government last year, mean landlords will no longer be able to deduct mortgage interest payments or any other finance-related costs from their turnover before declaring their taxable income from rent. The NLA's analysis showed an investor with a single property will pay £3,600 more a year on average, while someone with two or three properties could expect their tax liability to rise by £8,600.

Reported In: The Daily Telegraph, Independent i

 

House prices increase again

Figures from the Office for National Statistics indicate that house prices grew at an average of 8.4% in the 12 months to August - higher than the 8% rate in the year to July and the nineteenth consecutive month of growth. House prices in the east of England grew at 13.3%, faster than the south-east and London, where the rate of growth was 12.2% and 12.1% respectively. The average UK house price was £219,000, which is £17,000 more than a year ago.

Reported In: The Daily Telegraph, Financial Times, BBC News

 

START-UPS

Third of business owners underestimate set-up costs

A Lloyds Bank study reveals one in three business owners found it cost them more to start up their new venture than they expected. The average cost of setting up a new firm is over £12,000, with property the biggest outlay at an average £2,987.

Reported In: Daily Mirror

 

ECONOMY

Inflation rises at fastest pace in two years

The UK inflation rate rose to 1.0% in September, up from 0.6% in August, according to the Office for National Statistics. The ONS said it was the biggest monthly rise in the cost of household items in more than two years, but that there was "no explicit evidence" the lower pound was increasing the prices of everyday goods.

Reported In: Financial Times, The Daily Telegraph, The Times  

 

OIL & GAS

Untapped oil and gas is “significant” opportunity

The Oil and Gas Authority has published research drawing attention to the potential of "small pools" of oil and gas in UK waters. It described the estimate of more than three billion barrels of oil untapped underneath the UK continental shelf as a "very significant opportunity".

Reported In: BBC News

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