Cullinane: How will we cover the cost of the coronavirus bailout?

Writing in the Independent, John Cullinane, the tax policy director at the Chartered Institute of Taxation, wonders how we will ever pay back the immense borrowing undertaken to keep the economy afloat during the coronavirus pandemic. Cullinane provides a succinct history of debt control in Europe from the C19 to present, and the role tax policy played. He points to wealth taxes as a current focus for some, but goes on to speculate on whether we need to worry about paying the debt at all: “If people simply save the money that they would have spent on meals out, and everything else foregone during lockdown, then these excess savings would balance the Government’s excess spending – there is no sign of inflationary pressure, and it’s not as if the Government has to pay much interest.”

The Independent, Page: 35

Treasury denies plans to scrap Digital Services Tax

Reports over the weekend that the Government could drop the Digital Services Tax have been dismissed by the Treasury. The Mail on Sunday claimed the tax was about to be scrapped as it was hampering negotiations with US trade officials while bringing in only £500m a year. One source told the Telegraph the claims were “rubbish” while an official statement read: “We’ve been clear the Digital Services Tax is a temporary tax that will be removed once an appropriate global solution is in place – and we continue to work with our international partners to reach that goal.”

The Daily Telegraph, Business, Page: 1


Ex-NMC Health and Finablr bosses face fraud claims

A report seen by the Telegraph alleges that as many as 17 people including the former chief executives of NMC Health and Finablr siphoned cash out of the companies by forging documents. A report prepared by advisers for Bavaguthu Raghuram Shetty, the firms’ founder, accuses Prasanth Manghat, the former chief executive of NMC Health, and his brother Promoth, who led payments firm Finablr, of embezzling millions of UAE dirhams. Administrators at NMC Health told creditors they are preparing legal claims against people who they believe committed or facilitated fraud, but their findings may not align with the aforementioned report. Several investigations are ongoing in the UK and in the United Arab Emirates, where Mr Shetty is the subject of a criminal complaint.

The Daily Telegraph


City employers plan for lasting switch to remote working

The FT reports on how banks, asset managers, insurers and accountants in the City of London are expecting to spend far less time in the office in the future.

Financial Times, Page: 1


A poorer retirement is pandemic’s hidden legacy

An FT editorial says the coronavirus crisis has brought longstanding problems with pensions to the surface and workers will now have to live with lower returns from their pensions.

Financial Times


A quarter of listed financial services companies issued alerts this year

Research by EY reveals that UK-listed financial services companies have issued more profit warnings so far this year than in the whole of last year. Forty-two were issued in the first seven months of 2020, with 36 of these citing the effects of the pandemic. Retail-focused companies such as banks, finance and credit services and non-life insurers were suffering the worst, with 50% issuing alerts, while investment banking, brokerage firms and asset managers fared better with 15% of such companies issuing warnings. Tom Groom, UK head of financial services strategy at EY, said: “Since the financial crisis, banks, asset managers and insurers have all built up strong reserves and largely entered this period of economic challenge in a position of capital strength, but no sector has been immune, and the uptick in listed financial services firms issuing profit warnings is concerning.”

The Times, Page: 35


COVID-19 crisis demonstrates how essential management consultancy services are

Tamzen Isacsson, the chief executive of the Management Consultancies Association, explains in a piece for the Telegraph how the coronavirus crisis has shown how essential management consultants are. She points to how consultants have helped both public and private organisations with rapid digital transformation, cost cutting, supply chain repairs and other organisation developments whose change was accelerated by the pandemic. “If you ever thought that management consultancy services were simply a “nice to have”, the COVID-19 crisis has shown how they are essential – a “must have” if organisations are to achieve their goals quickly and effectively.”

The Daily Telegraph, Business, Page: 2

Restructuring experts prepare for fresh wave of UK company failures

The FT reports on how specialists across accountancy, investment banking and law are preparing for a fresh wave of corporate distress in the autumn, when government furlough and loan schemes come to an end.

Financial Times, Page: 11


Global dividends suffer worst quarterly fall since 2009

A report from Janus Henderson shows global dividend payments plunged by a fifth in the second quarter of the year – a $100bn drop which is the worst fall since 2009. The fund manager said that in the best-case scenario, it expected dividends to fall by 19% on an underlying basis this year, or 25% in its worst-case. It had previously forecast falls of up to 35%. “Despite the cuts witnessed so far, we still expect global dividends to exceed $1trn this year and next,” said Jane Shoemake, investment director for global equity income. The UK was one of the worst affected countries with over half of UK-listed companies cutting their payouts or cancelling them entirely, dragging total dividends paid in the quarter to $15.6bn, 54% lower than the same period a year ago. Of the countries with major stock markets, only France and Spain suffered steeper declines.

Financial Times The Daily Telegraph The Times, Page: 35 The Guardian, Page: 29 Daily Mail, Page: 62

Eurozone industry fears rebound from virus crash will be short lived

Economists fear a resurgence for manufacturing over the summer will fizzle out as pent-up demand is fulfilled and confidence remains depressed by the coronavirus pandemic.

Financial Times, Page: 6


Pandemic shows US must make vital products at home

Kevin McCarthy, the Republican leader of the US House of Representatives, explains in the FT how tax reforms will help re-shore production of medicine and technology back to the US. Elsewhere, the Times cites a report from Bank of America which estimates the cost of re-shoring all foreign manufacturing (intended for export) from China at $1trn, describing the cost as “significant but not prohibitive”. The pandemic, fears of a US-China trade war, and a shift to stakeholder capitalism have all accelerated plans for re-shoring, analysts said, adding that governments will be expected to encourage re-shoring through tax breaks and other subsidies while manufacturers will attempt to offset costs with more automation.

Financial Times, Page: 23 The Times, Page: 39

Contact Paul Southward