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Business news summary 8th December 2016

TAX

Tax avoiders in Philip Hammond and HMRC’s line of fire

Tax advisers and their clients face closer scrutiny by HMRC in measures forming part of the Government’s criminal finances bill. The Treasury began consulting yesterday on how to identify schemes designed to evade tax with Jane Ellison, the financial secretary to the Treasury, suggesting businesses and individuals using complex offshore structures on their tax returns may be required to flag them to authorities. The Government revealed that anyone who had failed to correct past evaded taxes by September 30 2018 would be hit with new penalties and possibly criminal charges.

Reported in: Financial Times,The Times, Financial Times

Hancock rejects idea tech firms promised tax breaks

The Minister of State for Digital and Culture, Matt Hancock, has rejected suggestions the UK Government had convinced Facebook, Apple and Microsoft, which are putting new offices in the UK, to invest in the UK post-Brexit with promises of low regulation and special tax deals. Speaking at the TechCrunch Disrupt conference yesterday, he said: “Apple’s decision to invest in the old Battersea Power Station in a really big way, which came after Brexit, was about, 'Where do we build our European headquarters?’ It wasn’t about taking stuff away from anywhere else, it was about building for the future. And those decisions keep coming back to the UK.”

Reported in: The Daily Telegraph

OUTLOOK

Corporate deal making plummets

Official figures from the ONS have revealed that corporate deal-making has tumbled in the wake of the EU referendum as merger and acquisition nearly halved between July and September. The ONS said there were 140 successful £1m or more deals worth £34bn in the third quarter, against 278 worth £33.1bn in the previous three months.  

Reported in: The Independent

Financial sector struggles to find common vision for Brexit

The City is struggling to present a compelling vision for Brexit, with overlapping lobbying groups frantically trying to get their message across. Insiders say the industry needs to stop shouting and work with the Government to find an agreeable model.

Reported in: Financial Times

LENDING

Zopa puts retail investors on hold as borrowers dry up

The UK’s first and biggest P2P lender has temporarily stopped accepting new money from retail investors. Zopa said “current volumes” of money available for lending had resulted in a shortage of creditworthy borrowers. Repayments received from borrowers can still be reinvested.

Reported in: Financial Times, The Daily Telegraph

FINANCE

Lack of festive foresight costly

A study of 500 small business owners by independent finance provider LDF found one in 10 admit they have been caught off guard this Christmas, with 15% admitting that bad financial planning has put seasonal profit at risk. Lack of festive foresight could cost the UK economy over £342bn of seasonal income, LDF says. Peter Alderson, MD of LDF, said: "Our research found that business owners are starting their Christmas preparation and planning far too late in the year, and actually with more insight and financial investment they could maximise the Christmas period a lot more than they realise."

Reported in: Yorkshire Post

INVESTMENT

Investors ditch £1bn of shares

Savers pulled nearly £1bn out of share funds in October, according to the Investment Association. Experts said worries over the Chinese economy, the fallout caused by Brexit and Donald Trump's election as the next US president has made investors nervous.

Reported in: Daily Mail

EXPORTS

Farmers warned over currency relief

The farming industry could be plunged into another downturn after 2020, finance experts have warned, and farmers should plan for the benefits of the weak pound to be lost in the 2020 reform of CAP. The weak pound since the EU referendum has so far made exports more competitive and has boosted the value of this year's EU support payments by 16.5%, Old Mill reported, but HSBC’s Paul Blundell said the 2020 reforms mean farmers “must prepare for a future with "ambiguous government support".

Reported in: Yorkshire Post

MANUFACTURING

UK manufacturing sector growth slows

UK manufacturing sector growth slowed in November, according to the latest Markit/CIPS purchasing managers' index (PMI), which fell to 53.4 from 54.2 in October. "The concern is that higher costs may in time offset any positive effect of the weaker exchange rate, especially given that export order book growth has already waned markedly from September's five-and-a-half year high," said senior Markit economist Rob Dobson.

Reported in: The Times, Daily Express, The Guardian, The Independent   The Scotsman, The Herald

Small food firms waiting longer for payments

According to the Asset Based Finance Association (Abfa) small food manufacturers are waiting almost two months to receive invoice payments, with payment delays worsening over the past year. Abfa says more needs to be done to reduce delays, and that SME food manufacturers lack the bargaining power that their larger rivals hold. The Government estimates that around £26.8bn is owed to UK SMEs in late payments.

Reported in: Independent I

REAL ESTATE

Tax haven findings over foreign firms

Transparency International UK and Thomson Reuters analysis of Land Registry data shows 90% of the 23,653 overseas companies owning 44,022 land titles in London are registered in a tax haven. Of the land and property analysed, over half is divided between three areas: Kensington and Chelsea, Camden and Westminster. Transparency International’s UK Head of Advocacy, Rachel Davies, said: “It's clear that a transparent system, based on conclusive and publicly available data, is necessary to unmask the corrupt individuals using Britain to hide their criminality.”

Reported: Daily Mail, City AM

Stamp duty and Brexit sees prime home sales slump

Investment firm London Central Portfolio has recorded massive falls in prime transactions, blaming stamp duty changes and uncertainty over Brexit for deterring buyers. LCP estimates that stamp duty receipts would be down by £500m over the last six months while changes bringing properties owned by non-doms into IHT could take that to £1bn by the end of the tax year.

Reported in: Evening Standard London, The Guardian, Daily Mail, The Daily Telegraph

CONSTRUCTION

Construction PMI at eight-month high

Britain’s construction industry reached an eight-month high in November, but its costs rocketed at the fastest pace since 2011, fuelled by the pound’s slump after the June Brexit vote. The Markit/Cips UK Construction Purchasing Managers’ Index (PMI) went up to 52.8 from 52.6 last month, helped by improved readings for commercial and civil engineering activity, as well as growth in house building. Companies cited a resumption in projects delayed after the EU vote as a factor for the improvement, although optimism about the coming year remained near lows last seen in early 2013. Construction firms also increased their pace of hiring for a fourth month in a row, with jobs growth hitting a six-month high.

Reported in: The Times, The Daily Telegraph, Financial Times, The Guardian, The Independent, Independent I, Evening Standard, Daily Mail.   Daily Express

UK office construction forecast to slow

Property agent Savills has said that the Brexit vote will lead to a slump in office construction, with up to half of planned developments in central London likely to be postponed or scrapped in coming years. Savills is predicting a 4% fall in UK office prices next year, followed by a 1% drop in 2018. Thereafter it forecasts a slow return to growth, pencilling in price increases of 1.1% in 2019, 2.5% in 2020 and 3.2% in 2021. Meanwhile, the Bank of England has warned that the commercial property sector could pose a risk to financial stability, with foreign investors’ appetites waning since the Brexit vote.

Reported in: The Guardian,  Financial Times,  The Times

DISRUPTION

Atom Bank launches mortgage range

Atom Bank has started to offer residential mortgages. The digital-only challenger bank has launched a range of loan products through independent mortgage advisers, including for self-employed borrowers, first-time buyers, new-builds and shared ownership. It also plans to start offering buy-to-let mortgages soon. Mark Mullen, Atom’s chief executive, said established banks were “playing with people’s dreams” by making the home-buying process “so difficult”, and that the challenger would make securing a mortgage much quicker and easier.

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

EMPLOYMENT

 Robots could make millions redundant

Robots could put millions of Britons out of work, the Bank of England Governor, Mark Carney, has warned. In a speech at Liverpool John Moore’s University, Mr Carney said many jobs would be 'hollowed out' as huge technological advances meant roles could be automated instead, adding that “up to 15m of the current jobs in Britain” – almost half of the 31.8m workforce – could be replaced by robots over the coming years as livelihoods were “mercilessly destroyed” by the technological revolution.

Reported in: Daily Mail

Growing headcount rarely boosts productivity

Academics who studied 250,000 companies between 2008 and 2015 have highlighted a "fundamental contradiction" between jobs growth and improvements in productivity. The Enterprise Research Centre (ERC) noted that "overhiring" in pursuit of growth, a habit of fast-growing businesses, may deliver growth but often coincides with reduced productivity. ERC said only one in five companies that grow their headcount also manage to improve productivity and just 5% of companies managed to simultaneously increase their turnover, jobs and productivity.

Reported in: The Times

Pay gap persists

The Independent’s Felicity Hannah considers why a gender pay gap persists in the UK. She says the fact that women are far more likely than men to work in part-time roles remains a key factor. Ms Hannah also cites a report into female professionals, which revealed that women returning to the workforce after a career break lose out on an average of £4,000 each a year by entering lower-skilled roles.

Reported in: The Independent

START-UPS

Thriving UK start-ups fear US squeeze on talent

The FT reports on how small tech firms fear UK expansion by their larger US rivals combined with tougher immigration controls post-Brexit could harm their ability to attract skilled staff.

Reported in: Financial Times

Brexit threatens UK’s top spot for tech start-ups

A new report from venture capital firm Balderton has warned that the UK’s leading position in the European tech start-up industry could be threatened if Brexit makes it harder to attract foreign employees. The UK currently boasts about a third of all tech start-up employees in Europe, ahead of France on 19% and Germany 18%. However, tech companies fear this position could be at risk as the fall in the pound makes salaries in the UK less competitive and the Government is considering curbs on free movement of people. Some 82% of CEOs and senior staff at UK start-ups are worried about continued access to talent post-Brexit.  

Reported in: The Daily Telegraph 

ECONOMY

Economists: Single market withdrawal will hurt UK

Economists have told MPs on the Treasury Select Committee that Theresa May’s insistence that Britain should impose controls on freedom of movement means the UK will by definition leave the single market. Jonathan Portes, research fellow at the National Institute of Economic and Social Research, said single market withdrawal would inevitably result in negative consequences for the UK, a view shared by Dr Martin Weale, a professor in the Department of Political Economy at Kings College London. "Economists have talked for centuries about gains from trade, and empirical work that has been done shows that there are indeed gains,” he added.

Reported in: The Independent

ONS revises estimate of current account deficit

The ONS has revised down its estimate of the UK's current account deficit after identifying a “processing error” in the way it accounted for imports and exports of "erratic" goods. The full revisions show the deficit is £6.7bn smaller for 2015 and £3.3bn for the first half of this year. However, revised figures for the third quarter could wipe out this improvement. The ONS said the gap between imports and exports has widened in the three months to the end of September to £17bn, £5.9bn worse than initially thought.

Reported on: Sky News

TECHNOLOGY

Two fintech envoys for Scotland announced  

Economic secretary to the Treasury Simon Kirby has named two envoys to spearhead the development of the fintech sector in Scotland. They are David Ferguson, chief executive of financial services platform business Nucleus, and Louise Smith, head of design in personal and business banking at the Royal Bank of Scotland. The Scotsman notes that fintech is one of the fastest growing parts of the UK economy, contributing £6.6bn to GDP in 2015 and employing more than 61,000 people. After London, Scotland turns out the most fintech-related graduates in the UK, accounting for 12% of the annual pool of 97,000 graduates.

Reported in:The Scotsman

OIL & GAS

 Independent energy suppliers fall from power in face of big six

In the wake of the collapse of GB Energy, the FT details how the ability of the Big Six energy firms to use their financial muscle to hedge against wholesale energy price hikes has left small providers struggling to compete.

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