News Roundup Wednesday 4th September 2019
News Roundup Wednesday 4th September 2019
Tax warning over Labour spending plan
Research suggests that Labour’s vow to boost government spending, end austerity and reverse most benefit cuts would come with large tax hikes. Leader Jeremy Corbyn has pledged £250bn of extra spending in the next decade under a Labour government but analysis shows that a separate pledge to cut public debt would mean tax increases would be required to provide the extra spending. The FT analysis suggests Labour would need to find at least £26bn in new tax rises to deliver its measures and live within its own budgetary rules. Deputy Conservative chairman Paul Scully said Mr Corbyn’s “ideological” plans would see “huge tax hikes for working people.” “From income tax to new taxes on homes, Labour would once again hit people in the pocket with a raft of tax raids,” he added. Meanwhile, Matthew Lynn in the Telegraph considers the impact a Labour government under Jerem y Corbyn and shadow Chancellor John McDonnell would have on the economy, noting that corporation tax would be increased to 26% from 19% and that the top rate of tax would be increased “and many more people would be swept up in its net”.
Extra tax payslip errors could affect millions
Up to 14.3m people have been asked to check their tax codes over concerns that they could be overpaying hundreds of pounds a year in tax. QuickBooks UK research indicates that 18% of employees (5.9m) don’t check their payslip each month, while 22m don’t think tax errors are their responsibility.
City bosses press Javid for cuts in tax and regulation
A group of bank and insurance executives have told Chancellor Sajid Javid that tax cuts are needed to ensure the prosperity of the City in a competitive global market after Brexit.
HMRC urged to clarify customs guidance
The Federation of Small Businesses (FSB) has called on HMRC to clarify Brexit guidance over concerns that existing advice is misleading. Letters sent to almost 90,000 companies which trade with the EU have added to uncertainty over Eori numbers – the customs identification code that businesses will need to continue trading with the EU if Britain exits the bloc with no deal in place. Many VAT-registered companies have been issued numbers by HMRC, but there remains confusion, with some unsure over whether they also need one from an EU country. While HMRC has indicated that the majority of traders would only need a UK Eori number, the correspondence seemingly contradicts this. Craig Beaumont, director of external affairs at the FSB, said: “At a difficult and confusing time, clarity of language and clear signposting for detail are both vital to help small firms prepare, and to provide reassurance. HMRC should rewrite these letters and send out a fresh batch, clarifying that most people will not need a second EU Eori number as well as a UK one.”
Debenhams’ CVA back in court
The legal battle between Debenhams and retail tycoon Mike Ashley has gone to the High Court in London, with the department store chain defending its store closure plans. Mr Ashley, who runs Sports Direct and House of Fraser, is financially backing the landlord, Combined Property Control Group, which objects to Debenhams’ plan to close 50 stores and pay reduced rents on 100 others through a CVA. Tom Smith QC, for Debenhams, said there are concerns that Sports Direct is funding the case because it wants to “drive Debenhams into administration so that it can pick up its assets on the cheap”. The department store chain has lined up Deloitte should the case not fall in its favour. Elsewhere, the FT’s Kate Burgess looks at issues at Sports Direct, including the delayed publication of its full-year results and Grant Thornton’s resignation as auditor.
FINANCIAL SERVICES NEWS
Ireland approves over 100 firms
Central Bank of Ireland deputy governor Ed Sibley has revealed that more than 100 financial services firms that applied to set up or extend operations in Ireland because of Brexit have been authorised to do so. He said: “We’re well over 100 authorisations or authorisations in principle where we’ve said you’re authorised subject to certain conditions, for instance putting capital in,” adding “We still have a number of applications that are in train.”
PERSONAL FINANCE NEWS
NS&I slashes savings rates
National Savings and Investments has pulled its one and three-year fixed-rate savings products from general sale and reduced the rate for existing customers looking to renew their accounts. The savings provider has cut the rates on its Guaranteed Growth and Income Bonds by 0.25%, while it has also cut the rate on its Fixed Interest Savings Certificates by the same amount. NS&I said the cuts were due to the fact rates for similar products have fallen, while the measure it uses for raising finance for the Government was lower due to “exceptionally low” gilt yields. Sarah Coles, personal finance analyst at Hargreaves Lansdown, called the rate cut “incredibly disappointing for customers”, but accepted NS&I was “caught between a rock and a hard place.”
Daily Mail Financial Times, Page: 15
Manufacturing falls to seven-year low
The UK manufacturing sector fell to a seven-year low in August, sending the pound down against all of the major currencies. The purchasing managers’ index (PMI) produced by IHS Markit/CIPS fell to 47.4 in August, down from 48 in July. A figure below 50 indicates the sector is contracting. New orders fell at the fastest pace for seven years, and business confidence fell to its lowest level since the survey first began to track the measure in 2012. Rob Dobson, director at IHS Markit, commented: “High levels of economic and political uncertainty alongside ongoing global trade tensions stifled the performance of UK manufacturers in August. The global economic slowdown was the main factor weighing on new work received from Europe, the USA and Asia. There was also a further impact from some EU-based clients routing supply chains away from the UK due to Brexit.”
Sterling shaken by election talk
The pound fell to the lowest level in three weeks yesterday amid mounting speculation that a general election is on the horizon, sinking more than a cent against the dollar to $1.2050. Against the euro, it fell below the €1.10 mark after a dip of around 0.7%. Experts warn that political uncertainty is hitting the currency, with Michael Hewson, chief market analyst at CMC Markets, saying headlines that suggest an election could come sooner rather than later have put pressure on the pound, while Craig Erlam, senior market analyst at Oanda Markets, pointed to a “seriously eventful week in parliament” and commented: “I don’t think sterling volatility is going anywhere soon.”
Sales flat in August
Analysis from KPMG and the British Retail Consortium shows that retail sales flatlined in August, while like-for-like sales were down 0.5% from the previous year. August’s readings put total sales ahead of the average quarterly rate of minus 0.4%, but behind the annual average of 0.4% growth The 12-month average of 0.4% sales growth is the lowest on record. KPMG’s Paul Martin, said: “For much of the retail market, efforts are being focused on preservation, not growth, in this uncertain climate.”
The Times, Page: 40 Daily Express, Page: 51 The I, Page: 38 Yorkshire Post, Business, Page: 1 City AM, Page: 3
Sajid Javid appoints EY Brexit guru
Sajid Javid has appointed Mats Persson, EY’s Brexit strategy leader, as his new chief of staff. EY has confirmed that Mr Persson, who was once David Cameron’s primary adviser on EU affairs, left the firm last week.
Contact Paul Southward.