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Business news summary 19th Jan 2017

Hammond hints at tax cuts to keep Britain competitive

Philip Hammond has indicated that he is prepared to cut taxes if the UK is denied access to the common market after Brexit. In an interview with the German Welt am Sonntag newspaper, the chancellor suggested Britain may be forced to change its "economic model" if it is locked out of the single market. Asked if the UK could become a "tax haven" by further lowering corporation tax, he said that the government would not "lie down" and would "do whatever we have to do" to remain competitive. However, Mr Hammond also said he was optimistic a reciprocal deal on market access could be struck, and that he hoped the UK would "remain in the mainstream of European economic and social thinking".

Reported in:Financial Times, The Sun, Daily Express, Independent I, The Guardian, The Daily Telegraph,  The Times, Daily Mail, BBC News

Fifth of large firms handed a tax wake-up call

Nearly a fifth of Britain's large corporations have been subject to a dawn raid by tax investigators in the past three years. A YouGov survey for law firm Allen & Overy found that, in Europe, only companies based in Germany were more likely to receive a similar early-morning visit: Some 18% of British corporations had been subject to a dawn raid since 2014, compared with 21% in Germany.

Reported in: The Times

OUTLOOK

Business booming post-Brexit

December’s regional PMI data from Lloyds Bank reveals business activity across England and Wales hit an 18-month high at the end of last year. As a whole the UK recorded a PMI of 56.7 in December, 1.4 percentage points up on November, as companies reported rising order books and employment growth. The East of England was the fastest growing part of Britain, where the index rose to a 27-month high of 59.8 in December. Meanwhile, the Bank of Scotland's latest PMI report reveals Scottish companies' costs surged in December at the fastest pace in 67 months, but the private sector nevertheless returned to growth.

Reported in: The Daily Telegraph, The Times, Daily Mail, The Herald, The Press and Journal

Scottish business failures edge up

Research has found the number of businesses failing in Scotland rose by 7% last year compared to 2015, with 969 businesses going into liquidation. However, the final three months of 2016 saw a 26% fall in insolvency appointments compared to a year earlier. Administrations decreased by 3% over the whole of 2016 to 99 after a sharp year-on-year fall in the final quarter.

Reported in: The Scotsman, The Press and Journal

FINANCE

Funding Circle raises £82m

Funding Circle has raised a further £82m in equity capital in its latest funding round led by venture capital firm Accel. Globally, investors on the Funding Circle platform lent more than £1.1bn to small businesses in 2016, with approximately £400m lent in the fourth quarter alone, a record for an SME direct lending platform. James Meekings, co-founder of Funding Circle and its UK managing director, said: “We didn't need the money but we wanted to do this to continue to build a world-class technology platform. Our big aim is to become the first choice for small business finance around the world.”

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

Number of SMEs seeking asset finance doubles

Research by the FSB shows the percentage of SMEs seeking asset finance, including invoice finance, more than doubled in the final quarter of 2016. The organisation’s ‘Voice of small business index Q4’ found that among SMEs that applied for credit during the period, 29.8% used asset based finance, more than double the 13.7% seen in Q4 2015.

Reported in: Leasing Life

INVESTMENT

SME investment concerns linger

The latest indicator that SMEs remain cautious about investment post-Brexit comes from Bibby Financial Services’ Q4 SME Confidence Tracker, which shows the biggest drag on investment plans is a concern among companies about their cost base and the upward trend. Some 22% of SMEs cited this as a worry, almost double the figure reported at the same time last year. Other key concerns were increasing competition (18%) and late payments (11%). In the next three months SMEs are forecast to invest an average of £49,237, less than half the level of intended investment in Q2 2016 (£101,919).

Reported in: SME Insider

EXPORTS

Trade deficit widens

Figures from the ONS show Britain's trade deficit widened by £2.6bn in November compared with the previous month, to £4.2bn. The increase was mainly due to a £3.3bn increase in imports, which was partially offset by a £0.7bn rise in exports. Suren Thiru of the BCC said the trade figures signified a weaker trading position than the average for the year.

Reported in: The Guardian, Daily Mail, The Daily Telegraph, Financial Times, Independent I, The Times

REGULATION

Companies to face criminal charges over staff fraud

Ministers have outlined plans that will see company boards become criminally liable if they fail to stop their staff from committing fraud. MPs want to see harsher laws to combat corporate criminality such as fraud, money laundering and false accounting. Last year, Attorney General Jeremy Wright warned that the present system encouraged directors to distance themselves from company operations, with companies facing criminal liability only if prosecutors can prove that a sufficiently senior person knew about the criminal conduct. Edwin Morgan, of the Institute of Directors, said changes to the law on corporate prosecutions could have wide implications. He added that the IoD would need to be convinced the government had solid grounds to act before it created new liabilities for companies.

Reported in: The Times

UK regulator doubles meetings with industry

The Financial Conduct Authority has doubled the number of meetings it will have with asset managers as it collates feedback on its interim report into the workings of the asset management industry. Separately, SEI’s Patrick Disney welcomes the FCA’s early findings and urges the regulator not to bow to pressure from firms “more interested in boosting their own bottom line.”

Reported in: Financial Times, Financial Times

MANUFACTURING

Caterham cheers best sales in 20 years

Sports car maker Caterham has celebrated its best sales in 20 years after selling more than 600 of the Caterham Seven model last year. Britons bought more than 55% of them, while the French and Japanese made up the bulk of vehicles shipped overseas. The group, which has been selling cars since 1973, said the EU referendum result had no impact on its exports and they had remained “consistently strong” throughout the year.

Reported in: Daily Mail

CONSTRUCTION

Barratt builds fewer homes amid slowing London market

Barratt said it completed fewer homes in London during the second half of last year, as the housing market in the capital slowed. The number of homes in London completed in the half-year to December 31 was 367, compared to 842 in the same period in 2015. Total number of homes completed in the six-month period fell to 7,180, from 7,626 a year previously. However, completions outside London were at their highest level for nine years, with robust activity in Scotland, the North of England, the North West and the West Midlands.

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

EMPLOYMENT

Unemployment falls to 1.6m

UK unemployment fell by 52,000 to 1.6m in three months to November, figures from the ONS show. The jobless rate was steady at an 11-year low of 4.8%, in line with forecasts, the ONS said. The employment rate was steady at a record 74.5%, while wage growth picked up pace. Average weekly earnings excluding bonuses increased by 2.7% compared with a year earlier. Growth in pay including bonuses rose 0.2 percentage points to 2.8% for the year to November. However, the number of people in work slipped by 9,000 to just over 31.8m, the ONS said. It was the second consecutive report to show a decline in the number of people in work - the first back-to-back fall since mid-2015. The number of full-time workers was 209,000 higher at 23.25m people, while the total of part-time employees jumped 86,000 to 8.55m.

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

Rate cut saved jobs

Mark Carney has suggested that the Bank of England’s decision to cut interest rates by 0.25% last August in the wake of the Brexit vote may have saved 250,000 jobs. The BoE Governor said that if the Bank's Monetary Policy Committee had not acted in this “timely, coherent and comprehensive way” an “output gap” of 1.5% of GDP would have opened up in the UK economy, “implying around a quarter of a million lost jobs”. Meanwhile, according to a report from Reed, job vacancies are increasing despite continued uncertainty over what will happen to the economy when the UK leaves the EU. Reed said 110,000 jobs have been posted on its website so far this year, up 16% on the same period in 2016.

Reported in: The Independent

Use of tracker devices for workers raises privacy questions

Companies are increasingly introducing body-worn tracker devices to monitor workers’ behaviour, both in and out of the workplace, but it has led to privacy concerns, even though supporters say their use is creating a more productive “augmented human being”. At least four British firms already have staff wearing ‘sociometric’ badges around their necks, which include a microphone for real-time voice analysis, a movement tracker, a Bluetooth sensor to scan for proximity to others, and an accelerometer to check physical activity.

Reported in: The Times

START-UPS

Birmingham boasts most new start-ups outside of London

Campaign group StartUp Britain has released analysis of local authorities’ data showing that more than 650,000 new companies were formed in the UK last year, a new record and almost 50,000 more than in 2015. London was home to 200,000 of the new firms, and Birmingham remains the most vibrant start-up community outside the capital with more than 17,000 businesses born last year, a 25% increase on 2015. Elsewhere around the country, Leicester's start-up total grew almost 8% to 3,821.

Reported in : The Sunday Times

VCs invest £1.4bn in London tech start-ups

London's tech start-ups received £1.4bn in investment from VCs, with no slowdown after the EU referendum, according to new figures published by London & Partners. Major funding rounds included Deliveroo, which raised £210m, and Citymapper, which secured a near-£30m injection of capital. London Mayor Sadiq Khan said: "Despite the Brexit vote, the capital continues to attract record levels of investment and remains the best place in the world to grow a business."

Reported in: Evening Standard, Independent I

ECONOMY

IMF raises UK’s growth forecast

The IMF has raised its forecast for the UK’s economic growth this year, following a better than expected economic performance since the Brexit vote. The IMF says it now expects the UK to grow by 1.5% this year, compared with the 1.1% it was previously forecasting. For 2018, the organisation's forecast for UK economic growth has now been downgraded, from 1.7% last October to 1.4% now. Its prediction that the global economy will grow by 3.4% in 2016, and 3.6% in 2018, is unchanged. IMF chief economist Maurice Obstfeld said: “In Europe, Britain's terms of exit from the European Union remain unsettled and the upcoming national election calendar is crowded, with possibilities of adverse economic repercussions, in the short and longer terms.”

Reported in: BBC News, Financial Times, The Guardian, The Times,    Independent I, Daily Mirror, The Independent, The Daily Telegraph

REAL ESTATE

Fifth of property firms in financial distress

Research from Begbies Traynor has found almost one in five companies in the British property industry are in financial distress, with estate agents hit particularly hard. Uncertainty caused by the EU referendum and higher stamp duty rates have been cited as factors which have added to pressures on the industry in recent months. London estate agent Foxtons has revealed its total revenues for the year were down more than 10% as a result of a “significant fall” in sales volumes.

Reported in: The Daily Telegraph

OIL & GAS

Cairn Energy eyes eventful 2017

Cairn Energy is eyeing an eventful year as it looks to start production in the North Sea and plans more drilling off the coast of west Africa. With net cash of $335m (£276m), the Edinburgh-based oil and gas explorer said it was fully funded for its capital commitments and continues to look at new opportunities to add to its portfolio of interests.

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