NEWS – FRIDAY 24TH APRIL 2020
NEWS – FRIDAY 24TH APRIL 2020
EMPLOYMENT NEWS – FRIDAY 24TH APRIL 2020
Higher earners losing out under £2,500 monthly furlough cap
Higher earners placed on furlough are seeing a significant drop in their take-home pay, according to an analysis by Blick Rothenburg. A person earning £60,000 per year, the cut-off for receiving child benefit, will be £1,517 out of pocket during furlough, and a person with a salary of £100,000 would lose out on £3,550 per month, rising to £4,350 for someone bringing in £120,000 a year. A spokesman for the Chartered Management Institute, which has been offering advice on furlough to managers and employees, has said managers should do everything they can to ensure that furloughed staff are supported. “Changes in personal circumstances can affect individuals’ wellbeing and managers must be sympathetic and ‘manage with a human face’ as staff adapt to their new normal – whether that be a change in income or being furloughed”, he said.
SMEs NEWS – FRIDAY 24TH APRIL 2020
Emergency lending to small firms doubles
Figures from UK Finance show lending to small businesses has almost doubled on a week ago with banks now committing £2.8bn in emergency government-backed loans to British firms. Royal Bank of Scotland has approved £1.2bn, Lloyds has lent £335m, Barclays £586m and HSBC £480.5m. UK Finance said banks had so far approved 46% of 36,000 applications. However, businesses are still reporting difficulties in accessing loans with the British Chambers of Commerce calling for the process to be simplified ahead of a “crunch week”. Mike Cherry, of the Federation of Small Businesses, welcomed the improvement but said more disclosure was needed on why businesses were being turned down by banks.
Sunak bends to pressure for 100% guarantees on small business loans
Chancellor Rishi Sunak is on the verge of agreeing to provide 100% guarantees on loans of up to £25,000 to Britain’s smallest businesses, with a scheme possibly up and running next week. The change in stance comes after intense lobbying by Tory MPs, the CBI and the Bank of England.
PROPERTY NEWS – FRIDAY 24TH APRIL 2020
Retail landlords banned from aggressive rent collection
The UK government has temporarily banned landlords from using winding-up orders and aggressive debt recovery tactics against retailers and restaurateurs while the COVID-19 crisis continues. Business Secretary Alok Sharma said: “In this exceptional time for the UK, it is vital that we ensure businesses are kept afloat so that they can continue to provide the jobs our economy needs beyond the coronavirus pandemic.” Helen Dickinson, chief executive of the British Retail Consortium said: “We thank Alok Sharma for his swift action, which will give retailers some vital relief and help safeguard millions of jobs all across the country.”
CBI: Give every business a three-month rates holiday
The Confederation of British Industry (CBI) is calling on the government to give all companies a three-month business rates holiday – extending rates relief beyond the retail, leisure and hospitality sectors. Grants administered by councils should also be made available to more small businesses and larger ones outside the crisis-hit sectors, the lobby group added. Dame Carolyn Fairbairn, CBI director-general, said: “This is a race against time, and the only winning strategy is scale, speed and simplicity.”
TAX NEWS – FRIDAY 24TH APRIL 2020
Could a one-off tax on wealth solve Britain’s economic woes?
Writing in the Times, Ed Conway wonders whether a one-off wealth tax levied on everyone in the country could be the solution to paying off the costs of the COVID-19 pandemic. Although politically undesirable, a 10% levy on all household net wealth would generate over a trillion pounds of revenues, Conway claims, with the bulk of the tax “paid by those who have benefited most from the increase in asset prices over the past few decades”.
France bans firms based in tax havens from government aid
France has banned companies with their HQ in tax havens from access to the country’s COVID-19 emergency loan programme. Bruno Le Maire, finance minister, said: “If a company has its HQ or any subsidiaries in a tax haven, it will not be able to benefit from state aid.” France has already indicated that companies who buy back their own shares or pay dividends during the crisis will also be barred.
The Daily Telegraph, Business, Page: 2
CORPORATE NEWS – FRIDAY 24TH APRIL 2020
Blackmore Bond enters administration owing £45m
Blackmore Bond has appointed Geoff Bouchier and Benjamin Wiles of Duff & Phelps as joint administrators. The Manchester-based property investor issued mini-bonds to retail investors, with a minimum investment of £5,000. However, construction work appears to have been slow, leading to a cash crunch as sales and completions failed to materialise on time. Bondholders have not had their promised quarterly coupon payments since last October and around £45m remains trapped in the firm.
The Times, Page: 45 The Sun, Page: 47 Daily Express, Page: 47 The Daily Telegraph, Business, Page: 1
Wahaca brings in PwC
Mexican-themed dining chain Wahaca has appointed PwC to help consider its options while restaurants remain shut. Most of the firm’s 1,000 staff have been furloughed.
The Times, Page: 42 The I, Page: 48
PENSIONS NEWS – FRIDAY 24TH APRIL 2020
Pension rules to be suspended for public sector workers coming back to fight coronavirus
Economic secretary to the Treasury John Glen has said that rules applying a tax charge to pension income for recently retired workers aged between 50 and 55 are to be relaxed for all public sector pensioners returning to work to assist in the coronavirus emergency. The move builds on an earlier ruling nullifying the charge for nurses and doctors. Retirees who receive a pension but return to work and earned a salary on top can be pushed into higher income tax bands. This usually triggers an “abatement”, which is a pound for pound reduction in the pension if their new earnings exceed their pre-retirement NHS salary.
ECONOMY NEWS – FRIDAY 24TH APRIL 2020
Business activity collapses amid lockdown
Business activity has collapsed at its fastest rate on record, according to fresh data from IHS Markit and the Chartered Institute for Procurement and Supply, a rate “previously thought unimaginable” amid the widespread shutdowns in response to the coronavirus outbreak. The composite reading fell from 36 last month to 12.9 for April, with services taking a particularly big hit, prompting Gertjan Vlieghe, a member of the Bank of England’s Monetary Policy Committee, to warn that the UK economy is experiencing the fastest and deepest contraction in “the past century or possibly several centuries.” However, Mr Vlieghe said the central bank was in control of monetary policy and could take steps to control inflation, adding that the priority “is to return the economy to that pre-virus trajectory as soon as possible”.
UK Treasury to quadruple borrowing to £180bn over next quarter
The UK government is seeking to raise £180bn over the next three months, to allow it to meet its spending needs as tax revenues plunge amid a severe economic contraction.
OTHER NEWS – FRIDAY 24TH APRIL 2020
Eurozone activity slumps to record low
The eurozone has suffered the steepest fall in business activity and employment ever recorded due to measures introduced to prevent the spread of COVID-19, according to data from IHS Markit. The EU’s economy is on course to shrink by 7.5% this quarter with Chris Williamson, chief business economist at IHS Markit, describing the slump as “ferocious” and surpassing “that thought imaginable by most economists.” Laurent Millet, manager of the Artemis European equities fund, commented: “We are increasingly worried about the absence of a euro-wide fiscal response to coronavirus. Without strong solidarity between European governments, the risk of a financing crisis is real.”
Contact Paul Southward