Chancellor may rue corporation tax hike

Paul Johnson, the director of the Institute for Fiscal Studies, writes in the Times that Rishi Sunak’s hike in corporation tax is unlikely to raise the additional £17bn a year that the chancellor is banking on. Indeed, the proposed increase could reduce foreign direct investment by 5% from 2023, says Professor Michael Devereux of the Oxford University, with a considerably bigger negative effect on investment overall. This, asserts Johnson, will push down wages and living standards over the long run.

The Times, Page: 37

Bootle: Let’s prove forecasters wrong and aim for tax cuts

Chairman of Capital Economics Roger Bootle says in the Telegraph that figures for the economy so far this year are better than expected and if forecasts from the OBR prove over pessimistic (and the Government should make sure they are just that) then the Budget’s raft of tax increases may yet turn out to be unnecessary. “In that case, the Chancellor would be in a good position to rescind them and even to introduce some judicious cuts before the next election.”

The Daily Telegraph, Business, Page: 4

Higher taxes urged for Scots earning more than £40,000

The think tank IPPR Scotland has called on the next Scottish government to hike taxes for anyone earning more than £40,000 a year to avoid having to make spending cuts. IPPR is proposing to add about £260 a year to the income tax bill for higher rate taxpayers and reduce the threshold at which that rate becomes payable to £40,000. If those changes are carried out, it estimates that by 2024/25 they would be bringing in an additional £700m annually for Holyrood.

The Times


Government under pressure to strike EU deal for the City

The Telegraph’s Lucy Burton reports on bankers’ expectations ahead of an outline memorandum of understanding set to be drawn up between the UK and the EU on financial services at the end of this month. Whatever the outcome, EY‘s financial services head Omar Ali says, the risk of fragmentation in the sector is high, which is “bad for all users of financial services, not just in the UK.” Although the City has not yet experienced the predicted exodus of banking talent, if there is not some sort of equivalence without the threat of it being removed after only 30 days, bankers earmarked to relocate are unlikely to stay put, one bank executive said.

The Daily Telegraph, Business, Page: 2


Lockdown drives up number of new breweries

The number of breweries in the UK increased by more than 200 last year despite the impact of the virus crisis on pubs and bars, according to a new report. UHY Hacker Young said there were now more than 3,000 breweries across the country. The firm’s James Simmonds said: “Growth in breweries during a very difficult period for the drinks industry is a positive sign. Entrepreneurs clearly feel confident in the prospects for a bounce back once pubs and bars can open again. People’s appetite for trying new beers from different breweries has contributed to the long-term rise in new breweries being set up. The sector hasn’t fallen into the trap of discounting. With the closure of pubs and bars, smaller breweries have had to adapt to direct-to-consumer models.”

The Times, Page: 11 The I, Page: 40 Daily Express, Page: 46


Graduates jostle in an overcrowded jobs market

University leavers in 2021 are facing a really tough jobs market, says EY’s Hywel Ball, who adds that applications for the firm’s graduate trainee programmes are up by 50% compared to February 2020.

Financial Times, Page: 21


Climate plans of big companies need substance

Andrew Edgecliffe-Johnson says PwC data showing climate change as a low-level threat for CEOs illustrates the need for more consistent ESG reporting and for directors to be held accountable for progress on ESG goals.

Financial Times


Lifetime ISA could serve young high earners well

Jessica Beard details in the Telegraph how young high earners could start targeting Lifetime Isas as they attempt to skirt restrictions on the pensions lifetime allowance, which the Chancellor has just frozen. Tom Selby of AJ Bell said: “For those who qualify, the Lifetime Isa will be an obvious starting point as it benefits from a 25% bonus and tax-free withdrawals for a first home worth £450,000 or less, or from age 60.” Anyone in their 30s who thinks they may breach the lifetime allowance should consider opening a Lisa with a small contribution while they can, Mr Selby added.

The Daily Telegraph


Domestic demand brings cheer to manufacturers

A report from Make UK and BDO has revealed that domestic orders have risen in the first quarter of the year, helping to offset the impact of the COVID-19 crisis and Britain’s departure from the EU single market. A net balance of 9% of respondents said that they had increased output during the period, up from -5% in the previous quarter. The outlook for the coming months is even brighter, with a positive balance of 15% of respondents expecting output to grow. Stephen Phipson, chief executive at Make UK, said: “After the seismic shock to the sector last year, manufacturers are now beginning to move through the gears and accelerate into recovery as demand at home increases and major markets begin to pick up.”

The Times, Page: 36 Daily Express, Page: 46

Post-pandemic QE carries inflationary risks

Liam Halligan considers the effect on inflation of the UK Government’s ongoing quantitative easing programme, In his Telegraph column he differentiates between post-financial crisis QE which mostly circulated between the Bank of England and the banks; although it later served to keep asset prices up, it wasn’t inflationary in the way QE from the past year has the potential to be, says Halligan, with vast sums having been pumped out to businesses and households. Although lockdown means they aren’t spending much for now, they will, he contends. With the Chancellor and Bank of England Governor failing to outline an exit plan from QE, we must assume they intend for it to go on indefinitely, concludes Halligan.

The Daily Telegraph


Janet Yellen says Biden has yet to decide on a wealth tax

US Treasury Secretary Janet Yellen told ABC’s “This Week” program on Sunday that the Biden administration had yet to decide on whether to impose a new wealth tax. The comments follow a recent study by Oxfam showing billionaires such as Jeff Bezos, Mark Zuckerberg and Elon Musk had seen their fortunes spiral since the beginning of the pandemic. Ms Yellen said Biden “hasn’t proposed a wealth tax, but he has proposed that corporations and wealthy individuals should pay more in order to meet the needs of the economy, the spending we need to do.” She went on to forecast only a small risk of inflation as a result of stimulus spending.

Daily Mail

Contact Paul Southward

Paul Southward