US looks to suspend global tax talks

The US has called for negotiations over a new law to allow European countries to tax the profits of large American technology firms to be suspended. In a letter to finance ministers including Chancellor Rishi Sunak, US treasury secretary Steven Mnuchin said: “This is a time when governments around the world should focus their attention on dealing with the economic issues resulting from COVID-19.” The letter, which was also addressed to French economy minister Bruno Le Maire and the finance ministers of Italy and Spain, said discussions over a global agreement that would allow countries to tax profits made in their jurisdictions had reached an “impasse”. Mr Mnuchin also reiterated that the US “remains opposed to digital services taxes and similar unilateral measures “. He warned: “If countries choose to collect or adopt such taxes, the US will respond with appropriate commensurate measures.” The Treasury said yesterday that the UK intended to press ahead with its own digital services tax, which is already enshrined in British law.

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Consumers prefer fair tax retailers

A poll for the Fair Tax Mark campaign shows that four in five consumers would prefer to give their custom to a retailer that is paying its fair share of tax. The survey of 2,000 people shows that a proportion want firms benefiting from Government support amid the coronavirus crisis to be forced to agree to terms prohibiting tax avoidance. Fair Tax Mark’s Paul Monaghan said: “The public want businesses to prove that we’re in this together.” Commenting on the findings, the Treasury said: “HMRC will tackle any business that doesn’t pay its fair share of tax.”

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Half of firms expect post-furlough job losses

A YouGov poll shows that half of businesses say they will have to reduce their workforces within three months of the furlough scheme ending. Of 503 business leaders surveyed, 34% said they would not lay any staff off, while 21% said they would cut 10 or more jobs. The study also found that 48% of bosses said the Government’s response to COVID-19 in regard to business has been good, compared to 38% who said it has been bad. While eight in ten respondents expect the economy to be in worse shape in a year than it was before the pandemic, six in ten believe their own business will be in the same condition or better than it was before the coronavirus crisis.

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One in three furloughed staff told to work

A survey by Crossland Employment Solicitors shows that a third of furloughed employees have been asked to carry out work while receiving funds under the Government’s coronavirus job retention scheme. Despite ministers warning that employers would be committing fraud if staff were made to work while furloughed, the poll saw 34% of respondents say they had been asked to return to work. A third of furloughed employees had been asked to carry on doing their usual job, with 29% asked to undertake more administrative tasks and a fifth asked to either cover someone else’s job or to work for a company linked to their employer while on furlough. HMRC says that as of June 14, it had received 3,079 reports of fraudulent furlough-related claims.

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PMI uptick points to optimism

NatWest’s Small Business PMI suggests optimism is increasing, with the index, which monitors output at small private sector firms in the services, construction and manufacturing industries, rising from 14.6 in April to 26.3 in May. NatWest’s principal economist Stephen Blackman said the uptick shows that “at least, the worst should be behind us.” He notes that while over a third of firms in services expect a further reduction in activity this year, fewer firms now anticipate a reduced workforce than they did in April. Mike Cherry, national chair of the Federation of Small Businesses, has urged the Government to deliver fresh support for small firms “as they evolve and adjust to the new norm.”

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Nationwide increases minimum deposit

Nationwide has announced that it will only lend to borrowers with a deposit of at least a 15%, scrapping its deal for those with 10% of the property’s value amid concerns about falling house prices in the wake of the coronavirus crisis. Nationwide, which before the pandemic offered loans where a deposit of just 5% was needed, said the change, which is due to ” unprecedented times and an uncertain mortgage market”, is “prudent”. It added that the 85% loan-to-value (LTV) ceiling will help protect borrowers from potentially slipping into negative equity. It also noted that the existing mortgage customers will still be able to obtain loans at up to 95% LTV.

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Boohoo secures Oasis and Warehouse

Online fashion retailer Boohoo has snapped up the Oasis and Warehouse brands, saying it will pay £5.25m for the online businesses and intellectual property of the two brands from Hilco Capital, which acquired them out of administration in April.

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Inflation sinks to four-year low

A record fall in fuel prices pushed the UK’s inflation rate down to 0.5% in May, the second full month of the coronavirus lockdown. This means inflation, which was 0.8% in April, remains below the Bank of England’s target of 2%. Fuel prices declined by 16.7% during May, the Office for National Statistics (ONS) said, dragging the Consumer Prices Index to the lowest level since June 2016. The lockdown has forced the ONS to change the way it collects data on prices as social distancing means that statisticians have to rely to a greater extent on online prices. Jonathan Athow, deputy national statistician at the ONS, said: “The growth in consumer prices again slowed to the lowest annual rate in four years.” Samuel Tombs, chief UK economist at Pantheon Economics, says headline inflation is set to fall even closer to zero in the coming months.

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BoE expected to boost QE

The Bank of England is expected to increase its asset purchase programme by at least £100bn today, as the central bank ramps up quantitative easing to shore up the economy. Economists also almost unanimously predict that the Monetary Policy Committee will keep the benchmark interest rate at a record low 0.1%.

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