Amazon provokes fury as it dodges new online tax

Amazon’s decision to pass on the cost of the UK’s digital services tax to small businesses selling on its platform has led to dismay from vendors. The tech giant will raise the price British firms pay to sell on its website by 2% next month. Federation of Small Businesses chairman, Mike Cherry, said: “Government and Amazon should work together to find a way to resolve this impasse and prevent millions of pounds of extra costs being imposed on the small firms who are only just starting to recover from the biggest crisis for generations. The tax is aimed at the profits of multinationals with large revenues. Passing the tax on to their small business customers will hurt them at the worst possible time.” Derek Cribb, chief executive of the Association of Independent Professionals and the Self-Employed, said: “Amazon could easily have absorbed the cost of the digital sales tax.” Meanwhile, Amazon chief Jeff Bezos has sold shares worth more tha n $3.1bn as part of a funding plan for his rocket company, Blue Origin.

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BoE warns lenders not to turn off credit taps

The Bank of England has argued that banks should keep lending or risk tipping the country into a worse slump. The warning comes amid concern the lenders could be tempted to turn off the credit taps this autumn in order to conserve capital. Threadneedle Street says businesses face a £200bn cash shortfall and require financial support. The Bank said: “While the number of corporate insolvencies has remained low to date, insolvencies are likely to increase. Some companies were vulnerable at the outset of the pandemic, and may become insolvent as a result of the shock.” It continued: “Others may face challenges to their long-term viability given structural change in the economy, some of which may have been accelerated or precipitated by the pandemic.” The BoE has also called for an inquiry into the resilience of markets and investors after they demonstrated a heavy reliance on extraordinary central bank support.

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Travelex cuts more than 1,300 UK jobs in rescue deal

Foreign exchange provider Travelex will shed more than 1,300 UK jobs as part of a rescue deal to stay afloat. PwC orchestrated a pre-pack sale of certain UK entities, which have been bought by a newly created company controlled by its lenders, saving 1,800 jobs across the country. Toby Banfield, joint administrator at PwC, said: “The completion of this transaction has safeguarded 1,802 jobs in the UK and a further 3,635 globally, and ensured the continuation of a globally recognised brand. Unfortunately, as the majority of the UK retail business is no longer able to continue trading, it has regrettably resulted in 1,309 UK employees being made redundant today.”

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Andrew Bailey backs end of furlough scheme

The Governor of the Bank of England, Andrew Bailey, has backed the Government’s decision to end its furlough scheme in October telling the BBC that it was important that policymakers helped workers “move forward” and not keep them in unproductive jobs. Mr Bailey said: “It’s been a very successful scheme, but [the Chancellor, Rishi Sunak is] right to say we have to look forward now. I don’t think we should be locking the economy down in a state that it pre-existed in.” In its latest Monetary Policy Report, the Bank said unemployment is expected to almost double from the current rate of 3.9% to 7.5% by the end of the year as government-funded support schemes come to an end. Workers are likely to see their pay frozen while in many cases “bonuses have been scaled back or withdrawn altogether for this year.”

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Banks limiting branch use as pretext for closures

The Times’ Andrew Ellison claims UK banks are using the coronavirus crisis as an excuse to close more branches. He says reasons given for maintaining limited opening times don’t hold water and he suspects the real motive is a desire to shift more customers onto digital services. But many, says Ellison, particularly the elderly and small business owners, rely on their local bank. “If banks really had their customers at heart, they would be back working nine to five.”

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UK business presses for more support on local lockdowns

Business groups including the CBI and the FSB are calling on more support for businesses hit by local lockdowns, including extending the furlough scheme and help with planning.

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Business rates appeals rocket by nearly 700%

Figures from the Valuation Office Agency show business rates appeals surged by 690% over the past quarter as property owners claimed values had been slashed in the face of the coronavirus lockdown restrictions. Government data show 144,910 shops, pubs, restaurants, offices, factories and public sector buildings filed appeals in the three months to June. This compared with just 18,340 checks reported over the same period last year. Experts say the “tsunami” of challenges would cause a 17-year backlog if appeals are dealt with at their current rate.

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UK construction sector reports sharpest rise in almost five years

The IHS Markit/CIPS construction purchasing managers’ index rose to 58.1 last month from 55.3 in June, slightly above economists’ forecasts. The figures indicate a sharp rebound from April’s record low of 8.2, but despite the optimism, construction companies are shedding jobs at one of the fastest rates since the global financial crisis.

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BoE expects pandemic slump will be less severe than expected

The Bank of England has predicted the economic slump caused by COVID-19 will be less severe than expected, with a faster easing of lockdown measures and a “more rapid” pick-up in consumer spending helping the economy rebound faster than it had assumed in May. The Bank expects the UK economy to shrink by 9.5% this year – not as severe as its initial estimate of a 14% contraction. The UK economy is expected to grow by 9% in 2021, and 3.5% in 2022, and forecast to get back to its pre-Covid size at the end of 2021. The Bank held interest rates at 0.1%. The Monetary Policy Committee said it would not even think about raising interest rates until there was “clear evidence” the recovery had taken hold. Ruth Gregory, an economist at Capital Economics, expects the Bank to keep interest rates at 0.1% “or below” for “at least five years”.

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High street recovery remains a long way off

BDO ‘s High Street Sales Tracker shows in-store like-for-like sales fell 39.4% last month, compared to a gain of 0.1% a year earlier. Sophie Michael, head of retail and wholesale at BDO, said further job losses were predicted and that “recovery still looks a long way off”. She added: “The high street is crying out for a confidence boost but with the full impact of coronavirus on the UK economy yet to be realised, uncertainty will prevail for the foreseeable future.”

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Trump team outlines plan to crack down on US-listed Chinese groups

The US has issued proposals which will force Chinese companies to de-list from US stock exchanges unless they comply with US accounting standards and provide access to their audits.

Financial Times

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