Business news round up

7 minutes Mark Halstead


Corporation tax receipts fall as deficit widens

UK public sector net borrowing was £1.3bn higher in September than at the same time last year and greater than the £8.5bn that economists had been expecting, according to the ONS. This brought the deficit for the first six months of the year to £45.5bn with £55.5bn forecast by the OBR for the year. Total government tax receipts rose 2.6% in September against the same month in 2015, while revenues rose 3.6% in the first six months. However, receipts from corporation tax and property transactions fell compared with last year. It was the first fall in corporation tax revenues for September since 2009, dropping by 8.7%. VAT receipts rose by just 1.4%, the slowest for September since 2012.

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


Government leaves small firms in dark about digital tax drive

The switch to regular digital tax returns in 2018 will place an unnecessary burden on companies awaiting further guidance about the mooted change, according to accountancy and business groups, which say it is being hastily imposed without any details about what firms must do to be in compliance. Frank Askew, head of tax at the ICAEW, said: “We as professional bodies want to support the road to digitisation . . . but the way at the moment it’s being framed, the terms of the consultation mean it’s very difficult for our members to give their support”.

Reported In: The Daily Telegraph




Economists improve post-Brexit forecasts

Independent forecasts compiled by the Treasury show that the economy is performing far better than expected in the immediate aftermath of the vote to leave the EU, the Telegraph reports. GDP growth of 1.9% is predicted for 2016 and forecasts for 2017 put it at 1%, up from 0.5% in July. Consumer spending is expected to grow by 1.3% next year, half its 2016 pace, and while business investment is likely to fall in 2017, export growth is forecast to outpace imports as a result of higher inflation.

Reported In: The Sunday Telegraph


Levels of financial distress fall for UK businesses

UK business saw levels of financial distress fall 6% in the three months after the EU vote, according to Begbies Traynor’s most recent Red Flag Alert. The report said the most marked improvement in the third quarter was in the building industry, where the number of companies experiencing 'significant' distress fell by 11% to 28,917. Professional services were also buoyant, with distress down 10%, partly due to increased work from clients looking for Brexit help.

Reported In: Daily Mail, Independent i  



PM urged to deliver on industrial strategy

Manufacturing trade body EEF has called on the Prime Minister to act quickly to devise a comprehensive industrial strategy and implement it, or risk undermining efforts by the industry to grow. A study by EEF showed that 76% of manufacturers are actively trying to grow and 71% of them have a three to five-year plan on how to achieve this. The EFF wants the government to back growth plans amid uncertainty over Brexit. Its research found 90% of adults agree that the UK needs a solid industrial strategy, and 86% of them want government to promote a stronger manufacturing base in Britain.

Reported In: The Daily Telegraph  




Chinese and US investors unnerved by Brexit

Britain has dropped out of the top five global destinations for mergers and acquisitions for the first time in the seven-year history of the EY Global Capital Confidence Barometer survey. Investors from China, the US and Japan showed the sharpest fall in sentiment, citing fears that Britain will no longer offer a "gateway into Europe". Investors in India, Russia and Europe still favour Britain, the report said. EY said Britain's fundamentally strong economy meant companies "don't look ready to run for the exit". "Nevertheless, smaller inflows into new and existing operations are concerning."

Reported In: The Guardian



BBA: Major lenders will exit UK early next year

Anthony Browne, the CEO of the British Bankers’ Association, has said the City’s biggest banks are preparing to relocate out of the UK in the first few months of 2017 amid growing fears over the impending Brexit negotiations. In an article in the Observer, he warns that “the public and political debate at the moment is taking us in the wrong direction”. With regards to Britain’s position, he writes that banking is the country’s biggest export industry by far, and that the current trajectory threatens not just tariff-free trade but the legal right of banks to provide services.

Reported In: The Observer   


UK will ensure stability of financial services sector

The Brexit minister David Davis has said the Government will do whatever is needed to ensure the stability of the financial services sector and markets during the process of negotiating Britain’s exit from the European Union. The Brexit vote has raised concerns in the City that financial stability could be undermined, with regulators in Britain and Europe liaising over how to minimise this risk. Addressing those concerns, Mr Davis said the financial sector would be of “great importance” in the negotiations.

Reported In: Daily Mail, Financial Times  




Mortgage lending falls 7%

Council of Mortgage Lenders figures show gross mortgage lending fell 7% month-on-month in September to £20.5bn, although this was still the highest figure for the month since 2007. Overall, it also represented a 2% increase in mortgage lending since September 2015. Lending for the third quarter came to £63.6bn, up 11% on the previous three months. Howard Archer, chief UK economist at IHS Global, said the data suggests the housing market is stabilising, although he expects house prices to dip by around 3% in 2017.

Reported In: The Times  



WTO rules would cost EU more than Britain  

The EU will face tariff costs of almost £13bn a year on exports to the UK while British firms will face a £5.2bn bill on sales to the other 27 states if Brexit means resorting to World Trade Organisation rules, according to new analysis by the Civitas think tank. The Times says the figures will be used by supporters of Brexit to argue that it is in the EU's best interests to hand Britain a favourable exit deal. Separately, ministers’ fear that it could take a decade to reach a post-Brexit free trade deal with the EU after the Belgian region of Wallonia blocked a flagship agreement with Canada.

Reported In: Independent I, The Times


Hedge fund industry faces digital disruption

A survey published by Managed Funds Association has found that 58% of more than 100 hedge fund leaders and executives polled expect technology such as AI and robots to have a medium to high impact on their industry. Around three-quarters of respondents expect automated trading technologies to have an impact on hedge fund returns over the next five years, although 26% feel any effect will be negligible at best.

Reported In: City AM  



 New HMRC unit to tackle exploitation of self-employed

The financial secretary to the Treasury, Jane Ellison, has announced that HMRC is launching a specialist unit to investigate companies that avoid giving workers employment protections by using agency staff or calling them self-employed. The move comes as HMRC reveals compliance teams are examining around 100 reports from staff at delivery company Hermes regarding claims that they are being paid below minimum wage by the courier service, once petrol costs have been accounted for. There have also been allegations that workers receive no holidays or sick pay amid confusion over whether they should be classed as self-employed.

Reported In: The Guardian, Daily Mail, Independent i 

 Details of incoming Apprenticeship Levy

The Government has outlined further details of the incoming Apprenticeship Levy, which sets government funding for the initiative at £2.5bn. Changes include giving employers 24 months instead of 18 to spend any funds in their digital account and enabling them to transfer digital funds to other employers in their supply chains. Education secretary Justine Greening also said there would be an extra 20% payment where training providers train apprentices aged 16-18 and a “simplified version” of support for disadvantaged areas. The apprenticeship levy, which comes into force in April, will tax large businesses in an effort to force them to invest more in training.

Reported In: The Guardian , The Times


 CBI: Orders up for manufacturing firms

Manufacturing exports have received a significant boost from the weakness of sterling, according to the latest Industrial Trends Survey from the CBI, which shows export volumes grew at their fastest pace for two and a half years in the three months to October. Both manufacturing output and orders grew over the quarter and although export orders are expected to rise further over the next three months, the survey found the weaker pound is also feeding through to costs, which are rising rapidly and may feed through to higher consumer prices in the months ahead.

Reported In: BBC News  



 Payment delays threaten construction contractors

A report from online finance firm Funding Options reveals that smaller construction firms are suffering "severe" cash-flow problems because of delays in being paid by property developers. The research shows that developers are taking 56 days on average to pay subcontractors, two days longer than a year ago. This, the report warns, is hitting growth prospects for subcontractors and is increasing the chances of them going bankrupt. Conrad Ford, chief executive of Funding Options, said: “Major developers feel they have a lot to gain from delaying payments, knowing that their subcontractors would be hesitant to raise their issues for fear of losing out on future work. There seems to be only two choices for the suppliers: accept these slow payments or lose the business going forward.”

Reported In: Independent I



Average price up £44k by 2021

The Centre for Economics and Business Research has said the average price of a home is still expected to be £44,000 higher in five years' time despite the uncertainty caused by Brexit. London and the top end of the property market will be hit particularly hard by the cool-down but by 2021 the average property is expected to be worth £254,000 - £44,000 more than it is now.

Reported In: Independent I, Daily Mail


 New fund will invest solely in start-ups led by women

A new £10m fund to encourage female founders has won the support of numerous technology entrepreneurs, reports the Sunday Times. AllBright, which will invest solely in start-ups led by women, hopes to have raised £10m by Christmas, and seeks to help redress the gender imbalance in the start-up world.

Reported In: The Sunday Times


 Retail sales grow at fastest rate since 2014

Retail sales volumes grew by 1.8% in the three months to September, the fastest rate since the fourth quarter of 2014 and up from 1.1% in the three months leading up to the EU referendum vote. "The underlying trend is one of strength, suggesting consumer confidence has remained steady since June's referendum," said Kate Davies, of the ONS.

Reported In: BBC News   


 Oil investors doubt OPEC can seal output deal

Oil stocks fell for a third day on Wednesday, nearing $50 a barrel for the first time in three weeks, as investors grew doubtful that OPEC members will agree to cut output and as U.S. inventories staged a surprisingly large increase. Iraq, the second-largest member of OPEC, does not want to join in with a proposed production cut that the group has said it will approve at a regular meeting in Vienna next month.

Reported In: Reuters

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richard west Mark Halstead Partner

Mark's experience is big data analytics, financial services and building businesses provides Red Flag Alert with strategic direction.