NEWS – THURSDAY 28TH MAY 2020
NEWS – THURSDAY 28TH MAY 2020
TAX NEWS – THURSDAY 28TH MAY 2020
Tories to stick to manifesto commitments on tax, says Johnson
While taking questions from MPs yesterday on the government’s response to the coronavirus pandemic, Boris Johnson said the Conservatives would not be “blown off course” when it came to sticking to manifesto commitments on tax. The Tory party promised not to raise the rates of income tax, National Insurance or VAT, and to maintain the “triple lock” on pensions. Mr Johnson said his instinct is to “keep taxes as low as we conceivably can” but added that he did not want to “anticipate now what we’re going to do on our economic package.”
HMRC widens powers to seize illicit funds in banks
HMRC has increased its use of account freezing orders and their associated account forfeiture orders as part of the tax authority’s campaign to crack down on illicit financing.
FINANCE NEWS – THURSDAY 28TH MAY 2020
France overtakes UK to take foreign investment crown
The latest attractiveness survey from EY reveals that the UK has lost its crown as Europe’s top destination for foreign investment for the first time in 22 years after being overtaken by France. Despite this, Britain attracted almost a third of all overseas digital technology investments across Europe last year, more than France and Germany combined. The survey also found that with Brexit transforming global economic ties, the US superseded the EU last year as the UK’s biggest source of foreign investment. EY also found that less than a quarter of investors regarded Brexit as a risk factor, down from 38% last year. Separately, research by Refinitiv shows British companies seeking venture capital enjoyed their best first quarter on record, generating £2.1bn through 137 deals, down slightly on the final quarter of 2019, when 132 deals raised £2.4bn.
EMPLOYMENT NEWS – THURSDAY 28TH MAY 2020
Furlough figures reach new high
Government figures reveal that the number of jobs furloughed under the government’s coronavirus scheme has reached a new high of 8.4m, alongside 2.3m self-employed. The figures were released as Chancellor Rishi Sunak prepares to bar firms from furloughing more workers, and to outline how much employers will have to pay towards workers’ wages from August. Tej Parikh, chief economist at the Institute of Directors, remarked: “While the Treasury is keen to reduce its spend on the scheme, for firms that have tried to hold off using it and may now need to, this will be a bitter pill to swallow.” Craig Beaumont of the Federation of Small Businesses noted: “The vast majority of employers registering for the scheme are SMEs. These struggle with changes, so any ending should be announced in advance so they have time to plan, including those who are entering the scheme now as their business enters difficulty.”
UK hiring sentiment may be turning around
The Recruitment & Employment Confederation’s Business confidence measure rose to -10 from -21 in April with short-term demand for permanent staff improving to -5 from -9. “Coronavirus has caused a huge slowdown in the labour market, but this data indicates that the worst could be behind us,” REC chief executive Neil Carberry said. Separately, the Institute of Directors has warned that companies using the government’s furlough scheme would struggle to contribute to the salaries of furloughed workers from August, raising fears of job losses.
INDUSTRY NEWS – THURSDAY 28TH MAY 2020
Service sector suffers steep drop in optimism
The CBI’s quarterly review has found confidence in the services sector is declining at a record pace with companies struggling with declining sales, mounting costs and weak cashflow. Optimism about the general business situation slumped to -79% among business and professional services firms, the worst figure since the financial crisis. The index for consumer services firms fell to a record low of -86%.
The Times, Page: 32 Yorkshire Post, Business, Page: 6
SMEs NEWS – THURSDAY 28TH MAY 2020
Small firms borrow over £18bn under government scheme
A total of £27.5bn in emergency lending has been provided to more than 650,000 businesses by banks, according to Treasury figures. Over £18bn was borrowed by SMEs through the government-guaranteed Bounce Back Loan Scheme (BBLS), while the Coronavirus Business Interruption Loan Scheme (CBILS) has lent £8.15bn so far. Lenders have approved around 50% of loan applications under CBILS so far, while the BBLS scheme has an approval rate of 79%. The figures were published as research from the Association of Chartered Certified Accountants and the Corporate Finance Network found that one in four companies claim to be unable to access enough cash to survive another two weeks of lockdown.
The Times, Page: 32 Daily Mail
SME representatives urge Chancellor not to proceed with furlough ban
The Chancellor has been urged not to ban firms from placing more staff on furlough, with Michael Lassman, London chairman of the Federation of Small Businesses, commenting: “It’s been a lifesaver for many small businesses, there’s no two ways about it, and if they need to they should be able to continue to access it. If there’s a cut-off that applies too soon that is going to be a concern.” This comes as Rishi Sunak prepares to make announcements on the future of the scheme, including outlining how much firms will have to contribute towards employee wages from August.
PERSONAL FINANCE NEWS – THURSDAY 28TH MAY 2020
Homeowners warned against extending payment breaks
UK Finance has written to the Financial Conduct Authority to warn that it would not be in the best interests of homeowners to allow borrowers to extend a three-month holiday on repayments to up to six months. The trade body said, “around 60% to 70% of customers can demonstrate affordability to resume full payments at the end of their current payment deferral”. There are concerns borrowers could run into difficulties when faced with the bigger interest bills while banks worry they will be accused of failing to provide enough information when customers sought an extension, leading to a rush of complaints.
PENSIONS NEWS – THURSDAY 28TH MAY 2020
Pension bodies release guide to steer public through savings crisis
The Department for Work and Pensions, the Financial Services Compensation Scheme, the Pensions Regulator, the Financial Conduct Authority, the Money and Pensions Service, the Pensions Ombudsman and the Pension Protection Fund have collaborated to produce a Q&A guide for savers detailing all the protections that are in place to shield savers from financial harm during the pandemic. Guy Opperman, the pensions minister, said: “We’re doing whatever it takes to ensure people are supported through these unprecedented times and this guide is a useful addition to the measures pension bodies have already taken to assist savers.”
WEALTH MANAGEMENT NEWS – THURSDAY 28TH MAY 2020
M&G buys adviser platform from Royal London
Fund manager M&G has agreed to acquire £14bn-in-assets adviser platform Ascentric from insurer Royal London, allowing M&G to sell its funds and insurance products to more retail savers. M&G is also pressing ahead with a bumper £410m cash return to its shareholders, despite regulatory scrutiny of dividend payments. John Foley, chief executive of the insurance and fund management business, said that it would “do the right thing by our shareholders” by following through with both its ordinary and special payouts.
Goldman delays digital wealth management push
Goldman Sachs has opted to delay a push into digital wealth management because of the coronavirus pandemic.
Financial Times, Page: 8 The I, Page: 40
ECONOMY NEWS – THURSDAY 28TH MAY 2020
Bailey: BoE’s pandemic measures are working
Writing in the Guardian, the governor of the Bank of England, Andrew Bailey, says Britain is entering the second phase of the coronavirus crisis with the lockdown lifting gradually and businesses starting to open up again. “There are reasons to believe that economic activity will return at a faster pace than in many past recessions, but this depends on how the measures continue to be eased, what degree of natural caution is shown by people, and how much longer term damage is done to the economy. The risks are undoubtedly on the downside for a longer and harder recovery.” The measures taken by the Bank were working, adds Bailey, who continues: “The Bank stands ready to do whatever we can to help UK firms and households in this economic disruption and get through this together. This is our duty.”
The Guardian, Page: 31
Scottish firms concerned about post-coronavirus prospects
Research carried out by think tank Scotianomics has found that 61% of Scottish firms fear they will go bust as a result of the coronavirus pandemic, despite support from the government. Gordon MacIntyre-Kemp, director of Scotianomics, commented: “After extensive analysis of the results, we have suggested a series of innovative and forward-thinking suggestions on how to rebuild Scottish business confidence. We are urging the Scottish government to consider these very seriously. If they act on these suggestions, we believe Scottish business and the economy will snap back quicker and more effectively than in many other countries.”
OTHER NEWS – THURSDAY 28TH MAY 2020
Coronavirus accelerates shift away from cash
The FT considers the effect of the coronavirus on cash, with more businesses moving to contactless payments and concerns raised over remote locations losing their access to coins and notes.
Contact Paul Southward