NEWS – THURSDAY 2ND JULY 2020

NEWS ROUNDUP

TAX NEWS – THURSDAY 2ND JULY 2020

OECD: US remains part of tax talks

The OECD has said the US is still taking part in discussions around a global digital tax, despite American officials suggesting the contrary. US treasury secretary Steven Mnuchin has said the US would pull out of talks if European countries did not halt their plans for independent digital taxes, while US trade representative Robert Lighthizer recently said the US was “no longer involved in the negotiations”. Despite these comments, OECD general secretary Angel Gurria yesterday insisted: “To be clear, contrary to some earlier media reports, the US has not pulled out of the negotiations.” Since the US suggested it was stepping away from talks, finance ministers from the UK, France, Italy and Spain have exchanged correspondence with American officials over the matter, with it suggested the European nations have offered to take a “phased approach” to their individual taxes so as to get US officials back around the table. Meanwhile, Mr Gurria has stressed the need for international agreement on a plan that will “ensure that a minimum level of tax will be paid, no matter how much clever tax planning is undertaken by multinationals.”

City AM Reuters

MPs call for digital tax amendment

A cross-party group of 22 MPs have called for an amendment to the Digital Services Tax that would force large technology companies to disclose country-by-country detail of their revenues and profits. Under the existing system, the information is disclosed to the taxman for all multinational companies but is not made public. In 2016, MPs voted in favour of releasing the information for all multinational companies so as to help tackle tax avoidance but the necessary legislation has yet to be brought forward.

The Times, Page: 33

Business bosses back online sales tax

A poll of company leaders suggests that business rates should be replaced with an online sales tax, with the majority backing the move. With many digital businesses prospering amid the coronavirus crisis and lockdown, BDO‘s Paul Falvey said it is “logical to pay tax based on online sales to help the economy recover”.

Daily Mirror, Page: 12

EMPLOYMENT NEWS – THURSDAY 2ND JULY 2020

UK firms cut 12,000 roles

More than 12,000 UK workers are set to lose their jobs after a number of firms announced plans to lay off staff over the past two days. Job losses announced include: up to 5,000 at Upper Crust owner SSP Group; 1,700 at plane-maker Airbus; 700 at Harrods; 600 at shirtmaker TM Lewin; up to 900 at management consulting firm Accenture; 300 across Virgin Money, Clydesdale Bank and Yorkshire Bank; Arcadia, whose chains include Topshop and Dorothy Perkins, is shedding 500 of its 2,500 head office staff; and 1,300 crew and 727 pilots at EasyJet are facing redundancy. John Lewis has also said it will close stores but has yet to detail job losses, while firms including WH Smith and Bensons for Beds have announced plans to reduce staff numbers. BBC News says the cuts come ahead of the Government’s furlough scheme being pared back before ending in October, suggesting that with firms having to consult on redundancies for 30-45 days, “some will feel that now is the time to act”. With the retail sector among the hardest hit, Milan Pandya of Blick Rothenberg has urged Chancellor Rishi Sunak to deliver a “clear and comprehensive plan” to support the sector, commenting: “If the redundancies continue, the Government has a real long-term problem of unemployment.”

BBC News The Independent, Page: 22 Daily Mirror, Page: 6 The Sun, Page: 2

BoE warning on unemployment

Bank of England interest rate-setter Jonathan Haskel has said the UK economy could be affected by the pandemic more severely than previously thought. He told the Brighton Chamber of Commerce that “Worryingly the indicators of rising unemployment are already revealing themselves, with unemployment claims recorded to date enough to put us back to levels of unemployment not seen since the financial crisis.”

City AM

Pandemic hits female workforce

Writing in the Mail, Dame Helena Morrissey looks at the impact the coronavirus and lockdown has had on working women. She notes PwC research showing that if the UK increased the female employment rate to the same level as Sweden, the economy would grow by almost 9%, equivalent to £180bn.

Daily Mail, Page: 41

INDUSTRY NEWS – THURSDAY 2ND JULY 2020

Letter: Auditors and the collapse of Kingston Cotton Mills

In a letter to the FT, Cameron Scott, former executive counsel at the Financial Reporting Council, suggests it may be time for the role of auditors to be fundamentally reassessed.

Financial Times, Page: 20

CORPORATE NEWS – THURSDAY 2ND JULY 2020

Wigan woe as club enters administration

Wigan Athletic has become the first club in professional English football to enter administration following the coronavirus pandemic. This comes just four weeks after Hong Kong-based consortium Next Leader Fund took over the Championship club, promising to secure its future. Administrators from Begbies Traynor say the immediate objective is to “ensure the club completes all its fixtures and to urgently find interested parties to save Wigan and the jobs of the people who work for the club”. Under league rules, Wigan face a 12-point deduction for entering administration.

The Times, Page: 63 Financial Times, Page: 10 Daily Mail, Page: 85 The Independent, Page: 64 The Guardian, Page: 40 The Scotsman, Page : 60

Lookers results delay leads to suspension from trading

Shares in car dealership firm Lookers have been suspended from trading after the company failed to publish its final results. An accounting probe carried out by Grant Thornton is ongoing after a £19m hole in Lookers’ accounts was identified. Auditor Deloitte has said it will resign as soon as the accounts for last year are released, while five directors at Lookers, including its chairman, are due to step down.

City AM

Sainsbury’s sees sales climb in lockdown

Sainsbury’s saw sales climb 8.5% for the 16 weeks to 27 June but expects the coronavirus pandemic to deliver a £500m-plus hit to profits. Julie Palmer of Begbies Traynor says new CEO Simon Roberts is facing the task of “navigating the supermarket through the murky economic waters of COVID-19.”

The Scotsman, Page: 34

PROPERTY NEWS – THURSDAY 2ND JULY 2020

Annual house prices see first fall in eight years

House prices in the UK fell for the first time on an annual basis in eight years in June, according to Nationwide, slipping 0.1% year-on-year, having increased 1.8% in May. Month-on-month, prices slipped 1.4% as the coronavirus lockdown hit the property market. Figures show the typical home was worth £216,403 in June. Nationwide’s chief economist, Robert Gardner, commented: “While latest data from HMRC showed a slight pick-up in residential property transactions from April’s low, in May they were still 50% lower than the same month in 2019.” He added that with lockdown measures set to ease further, market activity is likely to edge higher in the near term but remain below pre-pandemic levels.

BBC News The Guardian The Daily Telegraph Financial Times, Page: 3 City AM

SMEs NEWS – THURSDAY 2ND JULY 2020

Lloyd’s of London calls for SME support

A new report by Lloyd’s of London calls for the insurance industry to do more to help SMEs recover from the impact of the coronavirus crisis, with chairman Bruce Carnegie-Brown saying: “COVID-19 has demonstrated that there is much more we can do to support our customers by providing protection for the changing risks they face.” Business interruption insurance designed to help SMEs during future crises, by pooling non-damage business interruption coverage among participants in Lloyd’s insurance market, is one suggestion set out in the report.

City AM

INTERNATIONAL NEWS – THURSDAY 2ND JULY 2020

Police raid Wirecard offices

Police have raided Wirecard offices on the continent as investigations into the €1.9bn accounting scandal intensify. Prosecutors and police officers were supported by police IT experts as they swept five properties in Germany and Austria, including Wirecard’s headquarters near Munich. Meanwhile, Felix Hufeld, head of regulator BaFin, has refuted suggestions it fell short in investigating Wirecard, saying its ability to act was limited as the firm was not classified as a financial services provider.

The Daily Telegraph Financial Times, Page: 4

ECONOMY NEWS – THURSDAY 2ND JULY 2020

Manufacturing fuels hope of a V-shaped recovery

Manufacturing activity grew in June, prompting hope that the UK may see a V-shaped economic recovery following the hit from the coronavirus pandemic. The IHS Markit/Cips manufacturing PMI, where scores below 50 show decline and above 50 show growth, rose from 40.7 in May to 50.1 in June, having hit an all-time low of 32.6 in April. James Brougham of industry lobby group Make UK said: “Manufacturers are leading the economic recovery.” Considering the data, Pantheon Macroeconomics’ Samuel Tombs warned that “it remains highly unlikely that manufacturing output will recover to its pre-coronavirus level on a sustained basis within the next year”. Meanwhile, the survey raised concern over jobs in the sector, with employment falling for a fifth straight month in June. Rob Dobson, a director at IHS Markit, said: “Concerns are rising about the potential for marked job losses, especially once the phase out of government support schemes begins.” Dave Atkinson, UK head of manufacturing at Lloyds Bank, warned that manufacturers are “bracing themselves for the second half of the year in the knowledge that a reckoning looms.”

The Daily Telegraph, Business, Page: 5 Daily Mail City AM

Contact Paul Southward

Paul Southward