Temporary tax cuts ‘could boost economic recovery’

John Hawksworth, chief economist at PwC, writes in City AM on the case for “temporary, well-targeted tax cuts to support the recovery in the months after the lockdown starts to be eased.” He suggests that a short-term VAT reduction, such as Alastair Darling introduced after the global financial crisis in 2009, “might be one such option to consider for later this year” and concludes that policymakers “will need to be careful not to undermine incentives for wealth creation and drive foreign investors away from the UK.”

City AM

Firms face ‘new normal’ post-lockdown

Matt Kilcoyne, deputy director of the Adam Smith Institute, looks at the economic impact of the coronavirus pandemic and warns that companies will have to “learn to adjust to a new normal”. Looking to the future, he says more cash will need to be brought into the UK, arguing that abolishing the factory tax – the inability to immediately write-off capital investments – will “get factories back up”, while reducing capital gains tax could “make it worthwhile to bring cash onshore.” He adds that slashing employers’ National Insurance contributions could ensure jobs are retained.

The Daily Telegraph, Business, Page: 4

Dealing with disputes

Alistair Duncan, head of indirect tax at Anderson Anderson & Brown, looks at tax disputes and the benefits of turning to a resolution specialist. He suggests that while HMRC has been supportive of businesses amid the difficult climate brought about by COVID-19, this more helpful approach “differs from the normal face that the Government department presents to taxpayers”.

The Scotsman, Page: 37


FCA warned about Blackmore Bond

The Independent reports that the Financial Conduct Authority (FCA) sat on information about an operation in which savers were persuaded to transfer money into risky investments. It is claimed that white-collar crime expert Paul Carlier handed the FCA allegations over Blackmore Bond as far back as March 2017, while other investors made complaints in March 2019. Emails to the FCA seen by the Independent show that Mr Carlier escalated his allegations directly to Andrew Bailey, then head of the FCA and now governor of the Bank of England. Blackmore Bond, which issued high-risk mini-bonds” between 2016 and 2019 to raise money to develop properties, collapsed into administration last week. Duff & Phelps have been called in to try to recover assets for investors. The Independent notes that former auditor Grant Thornton cut ties with Blackmore last March.

The Independent, Page: 56

KPMG raises fresh issues on Wirecard accounts

The FT reports on KPMG’s audit of Wirecard, which saw shares in the firm fall 26% after investigators reported obstacles in attempts to verify parts of the business. Activist short-seller Christopher Hohn, manager of the $24bn Children’s Investment fund, has called on Wirecard’s supervisory board to fire CEO Markus Braun following KPMG’s six-month probe.

Financial Times, Page: 9 Financial Times, Page: 9

Pandemic to hit airlines

The Times considers the impact COVID-19 could have on air travel, noting that social distancing measures calling for two metre gaps between people would require airlines to leave up to 80% of seats empty. Paul Zalkin at Quantuma comments: “Budget airlines operate at a break-even load factor well in excess of 80%, so taking out all middle seats will not work, unless all the window and aisle seat passengers subsidise the empty middle seats. That would mean much higher ticket prices. ”

The Times, Page: 1

COVID-19 and the toll on tourism

Tom Rees looks at how the tourism sector could be effected by the coronavirus outbreak, saying UK hotspots could see more domestic visitors as Britons scale back plans to travel abroad. KPMG chief economist Yael Selfin comments: “If the vaccine is going to take 12 to 18 months, we may not actually go back to normal until August next year so that would wipe out two years for the tourism industry.”

The Daily Telegraph, Business, Page: 2

Building firm collapses

Glasgow-based construction company Central Building Contractors has fallen into administration, making about 150 staff redundant. Blair Nimmo and Geoffrey Jacobs of KPMG were appointed joint administrators.

The Scotsman, Page: 35


Poll: Furlough scheme ‘should be extended’

A survey by the CIPD has revealed that some 60% of employers believe extending the Government furlough scheme to September was the most important policy change to the labour market that would best help them through the coronavirus crisis. The CIPD also suggested that changes to the programme to allow short-time working would “enable hundreds of thousands of furloughed staff to work in some capacity, helping to protect jobs, support businesses and reduce the burden on public finances.” The organisation’s chief executive Peter Cheese remarked: “The Government has worked hard to get the job retention scheme up and running so quickly. However, urgent decisions must now be taken to make it more flexible and to extend it so employers can continue to protect jobs.” Meanwhile Evening Standard business editor Jim Armitage advises the government to “taper the end of furloughing rather than chop it off on an arbitrary date”, adding: “Let’s make it easier for CEOs to get their companies back to work.”

City AM Evening Standard


Grant scheme could boost small firms

Treasury tax and welfare chief Beth Russell has suggested small business owners unable to access the Government’s coronavirus support measures could benefit from a new scheme, with the Treasury “looking at proposals” to offer emergency grants to small business owners who pay themselves via dividends. She said the possible initiative would be different from schemes already in place and “would take far longer to set up”. Analysis suggests around 800,000 directors of limited companies are ineligible for emergency support for the self-employed that has been rolled out by the Chancellor.

The Sun, Page: 9

Small businesses in shared offices lose out on grants

Research by Colliers International suggests that more than 10,000 small businesses based in shared offices are missing out on COVID-19 support grants as eligibility is based on a premise’s rateable value.

Financial Times, Page: 3


London retail rents set to drop

A study by the Royal Institution of Chartered Surveyors suggests a decline in demand will see London retail rents fall this year. Analysis shows that occupier demand for retail fell to a net balance of minus 75% in Q1, while office space demand declined to minus 18%. Secondary retail rents in the capital are expected to fall around 13.4% over the next 12 months, while prime retail rents are forecast to drop 9%. Meanwhile, occupier demand for industrial space increased 11% in the first quarter, with prime rents in the sector expected to rise 2.1% over the next year.

City AM


M&A nears 35 year low

Research from Refinitiv shows that UK M&A activity has fallen to its lowest monthly level in almost 35 years due to the COVID-19 pandemic. Deal value totalled £409.1m in April – its lowest since September 1985. April’s figures mark a 99% decline on March and a 92% fall compared to April 2019. Transaction volume was down 84% month-on-month and 87% year-on-year. Deals involving a European target totalled £4.9bn during April, with this a dip of 91% on March and the lowest monthly total since August 1992. Globally, M&A is down 72% on March, with the £55.7bn of deals announced during April the lowest monthly total since September 2002. Cornelia Andersson, head of M&A and capital raising at Refinitiv, said: “It’s been an April bereft of showers for the rainmakers as coronavirus continues to take its toll on global markets – with the UK being hit severely.”

City AM

Factory output falls to lowest level since records began

Manufacturing output fell 57.7% in April, the lowest level since records began in 1980, while sentiment index for services fell to minus 58.8 in April, from minus 9.3 in March.

Financial Times, Page: 3

Contact Paul Southward

Paul Southward's News Roundup