News Roundup Thursday 4th July 2019

NEWS ROUNDUP

TAX NEWS

Boris Johnson plans tax-free zones around UK

Boris Johnson has said he would like to see half a dozen free ports around the UK to help boost the economy after the UK leaves the EU. Freeports are tax-free zones that can be used by manufacturers to import parts and export goods without tariffs. “They have delivered around the world, there are about 130 countries who have them. We don’t because of our membership of the EU,” he said. Jeremy Hunt also backed the proposal, which was also welcomed by the Federation of Small Businesses, which said it “would be transformational for this society, whether you are a unionist, nationalist or neither”. The Telegraph notes that one study found that seven northern England zones would boost trade by £12bn and create 150,000 jobs. However, the UK in a Changing Europe think tank warned that such zones “provide a soil for misuse of competitive advantages and attract money laundering and tax avoidance activities.& rdquo;

The Daily Telegraph, Page: 8 The Daily Telegraph, Page: 17 The Times, Page: 6

Boris promises to review sin taxes

Boris Johnson has pledged to review levies on products high in salt, fat or sugar claiming they unfairly penalise low-income households. Treasury chief secretary Liz Truss and a Boris supporter backed the move: “We shouldn’t punish people on low incomes who want to enjoy a treat. Instead of taxing people we should be making it easier to live a healthy life. Bye-bye nanny state.” But the proposal contradicts key Johnson supporter Matt Hancock who says the sugar tax is effective and wants to expand it to include milkshakes.

The Times, Page: 6 The Daily Telegraph, Page: 1, 8 Financial Times, Page: 1 Daily Mail, Page: 2 The Sun, Page: 6 Daily Express, Page: 10 City AM, Page: 8

Hunt says he’ll save Scottish businesses £1,300 a year

Jeremy Hunt’s proposal to cut corporation tax to 12.5% would mean small businesses in Scotland making a profit of £20,000 would pay £1,300 less in tax than they do presently, his campaign team has said. Ahead of a leadership campaign trip through Scotland this week, Mr Hunt accused Nicola Sturgeon of creating an “antibusiness environment” and promised his plans would increase growth providing more cash for public services.

The Scotsman, Page: 9

FINANCIAL SERVICES NEWS

Cyber-incident reports from UK financial services soars

A Freedom of Information request to the FCA has revealed that there has been a sharp rise in the number of cyber-incidents reports by the UK’s financial services sector. The data revealed that the number of declared events rose from 69 in 2017 to 819 last year – a rise of more than 1,000%. Consumer banks accounted for nearly 60% of the reports submitted to the watchdog last year. The BBC contends that the spike is likely to have been driven by the introduction of the EU’s GDRP, which introduced an obligation on all organisations to report certain types of data breaches. RSM, which made the FoI request, added that it also reflected the fact that there had been an increasing number of attacks on the industry. Steven Snaith, RSM’s cyber-security specialist, commented: “One of the problems is that there are lots of freely available cyber-attack tools and knowledge that can be sourced online. There is current ly no legislation that makes possessing or developing these tools illegal and this is exacerbating the problem.”

BBC News

CORPORATE NEWS

Auditors raise red flag over Arriva

Auditors to one of the Arriva’s train operators believe plans by German owner Deutsche Bahn to sell off the business calls into question its ability to continue as a going concern. EY has inserted an “emphasis of matter” warning into its report on Arriva subsidiary Grand Central. The firm says Deutsche Bahn’s decision to explore options to sell Arriva “indicate the existence of a material uncertainty which may cast significant doubt about the company’s ability to continue as a going concern”.

The Daily Telegraph, Business, Page: 1

EMPLOYMENT NEWS

Tories must retrain workers at risk of automation

A report from Tory modernising think tank Onward is urging the next PM to introduce a retraining tax credit aimed at giving 1.5m low-skilled workers new skills and to target tax breaks and retraining investment at areas of the country which are the most deprived. Will Tanner, Onward’s director, says: “In responding to Brexit, leaving the EU is necessary but not sufficient. The next Conservative leader must also deal with the underlying drivers of political turbulence – and prepare Britain’s low-skilled workers and places for the coming wave of automation – if they want to stop Nigel Farage in his tracks.”

The Times, Page: 7

SMEs NEWS

OakNorth to double headcount following deal with Dutch bank

After sealing a deal to provide small business loan technology to Dutch lender NIBC Bank, British challenger bank OakNorth is on track to double its headcount. OakNorth, which helps SMEs secure debt finance, is in talks about providing its credit analysis and monitoring technology to around 10 other banks around the globe.

The Daily Telegraph The Times, Page: 39

Funding Circle shares plunge on revenue warning

Funding Circle has revised expected revenue growth down from 40% for the current year to 20%, causing its shares to fall 30% to a new record low of 115p. The peer-to-peer lender blamed economic uncertainty for lower demand for loans. Samir Desai, co-founder and chief executive of Funding Circle, said that by revising its guidance downwards the firm was “taking the prudent course of action for the long-term growth and development of our business”.

The Daily Telegraph The Times, Page: 38 Financial Times, Page: 18 The Sun, Page: 43 The Guardian, Page: 38 The Times, Page: 37

BREXIT NEWS

Hammond signals he will fight a no-deal Brexit

Philip Hammond has warned that a no-deal Brexit could cost the Treasury over £90bn a year as he signalled he would defy the new PM if they pursued no-deal as a policy. “I believe that it will be for the House of Commons, of which I will continue proudly to be a member, to ensure that that doesn’t happen,” he told MPs. A no-deal Brexit would consume the £27bn fiscal headroom and more, said Hammond, leaving nothing for long-term tax cuts or spending increases.

Financial Times The Independent The Times, Page: 8 Daily Mirror, Page: 4 The Guardian, Page: 1, 8 Daily Express, Page: 10

Trade war and Brexit risks may prompt intervention – Carney

Mark Carney said global trade tensions and a no-deal Brexit were growing risks to Britain’s economy. The Governor of the Bank of England said the threats meant the “rationales for action are broadening” prompting investors to increase their bets on a BoE interest rate cut. Mr Carney also warned that a new Cold War in trade would have a deep effect on the world economy. Elsewhere, Moody’s now believes the UK “would likely enter a recession” if it crashes out of the EU in a hardening of its view of the economic impact of a no-deal Brexit.

Reuters Financial Times, Page: 13 The Daily Telegraph The Guardian, Page: 37 Financial Times

ECONOMY NEWS

Construction output suffers steepest decline since 2009

The IHS Markit/CIPS UK Construction Purchasing Managers’ Index (PMI) fell to 43.1, down from 48.6 in May, the worst measure of output since April 2009 and far below the 50 level that indicates no change from the previous month. Political instability and concerns over the economy are blamed for the fall in activity. The three areas of the construction sector – housebuilding, commercial and civil engineering – all reported sharp falls in activity. “While the purchasing managers’ surveys can sometimes overstate economic developments at particularly good or bad times, it is hard to find anything of comfort in this release,” EY Item Club said in a comment.

Financial Times, Page: 3 The Times, Page: 40 The Daily Telegraph The Sun, Page: 43 The I, Page: 38 Daily Mirror, Page: 38 Daily Express, Page: 51 The Guardian, Page: 37 Daily Mail, Page: 65

Wages up in Scotland as costs tighten

Uncertainty over Brexit and the global economic slowdown have led Scottish businesses to put their investment and expansion plans on hold, according to the Scottish Chambers of Commerce. Wages are up over the past three months as companies vie to keep skilled workers while the majority of sectors also reported rising cost pressures from raw material prices. The findings are mirrored in the latest quarterly economic outlook from KPMG which also points to weak growth for the remainder of the year, driven primarily by depressed business investment as firms delay spending decisions.

The Scotsman, Page: 6, 32

Contact Paul Southward.

Paul Southward