Business news round up

7 minutes Mark Halstead


Hammond needs to simplify tax system

The Times’ Mark Little and the Telegraph’s Mathew Lynn both call for the Chancellor Phillip Hammond to use his Autumn statement as an opportunity to scrap swathes of taxes. They say Britain’s tax system has become dysfunctional and inefficient. Mr Littlewood says Mr Hammond should be seeking to ease the overall tax burden down to about 30% of national income to boost confidence and stimulate growth. Mr Lynn takes particular exception with the buy-to-let tax and says all changes to stamp duty should be scraped – “You shouldn't need a couple of hours with an expensive lawyer or accountant just to work out how much stamp duty you owe when you buy a property,” he quips. He adds that ideas such as a tax on sugary drinks are nothing more than virtue signalling while a sprawling array of Isas are “simply cluttering up the tax system.”

Reported In:The Times, The Daily Telegraph

 EU tax haven blacklist criteria contested

The UK is among several countries arguing that a non-EU country with a zero rate of corporation tax should not necessarily be blacklisted by the EU as non-cooperative. The UK, Ireland, Sweden, the Baltic states, the Netherlands and Luxembourg argue that the EU has no right to penalise outside jurisdictions for setting zero rates, because corporate tax is not an EU competence. David Gauke, chief secretary to the Treasury, is expected to tell EU finance ministers in Brussels today that the UK opposes attempts to put Guernsey, Jersey and British Overseas Territories on the list. The UK is also pressing to allow potential blacklistees until 2020 to meet the EU criteria rather that the current 2017 deadline. The move angered some MEPs who believe the British government should not be allowed to set deadlines that clashed with the Brexit timetable.

Reported in: The Guardian,

 Digital tax should not be a burden to businesses

HMRC’s Jim Harra writes to the FT to reassure businesses that the Revenue’s digital transformation project will result in “a simpler, more efficient tax system that frees business people from red tape and form-filling.” His comments come after several industry bodies voiced concerns about the viability of HMRC’s Making Tax Digital (MTD) strategy. The CIOT has called on HMRC to defer its introduction amid fears the current timetable and lack of information underpinning its implementation could undermine voluntary compliance and trust in the tax system. And the ATT has cited major concerns about the regime’s penalty proposals in its response to the MTD consultation.

Reported in:Financial Times,


Eurozone growth cut

The European Union has raised its eurozone growth forecast for this year but lowered it for 2017, warning that the economy faces new challenges due to Brexit and rising inequality. Pointing to increased global risks for the 19-country single currency area, the European Commission said economic growth this year would reach 1.7%. The commission added that eurozone growth would slow to 1.5% growth next year, as the negative effects of Britain's looming divorce from the EU began to be felt more deeply. It cut its 2017 growth forecast for the UK to just 1%, almost half the 1.8% in its May round of forecasts.

Reported in: The Independent

Business confidence down since Brexit

A survey of 1,000 accountants by the ICAEW has found that business confidence has plunged since the Brexit vote, even though exports have been boosted by the 16% drop in the value of the pound since June 23. Michael Izza, chief executive of ICAEW, said “Businesses are planning on slowing investment. The forthcoming Autumn Statement is an opportunity therefore to encourage businesses to make the most of the fall in sterling”. The concern was echoed by the EEF, which says that three out of five manufacturers are planning to spend the same or less on equipment and facilities.

Reported in: The Independent


Beware crowdfunding conundrum

The Times’ James Hurley reports on the performance of equity crowdfunded companies. According to a report from AltFi Data, of the 955 capital-raisings completed on equity crowdfunding websites, only 118 were for companies that subsequently failed, are showing signs of distress or have raised further money at a lower valuation. AltFi Data said that 23% of the cohort had gone on to raise more money at a higher valuation than their first crowdfunding round, but only five companies had produced any profits for investors so far. Rob Murray Brown, of ECF Solutions, warned that a company that raised further funds at a higher valuation should not automatically be associated with financial health. "It's just as likely that the shareholders feel that putting in more money is a better option to losing their original investment," he said. "It's a very typical gambler's conundrum. Almost daily, we are contacted by crowdfunding investors who feel hard done by."

Reported in: The Times


 Bank of England sets out new rules for banks

The Bank of England has said the UK’s banks will be given an extra two years, until 2022, to build up sufficient funds to ensure they do not need to rely on taxpayer bailouts if they collapse. The central bank said it would help smaller banks and building societies by raising the size they can reach before more onerous capital rules kick in. BoE governor Mark Carney commented: “This policy is a significant milestone on the journey to end 'too big to fail' in the UK. It will ensure that banks that provide essential economic functions hold sufficient resources to be resolved in an orderly way, without recourse to public funds.”

Reported in: BBC News, The Daily Telegraph, The Times  


 Equity deals slide in wake of Brexit

A new report from Beauhurst, which tracks high-growth companies, has revealed that there has been a significant decline in equity funding towards the end of 2016, with deal volumes falling and pots of capital drying up. Beauhurst said early-stage deals are down 37% and growth-stage deals down by 41% in the third quarter. Beauhurst CEO Toby Austin blamed Brexit and market saturation for the slide.

Reported in: The Daily Telegraph


UK trade deficit widens in September

The UK trade deficit widened to £5.2bn in September from £3.8bn in August, the ONS has said. Exports decreased by £0.2bn, while imports increased by £1.2bn, in part driven by a record £8.7bn deficit with the European Union. Between the April-to-June and July-to-September quarters, the total trade deficit for goods and services narrowed by £1.6bn to £11bn. There was a £4.5bn increase in goods exports and a £3.1bn increase in goods imports between the second and third quarters, partially offset by a £0.1bn decrease in services exports and a £0.3bn decrease in services imports. ONS statistician Hannah Finselbach said: “So far there is little evidence in the data of the lower pound feeding through into trade volume or prices.”

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

ABF looks forward to the benefits of Brexit

Associated British Foods says that the UK’s Brexit vote “has the potential to benefit the group”, offering it the chance to build export markets. CEO George Weston also warned that supermarket prices are likely to rise in the near future.

Reported in: Financial Times, The Daily Telegraph, Daily Mail, The Times


UK manufacturing picks up in September

Output from manufacturers rose by 0.6% last month, up from 0.2% in August and a 0.9% fall in July, according to the Office for National Statistics (ONS). Drug makers and factories carrying out repairs grew strongly but total industrial production dropped 0.4% in September, after falls in the oil and gas sector. However, for the third quarter, which covers the first three months since the Brexit result, manufacturing and industrial production fell by 0.9% and 0.5% respectively, compared with the quarter before. Suren Thiru, head of economics at the British Chambers of Commerce, said: "It is concerning that the longer-term trends show that manufacturing and total industrial output are adding little to overall UK growth".

Reported in: The Daily Telegraph, The Times, BBC News, The Guardian


Disruptors driving salaries up

The emergence of challenger banks and FinTech firms is driving opportunities for financial services professionals, putting pressure on the traditional sector and driving up salaries, according to Robert Half. Starting salaries for professional roles in Scotland are expected to increase by an average of 2.5% next year. The highest pay rises in financial services roles in Edinburgh are likely to be for senior operational risk managers and qualified accountants, the recruiter said.

Reported in: The Scotsman


 House price inflation slows

Annual house price inflation in the UK has fallen to its lowest rate since July 2013, according to Halifax, down to 5.2% in the year to the end of October, from 5.8% the previous month. The average price of a house or flat is now £217,411. In October values increased 1.4%, their biggest monthly rise since March. The boost in monthly prices has been attributed to increased buyer demand and a record shortage of homes on the market. Andrew Wishart of Capital Economics said the report “echoes the broad picture outlined by other indices that, while house price growth slowed in the wake of the referendum result, there is no evidence of any substantial fall in values". Halifax’s report was in contrast to Nationwide's rival house price index, which found that house prices had stalled in October for the first time in 15 months and had risen by 4.6% over the year. 

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

London residential land prices fall by most since 2008

Savills’ land index shows that land prices for residential development in central London fell by 8.9% in the past six months, with values down 10.2% in a 12-month period. Across the country, excluding the capital, greenfield land values fell 0.4% in Q3 2016, but remain 2% up year on year.

Reported in: Financial Times,The Daily Telegraph,


 Javid pledges action to improve house building sector

The Communities Secretary, Sajid Javid, has called for "far more competition" to change a housebuilding market that is "not diversified enough”, ahead of a White Paper on housing supply due next month. With the numbers of housing units granted planning permission each year up 60% since 2010, according to Mr Javid, large developers stand accused of using their market dominance to increase housing supply slowly, keeping prices as high as possible to maximise profitability. The Home Builders Federation rejected the criticism. "There's no reason we'd delay or artificially reduce the amount of houses we sell," said Andrew Whittaker, the federation's head of planning.

Reported in: The Daily Telegraph, The Daily Telegraph, The Daily Telegraph


Deliveroo riders seek to gain workers' rights

Following in the steps of two minicab drivers who last week won a case against Uber to be considered as employees rather than self-employed, Deliveroo riders in London are taking legal steps to gain worker’s rights. The ruling, which could entitle them to holiday pay and a guaranteed minimum wage, may trigger changes affecting thousands of Deliveroo workers, who receive £3.75 per delivery rather than an hourly fee.

Reported in: BBC News, The Independent, Yorkshire Post, Financial Times, The Sun


Fintech start-up secures funding for UK launch

Fintech start-up AREX has raised EUR3m for product development and to support its 2017 launch into the British market. Founded in 2014 by two Finns and an Estonian, it offers an Account Receivables Exchange – a solution for short-term borrowing against receivables. “The team are building an entirely new asset class, that is both a new model for investors, enabling them to participate in SMB financing in a way that simply wasn’t possible before, and a critically important way for SMEs to release their working capital,” said Timo Ahopelto, of lead investors Lifeline Ventures.

Reported in: ArcticStartup   Bdaily


BoE raises 2017 growth forecasts

The Bank of England has raised its growth and inflation forecasts for 2017 and kept interest rates on hold at 0.25%. It now expects the economy to expand by 1.4% next year, with inflation set to surge to 2.7%, almost triple its current level. Growth of 1.5% is now forecast for 2018, down from the previous 1.8% estimate. The BoE said it reached the revision after a boost to exports from a weaker currency, and consumer spending and the housing market had proven more robust than expected in August.

Reported in: BBC News  Financial Times   The Daily Telegraph  


New tech fund launched

Scottish Equity Partners (SEP) has raised £260m for a new technology-focused fund. Its SEP V fund will invest in high-growth technology companies based mainly in the UK and Ireland.

Reported in: The Scotsman


North Sea oil producers seek more tax breaks to boost investment

North Sea oil and gas producers are calling on the Chancellor to provide further tax incentives to help boost investment, despite the Treasury making a net loss from the industry in 2015-16.

Reported in: Financial Times

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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.