UHY Hacker Young has warned that a surge in interest in cryptocurrencies – alongside their climbing value – is likely to lead to increased scrutiny over their links to organised crime. The firm said that with organised crime becoming increasingly digital, there are concerns cryptocurrencies are being used by tax evaders, with HMRC set to demand data on cryptocurrency holdings from those it suspects of tax evasion in its “statement of assets” form. David Jones, director at UHY Hacker Young, said: “While criminals can still choose to not declare these assets, doing so gives HMRC another opportunity to bring criminal charges against them if their forensic work finds a hidden Bitcoin wallet.” Pointing to tax office concern that hidden wealth is “slipping through its fingers” due to the rise of cryptocurrencies and unsanctioned money transfer systems, Mr Jones added: “This demand for information is an important step in HMRC’s fightback against that”.
City AM Daily Express
7 in 10 willing to pay more tax to boost frontline workers’ income
A poll by the IE University Centre for the Governance of Change shows that seven in 10 UK workers are willing to pay more tax if it would boost the income of frontline workers. While 70% of UK and Swedish taxpayers would pay more tax to increase the wages of workers on the frontline, France was the only European nation not prepared to boost the wages of low paid workers, with 54% against the idea. Overall, the poll of 2,769 adults across nine European countries found that 61% of Europeans said they were willing to pay more in taxes in exchange for raising the salaries of essential workers.
The I, Page: 9
Think-tank: Independence could see tax rises
The Institute for Government (IfG) says an independent Scotland could face years of budget cuts and tax rises as it looked to manage its deficit, with the think-tank saying there would be an immediate need for “difficult fiscal choices” to address the gap between public spending and tax revenues. The IfG suggested that to cut the deficit and stop debt climbing, a newly independent Scotland could look to tax rises on immovable assets such as land or property, as well as rolling out spending cuts and launching policies to boost the economy.
Samsung heirs to pay record inheritance tax
The family of Samsung Electronics chairman Lee Kun-hee will pay more than £7.8bn in inheritance taxes on his estate. Samsung said that the payment is one of the largest ever in South Korea and globally, noting that it is more than half of the value of the late chairman’s total estate. South Korea’s inheritance tax rate is the world’s second highest after Japan, coming in at 50% – with the rate rising to 60% for company shares inherited by large shareholders. In the UK and US the levy is set at 40% while across the Organisation for Economic Cooperation and Development, the rate averages 15%.
Canada Finance Minister hails global tax plan ‘breakthrough’
Canadian Finance Minister Chrystia Freeland says a US proposal for a global minimum corporate levy is a “breakthrough moment” in international tax talks, with the OECD seeking agreement on a minimum rate.
Families are being urged to renew their tax credits to avoid losing out on support, with HMRC issuing 2.5m renewal packs to claimants, advising households to update their details by July 31.
Daily Mirror Daily Star
EMPLOYMENT NEWS – THURSDAY 29TH APRIL 2021
Barclays tops LinkedIn companies list
Professional network LinkedIn has released a ranking of the top 25 firms to build and sustain a long-term career, with Barclays identified as the best place to work for those keen to progress up the ladder. The Top Companies List identifies the organisations that offer growth, skills development opportunities and job stability. Tesco came second in the rankings, with NatWest third, BT fourth and PwC fifth. Deloitte (6th) and EY (8th) also made the top ten. Siobhan Morrin, news editor at LinkedIn, said the Top Companies List “provides a helpful resource of companies that offer skills development and stability, giving our members that added confidence when taking that first step towards their next opportunity.”
Daily Mail City AM
Women in North worst hit by pandemic
The IPPR North think-tank has published a study which shows that women living in the North of England have been disproportionately hit by the economic disruption caused by the coronavirus pandemic. The research found that almost half of northern women currently in work are in sectors that have been hardest hit by the coronavirus emergency, such as retail and hospitality. By comparison, men constitute around only a quarter of the workforce in these industries. The report also found most key workers in the North are women. IPPR North wants pay and working conditions for women across the region to be improved, and proper data to be amassed on inequalities.
Police forces urged to exploit tax break
Police Federation chairman John Apter says forces should use tax breaks to target former soldiers in their bid to recruit 20,000 more officers. He has called on police forces and ministers to make the most of new rules that exempt firms and public sector bodies which employ military veterans from paying National Insurance contributions during the first 12 months of their employment.
R3, the trade body for insolvency and restructuring accountants, says the number of Scottish companies facing insolvency is expected to rise despite restrictions on the economy being relaxed, with the repayment of coronavirus-related Government loans set to hit firms that have been kept afloat by the support measures. Figures show corporate insolvencies in January to March were down 31% on Q4 2020 and 63% lower than the first quarter of last year. However, the number is set to climb in the coming months, with Tim Cooper, chair of R3 in Scotland, saying companies are “in a form of suspended animation” but warning that this “cannot last forever”.
Dixons Carphone is to permanently close all of its outlets in airports, pointing to the impact of the Government’s decision to scrap tax-free shopping, with the retail scheme which enabled non-EU visitors to reclaim VAT paid on their purchases having been withdrawn on January 1. Dixons Carphone says it took the “difficult decision” to close the stores as it does not expect passenger numbers to recover sufficiently to compensate for the removal of airside tax-free shopping. The firm said staff employed at the stores will be offered roles elsewhere. Meanwhile, Dixons Carphone also revealed that strong recent sales mean it will repay £73m in furlough support.
Research from estate and lettings agent Barrows and Forrester suggests the extended stamp duty holiday could see the average house price climb by more than £20,000 this year. The analysis shows that since the Chancellor announced the tax break in July 2020, house prices across England have increased by an average of 0.84% each month, hitting £268,291. If this rate of growth continues, the average price could be £23,376 higher by the end of 2021. The South East of England, where typical prices have risen 0.87% month since the introduction of the stamp duty holiday, could see the biggest jump, with £31,176 added to the average if the current rate of increase is maintained.
ECONOMY NEWS – THURSDAY 29TH APRIL 2021
Business leaders set out recovery plan
A group of leading executives have set out a plan for a post-pandemic economic recovery, with the Covid Recovery Commission calling for the creation of at least one new globally competitive industry hub in every part of the UK by 2030. The commission, whose members include executives from firms including Tesco, Vodafone and AstraZeneca, is also calling for a radical overhaul of the Apprenticeship Levy, with the establishment of £10,000 lifelong training allowance for all over-25s. Tesco chair John Allan said the commission’s report goes beyond “purely economic measures”, arguing that there is a need for growth to be used to remedy widening social inequality.
Andrew Orlowski in the Telegraph says that while Microsoft has always been competent with its developer tools, it is now able to add business analysis tools to its software, saying this may have the technology divisions of accountancy firms “looking nervously over their shoulders.” He adds that with Microsoft’s “industry-specific clouds” focused on business sectors such as retail, manufacturing and healthcare, “it has parked its tanks squarely on the Big Four’s lawn”.
Family businesses lobby group calls for £150bn of tax cuts
The International Business Network has called for the abolition of corporation tax and cuts to income tax and VAT to drive a post-pandemic recovery. The group, which represents family businesses, urges the Government to make £150bn of tax cuts, £70bn of which should be permanent while quantitative easing should be abandoned and perpetual “Covid recovery bonds” issued in its place to finance the recovery. “The UK is at an economic crossroads between prosperity and long-term relative decline. It is vital it chooses the right path,” John Longworth, chairman of the network, said. “This package sets out a clear agenda to allow family owned and run businesses . . . the cover they need to drive us out of this economic Armageddon.”
The US president is expected to use his first speech to a joint session of Congress on Wednesday to outline his proposals for increases in capital gains tax, corporation tax and income tax. The tax raid on America’s wealthy is supposed to fund multi-trillion dollar spending programmes, but Republicans have called the plans “economic sabotage” while business figures said it threatened to “kill the golden goose that is America.” Chris Christie, the former Republican presidential candidate, said it showed Mr Biden was a “far-left president”. He said: “It is nothing more than income redistribution. It’s socialism.” Those earning more than $1m will see CGT rates almost double and when local and state capital tax rates are combined with the new federal level investors will pay up to 58% in some localities, such as New York City. Meanwhile, Mr Biden also plans to give the IRS an extra $80bn to crack down on wealthy individuals and powerful corporations who try to evade his proposed new tax hikes. UK analysts are watching the Chancellor closely to detect signs that he may follow suit with his own CGT rate increase later this year.
PAC issues stinging report on tax and UK’s net-zero vision
A report from the Public Accounts Committee has said that the Treasury and HMRC have no “clear vision” of how taxes could help the UK meet its legal target of net-zero emissions by 2050. Committee chair Meg Hillier said the Government needed to release a clearer plan ahead of Cop26: “The economic revolution required to abandon fossil fuels and reach net zero must be the greatest coordinated ask of governments around the globe in history,” she said. “But the UK Government has been blithely issuing ever more ambitious climate targets for years now, with no sign of a roadmap to reach any of them. The departments in charge seem stuck in a bygone era, with little sign of the innovative thinking needed to achieve all this.”
The Independent Daily Express, Page: 4
French and German finance ministers back US global tax plan
France and Germany have backed the US Government’s idea of a global minimum corporate tax rate of 21% to be negotiated at the OECD. Germany’s finance minister Olaf Scholz said that personally, he had nothing against the US proposal. France’s Bruno Le Maire said: “If that is the result of negotiations, we would also be agreed.” Austrian Finance Minister Gernot Bluemel said the U.S. proposal was constructive. “This tax fairness must also apply above all between digital and analogue business models,” he said.
Venture capital investment into technology start-ups in the UK and Ireland is on track to set a record in 2021, according to data business PitchBook. Technology companies in the UK and Ireland raised £5.3bn in the first quarter of 2021, placing the sector on track to surpass last year’s funding record of £13.4bn. “In this post-Brexit era, UK-based companies have generally been able to attract capital and conduct business as usual,” PitchBook wrote in its new European Venture Report. “In the long run, prominent UK-based start-ups could play a key role in retaining talent and attracting new overseas investment,” the report added.
The latest KPMG Venture Pulse survey reveals that venture capital investment in Scottish businesses cooled in the opening months of the year, with the combined value of deals falling to £64.3m, from £97.6m previously. Amy Burnett, senior manager with KPMG private enterprise in Scotland, commented: “The figures for Q1 are relatively subdued and disappointing, but it’s clear investors still have an appetite for Scottish scale-ups. To some extent, we bucked the global trend towards the end of 2020, with significant deal volume and value, and we’re now seeing that steady off and balance itself out.” Bina Mehta, chair of KPMG UK and head of the firm’s ‘emerging giants’ practice, added: “The fact that the amount of VC investment coming into the UK from overseas increased in this post-Brexit environment is encouraging, as was the continued strength of corporate VC investment”;
The Business Banking Resolution Service finally went live in February after a series of delays, the Times reports, but since its inception in 2019 the body has cost more than £23m without having compensated a single business. The BBRS was set up to give small and mid-sized businesses an independent view on banking disputes. Craig Beaumont, chief of external affairs at the Federation of Small Businesses, said: “Small businesses seeking redress will be looking at these big sums and expecting big results.”
Bloom & Wild has acquired Netherlands-based competitor Bloomon for an undisclosed sum – its first acquisition which quadruples the size of the online flower and gifting platform’s European footprint. PKF advised Bloom & Wild on the deal. Sophia Meadows, finance director at Bloom & Wild, said: “PKF were an invaluable support throughout the entire process. They were flexible with ever moving timelines, totally understood our business and what mattered to us and we relied on their technical expertise heavily to guide us through the process.”
Research from Netwealth suggests the pandemic has made people more engaged with their personal finances, although just one in seven Britons have increased their reliance on financial advice. A February survey of 2,000 adults aged 35-plus found two in five (41%) said they were more engaged with their personal finances throughout the pandemic than in previous years. But the research also found only 15% said they relied more on a financial adviser or wealth manager during the pandemic compared with previous years.
ECONOMY NEWS – WEDNESDAY 28TH APRIL 2021
New Investment Council will advise on post-Brexit reform
The Department of International Trade has announced the creation of a new Investment Council to help advise ministers on how to make the most of Britain’s post-Brexit freedoms. The body, which is made up of private sector businesspeople, will meet at least twice a year to provide strategic advice on how to make regulatory changes to improve the attractiveness of the UK for foreign investors. International Trade Secretary Liz Truss said: “Alongside the Office for Investment, this Investment Council led by Minister Grimstone is a major leap towards ensuring foreign investors are heard and fostering a business environment that is fair and drives innovation and economic growth across the UK.”
UK manufacturers’ profitability drops to decade low
Figure from the ONS show UK manufacturers’ profitability fell sharply for a second consecutive year in 2020, dropping to 8.8%, the lowest since 2010.
Opinion: Investors should consider doing a little goodwill hunting
The Telegraph’s Ben Wright considers the treatment of goodwill and warns that a high proportion of listed companies entered the pandemic with the value of the goodwill on their balance sheet exceeding their retained earnings. “The worry is that the pandemic will have profoundly altered some of the assumptions about the future upon which companies were valuing their goodwill.” Adam Leaver, a professor of accounting and society at the University of Sheffield, says: “The big question is how difficult it’s going to be for some companies to sustain the cash flow expectations that underpin the assumptions on which that goodwill is valued in this new world.” He adds: “For acquisitive companies with levered balance sheets, [it] could get very messy if all of a sudden, observers begin to question the cash flow expectations that underlie their goodwill valuations.”
The Daily Telegraph, Business, Page: 4
Contact Paul Southward
NEWS – TUESDAY 27TH APRIL 2021
NEWS – TUESDAY 27TH APRIL 2021
TAX NEWS – TUESDAY 27TH APRIL 2021
White House says capital gains tax rise will hit only richest 0.3%
Following heavy criticism of new tax plans coming out of the White House, a Biden administration official has said only the richest 0.3% of Americans would have to pay the new levy on capital gains. The Mail reports that wealth advisers in the US are seeing a flood of inquiries as clients rush to sell assets, shift gains into retirement accounts or tax-deferred opportunity zone funds.
New research from Aldermore Bank indicates signs of recovery for small and medium-sized enterprises (SMEs), as they reveal plans to invest in their businesses in the next year, coinciding with the easing of lockdown restrictions. SMEs plan to spend an average of £97,000 to grow their business in 2021 and help kickstart their recovery from the COVID-19 pandemic. Over the next 12 months, one in four (25%) SMEs will invest in their online presence, with one in five (21%) advancing their digital marketing. A further one in four (21%) will spend on new equipment and 20% will invest in their staff through training. “It’s encouraging to see that SMEs are investing in their recovery from the COVID-19 pandemic”, said Tim Boag, group managing director, business finance at Aldermore. “Recent data reveals a vastly improved near term outlook for businesses, with the easing of restrictions. Confidence from SMEs is growing, and this is reflected in plans to invest in the growth of their businesses in order to recover effectively from the pandemic”.
Research by angel network Cornerstone Partners shows that entrepreneurs from black and ethnic minority backgrounds are being excluded from venture capital funding. Just 1% of founders who receive seed funding identify as black, according to the study. Only 3% of VC-funded founders identified as black and only 2.9% were Asian. The report also says that three quarters of founders come from advantaged socio-economic backgrounds and hardly any founders come from families living on welfare entitlements. Cornerstone Partners has made a number of recommendations, including the establishment of schemes that support angel groups and accelerators which invest in businesses led by minority founders. It also called for the introduction of early career development.
Figures from NAEA Propertymark show one in six homes sold in March went for more than the asking price – a seven year high – with just a third selling for below the original price. Mark Hayward, chief policy adviser at Propertymark, said: “The imbalance of supply and demand means it’s an extremely strong sellers’ market; properties are selling quickly and for over the asking price, and this is something we expect will continue in the coming months.” Homeowners reconsidering their lifestyle and the stamp duty holiday are seen as the main drivers of the increased demand.
A new report from LCP warns that it will take too long to save into defined contribution (DC) pensions to keep retirement savings steady and offset the loss of defined benefit (DB) income. The report, titled ‘The ski slope of doom – is this the most worrying chart in pensions?’, claims that the incomes of newly retired workers are set to fall at a much more dramatic rate in the coming decades than had previously been thought. The report found that for those working in the private sector, the decline of traditional “final salary” type pensions is more rapid than expected and that the rise of new-style workplace pensions will take longer to make a real impact than previously assumed.
Research from the Institute for Fiscal Studies shows that inheritances are likely to be larger compared with lifetime incomes for younger generations than was the case for their predecessors. For those born in the 1980s, average inheritances compared to lifetime income are projected to be almost twice as large as those born in the 1960s.
ECONOMY NEWS – TUESDAY 27TH APRIL 2021
UK growth forecasts boosted by vaccines rollout and extended state support
Analysis by Consensus Economics puts UK growth at 5.4% this year, up from 4.2% predicted in February. Others believe this remains pessimistic, however, with Oxford Economics going as high as 7.2%. The EY ITEM Club has predicted growth of 6.8% while Goldman Sachs goes as high as 7.8%. A bounce-back is not unexpected considering the UK suffered a 9.8% slump in 2020 – the worst performance among the G7 group of major advanced nations but forecasters are upgrading predictions following the “innovative and flexible” response of UK businesses and consumers to the pandemic.
Investors may have to wait until 2025 for dividend recovery
According to Link Group’s Dividend Monitor, British companies paid out £12.7bn in dividends in the first quarter of 2021, down 27% on the same period last year. Reduced payouts from oil giants Shell and BP were responsible for most of the drop. Link said dividends were down 42% over the last 12 months and its “best-case” forecast for this year was a rise of just 5.6% on last year’s total. Ian Stokes of Link Group said there were signs of recovery but “2025 still looks like the most realistic moment for dividends to match their 2019 high point.”
City bosses want payback after being left on Brexit sidelines
The Telegraph’s Lucy Barton looks ahead to what’s in store for the City post-Brexit as organisations including the Investment Association submit ideas to the Treasury for reform. The lobby group told ministers to consider a fully exempt tax regime for UK funds to keep them competitive with EU rivals. One banking executive who is in regular talks with ministers told the paper: “There will definitely be changes. Banking is completely exposed to politics and political changes – that’s always a huge risk – but I’ve never seen such commitment to change.” But although Rishi Sunak has told the City to brace itself for a “Big Bang 2.0” post-Brexit, TheCityUK’s CEO Miles Celic argues the sector is not chasing a “deregulatory agenda”. He says: “Competitiveness is about much more than regulation – it’s got to look at issues such as access to talent and a stable, predictable, simplified tax regime.” Finally, Barnabas Reynolds at Shearman and Sterling believes big changes are on the way, but it could take three to five years for the rule book to look significantly different.
The Daily Telegraph, Business, Page: 2
OTHER NEWS – TUESDAY 27TH APRIL 2021
Johnson hopeful restrictions will lift on 21st June
Boris Johnson has said Britain had built “some pretty robust fortifications” against another wave of Covid and there is now a “very good chance” of completely ending coronavirus restrictions in England on June 21st, as planned. The prime minister said lockdown had helped get the number of cases down considerably but that did not mean Covid was over.
Tax authorities could seek clarification from PM over flat refurb
Boris Johnson may have to clarify with HMRC where the £58,000 used to refurbish his Downing Street flat came from and whether it should have been declared, the i reports. The Prime Minister would be “treated like any other taxpayer” to determine whether he derived any benefit in kind from any loans or donations for the refurbishment. It was reported last week that Tory donor Lord Brownlow was to chair a charitable trust, set up by Mr Johnson for “preserving Downing Street’s heritage”, and donated £58,000 into it to pay for the revamp. Downing Street says Mr Johnson has now covered all of the costs for the work, but it is unclear whether this was after a loan or donation had been made by Tory party donors. Fiona Fernie, a tax disputes and resolution partner at Blick Rothenberg, said: “HMRC will always look for clarification if there is a chance that money wouldn’t have been received by someone unless it was because of the position they were in. HMRC would not want to be seen not to seek clarification from the Prime Minister when it would from anyone else.”
The i , Page: 6
Investment trade body seeks abolition of taxes on UK funds
Proposals to make the City more competitive post-Brexit include a call from the Investment Association for the Government to apply a zero rate of value added tax to all UK funds.
Analysis shows fees and expenses charged or incurred by insolvency practitioners and lawyers working on recovering assets for bondholders exposed to the London Capital & Finance scandal have contributed to total costs approaching £25m. LCF failed after the Financial Conduct Authority said that it was misleadingly promoting high-risk bonds. Smith & Williamson , which is leading the administration of LCF as well as linked insolvencies of borrowers including London Oil & Gas and Prime Resorts, defended its costs after some bondholders criticised the fees as “exorbitant”. Finbarr O’Connell, partner at Smith & Williamson, said: “Our extensive investigation work … has led to us issuing legal proceedings against a number of parties with a view to recovering substantial funds. This robust action can’t be undertaken without incurring costs and fees.” FRP Advisory and CMB Partners, along with lawyers from Mishcon de Reya, have also worked on the insolvencies.
It is in the EU’s own interests to agree a post-Brexit deal on financial services, says PwC’s global head of financial services John Garvey, who predicts that although an agreement may not transpire in the short term, the Europeans will eventually realise they need access to the London market. An aversion to shouldering the risk is also hampering the EU’s efforts to set up a new financial centre, Garvey adds, as none of their governments, particularly Germany, is comfortable with taking on the responsibility.
A survey of 500 SMEs by Nucleus Commercial Finance finds that small firms believe it will take an average of a year for their business to make up for lost revenue caused by the coronavirus crisis. The study indicated medium-sized businesses are most confident about their recovery while younger business owners are more optimistic about making up lost revenue. Chirag Shah, chief executive of Nucleus Commercial Finance, said: “While the trepidations of the pandemic and subsequent restrictions will have lasting effects for many British businesses, it’s encouraging to see such optimism among SMEs about their projected finances as they return to business as usual.”
The I, Page: 40
Nearly 4,000 businesses repay furlough grants
Research by UHY Hacker Young indicates that some 3,777 businesses have voluntarily repaid over £760m in furlough grants to HMRC. The firm says it is likely that many of these businesses claimed furlough money in the early stages of the pandemic as a precaution in case they ran into financial difficulties.
The I, Page: 42
ECONOMY NEWS – MONDAY 26TH April 2021
Data points to rapid recovery
Tracking data from Apple and Citymapper indicates that movement in cities has almost reached the post-Covid highs of last September, raising hopes of a strong comeback for the UK economy. Figures from Google suggest footfall in retail and restaurant hubs are down 30% compared to the 60% fall seen in February while data from Opentable show restaurant bookings last week were almost 40% down on normal levels. Meanwhile, data from Barclays suggests total spending was 15% above pre-Covid levels in the first week of the latest phase of reopening. Sanjay Raja, UK economist at Deutsche Bank, says he expects a 5% jump in GDP in a “roaring” second quarter compared to the previous three months. Fabrice Montagné, Barclays UK economist, adds that although the consumer-related fast data is heartening, it is labour market improvements that will in time prove much more critical to the sustainability of the recovery.
UK economy is on course for its best year of growth since WW2
Economists at EY Item Club predict GDP growth of 5% to 6.8% for 2021 – the highest rate since the Second World War. The economy is expected to regain its pre-pandemic size by the second quarter of 2022, they add, due to Britain proving “more resilient than seemed possible”. The final three months of this year should also see peak unemployment fall from 7% to 5.8%, EY said. Separately, the Deloitte Consumer Tracker shows every measure of confidence – from the state of the economy to general wellbeing and personal debt levels – improved over the first quarter. “The UK is primed for a sharp snap back in consumer activity,” said Ian Stewart, chief economist at Deloitte. “High levels of saving, the successful vaccination rollout and the easing of the lockdown set the stage for a surge in spending over the coming months.”
Time for citizens to take back control, scientists say
In an open letter published today, leading scientists say ministers and Government advisers are exaggerating the threat from COVID-19 and that all restrictions must be lifted on June 21 – the final date in Boris Johnson’s roadmap out of lockdown. They argue that with data showing vaccines reduce the risk of death by 98% and hospitalisations by more than 80%, COVID-19 is being turned into a mild disease in Britain. The letter’s 22 signatories include Professors Carl Heneghan and Sunetra Gupta from Oxford University, Emeritus Professor Hugh Pennington from the University of Aberdeen and Professor Robert Dingwall from Nottingham Trent University. “We are being told, simultaneously, that we have successful vaccines and that major restrictions on everyday life must continue indefinitely. Both propositions cannot be true,” the scientists write. They add: “Mandatory face coverings, physical distancing and mass community testing should cease no later than 21 June along with other controls and impositions. All consideration of immunity documentation should cease.”
“It is time to free up businesses and people to start really building back our economy and the nations health.”
TAX NEWS – WEEKEND TO 25TH APRIL 2021
Investors in uproar over Biden’s proposed capital gains tax rise
Investors have lashed out at Joe Biden’s plans to double capital gains tax with Scott Minerd at Guggenheim Partners declaring the plans “insanity” while Anthony Scaramucci, founder of SkyBridge Capital, believes the proposals would “have deleterious effects on job creation and wage growth for middle-class workers.” Stocks fell following the announcement and cryptos such as Bitcoin and Ether fell sharply. Although the plans will face stiff opposition in Congress, fund managers warn that investors could dump “momentum” stocks as they seek to crystallise gains ahead of a tax hike. Alasdair McKinnon, manager of the Scottish Investment Trust, said the impact of Biden’s proposals would be felt across America’s stock market. “New capital gains taxes are unhelpful to all asset prices,” he said.
The Express reports on plans touted by the European Commission to harmonise tax rates across the bloc for tobacco products. Pieter Cleppe, a research fellow with the Brussels-based Property Rights Alliance, said in a paper that the Commission is exploring ways to do this without EU Treaty change, “using health concerns as a pretext to obtain more power.”
HMRC deadline extension creates state pension headache
HMRC has warned that small business owners and those with ‘side hustles’ could miss out on state pension benefits if they filed their tax return after January this year.
Conservatives should fight an international tax stitch-up
Hamish McRae asserts in the Mail on Sunday that if Joe Biden gets his tax hikes though Congress other countries would have cover for introducing similar measures too. The new administration wants to tax capital gains as income, raise corporation tax and introduce a global minimum tax rate. McRae says following the extreme pandemic spending by governments, raising taxes on the wealthy is logical and fair and hard to argue against. The Observer’s business leader lauds Biden’s move believing the tax hikes and trillions in stimulus are intended to tackle “deep-rooted inequalities” and that the UK Government should use Washington’s move to inspire its own plans to build back better. But Daniel Hannon contends in the Sunday Telegraph that plans for international tax harmonisation, with legal threats against those who resist, “would mark the birth of a high-tax cartel, and the rate would surely rise”. Socialists have long resented the fact that exorbitant taxes redistribute people rather than wealth, but without international competition this inconvenience would end, he says, as would the right of poor nation states to try and improve their lot through tax cuts. Ultimately, Hannan adds, low taxes improve revenue, employment and economic activity – all things needed to repair shattered post-pandemic public finances, but this seems to have been forgotten by Conservatives in the UK.
The Observer, Page: 56 The Mail on Sunday, Page: 122 The Sunday Telegraph, Page: 20
HMRC sends 18,500 fines to wrong address
HMRC has sent 18,500 fines to the wrong address with a software error said to be to blame for the fiasco, the Sunday Times reports. Accountants have reported finding demands for multiple taxpayers when opening envelops addressed to another taxpayer, with private codes and other reference numbers included in the correspondence. “This is an absolutely astonishing blunder,” said George Bull from RSM. “HMRC makes much of relying on self-employed workers getting their tax bills right, but appears incapable of managing its own data.” In a letter to the Association of Taxation Technicians (ATT), HMRC said: “We sincerely apologise and recognise that this is not in line with our Charter standards. We take all aspects of protecting data very seriously so there has been a lot of activity to understand this incident and mitigate future risks.” HMRC said it had taken urgent action to ensure the data breach did not happen again: “If any agents receive any correspondence for incorrect clients, we would ask that they return them to HMRC.”
The Sunday Times, Business, Page: 12
CORPORATE NEWS – WEEKEND TO 25TH APRIL 2021
Stanlow refinery reaches with HMRC
Essar Oil, which controls the Stanlow oil refinery in north west England, has struck a deal with HMRC on its tax liability. The refinery produces a sixth of the country’s petrol and diesel and has now been thrown a £400m lifeline by the taxman amid fears it could collapse. Industry sources confirmed the “time to pay” deal reached with HMRC has removed the risk of insolvency. International travel restrictions have reduced demand while poor margins for refining alongside market volatility caused operating losses for the company.
Fundraising experts warn that charities will inevitably have to ration their services after the pandemic left them struggling for cash. Some small operations are suspending services leaving others to pick up the slack. The Sunday Telegraph notes that between April 2020 and February, the Charity Commission saw a 25% increase in concerns being raised by auditors over reports and accounts. The main issue reported was insolvency or financial difficulties.
Tate & Lyle auctions off primary products division
Tate & Lyle has been working with Deloitte for some time to figure out the best way to spin off its primary products division, with Apollo Global Management and Cerberus among the interested parties. City sources say a £1.2bn auction for the division is now underway.
Small firms suffer cashflow woes just as support is withdrawn
The Sunday Times talks to small business owners who, after being devastated by the pandemic, face paying back Covid loans before their cashflow has been repaired. One businessman said: “The speed at which the Government thinks you’re able to start hurling money back at them is crazy.” Craig Beaumont, chief of external affairs at the Federation of Small Businesses said the issue was common, adding: “The Government should be throwing everything it’s got at getting businesses across this ‘unlock’ phase and into the recovery, to avoid businesses falling at the final hurdle because of lack of cashflow.” But Steve Russell, head of restructuring services at PwC, says VAT deferrals, the furlough scheme and emergency loans are “not gifts. They are support schemes that need to be unwound.”
PERSONAL FINANCE NEWS – WEEKEND TO 25TH APRIL 2021
Families increasingly using deed of variation
Irwin Mitchell solicitor Sarah Paton says there has been an uplift of families changing the wills of elderly parents after they pass to help younger generations hit hard by the pandemic. “A deed of variation can be used to give a fixed sum or a proportion of the estate directly to the grandchildren of the deceased instead of the children,” she explains. Mike Hodges, partner at Saffery Champness, points out that families often decide it is better to wait until after the death to work together to rejig the will, to save the loved one distress. Using a deed of variation can also reduce inheritance tax liabilities by shifting assets directly to a younger person’s estate.
The Mail on Sunday
PENSIONS NEWS – WEEKEND TO 25TH APRIL 2021
Drop in pension income more startling than expected
With the closure of final salary pension schemes looming, Lane, Clark & Peacock believes the drop in pension income is going to be more startling than first thought. Its research suggests that the average man retiring this year will have an annual income of £14,634 and a woman £10,042, including state pensions. But by 2045, a man retiring would have an income of £12,460, and a woman £10,797, in today’s money. Female income improves because more are expected to be able to claim full state pensions. Public sector workers will suffer less because many will still have defined benefit pensions. Steve Webb, a former pensions minister and partner at LCP, commented: “For years, salary-related pensions from private sector jobs have supported the incomes of the newly retired, and men in particular. But these pensions are disappearing much more rapidly than we thought. And new-style workplace pensions are not being built up quickly enough to take up the slack.”
The Sunday Times warns that more needs to be done to close the pensions gender gap and promote equal pay in retirement. The paper reports that research from the Prospect union has found that the gap for pensions stands at 40.3%, more than double the gender salary gap of 15.5% reported by the ONS. The SNP MP Patricia Gibson said it was unacceptable that all types of pension inherently discriminate against women. It is noted that last week, Guy Opperman, the Pensions Minister, said there was a “clear passion” for making women better off in older age.
The Sunday Times
PROPERTY NEWS – WEEKEND TO 25TH APRIL 2021
Tax deadline leads to frenzied market
House prices have rocketed over the course of the stamp duty holiday and there is a buying frenzy as the deadline looms, reports the Sunday Times. Figures from HMRC show almost 191,000 homes were sold in March – the highest number in a single month since July 2004. But the savings from the Chancellor’s tax cut have long since been cancelled out by property price rises, the paper’s Carol Lewis claims.
Former subpostmasters cleared over accounting scandal
Almost 40 former subpostmasters who were convicted of theft, fraud and false accounting because of the Post Office’s defective Horizon accounting system have finally had their names cleared by the Court of Appeal. The Horizon system, developed by Fujitsu, was first rolled out in 1999 but from an early stage it appeared to have significant bugs that could cause the system to misreport. Horizon-based evidence was used by the Post Office to successfully prosecute 736 people. Lord Justice Holroyde said the Post Office “knew there were serious issues about the reliability of Horizon” and had a “clear duty to investigate” the system’s defects. But the Post Office “consistently asserted that Horizon was robust and reliable”, and “effectively steamrolled over any subpostmaster who sought to challenge its accuracy”, the judge added. In all, 39 of the 42 appeals were allowed on the grounds that the prosecutions were “an affront to the public conscience.” Lawyers for the group said they would be seeking compensation and an urgent criminal investigation into the actions of those at the Post Office.
Talent hunt kicks off as London firms launch hiring sprees
Financial services, legal, PR and construction companies across London are ramping up hiring with recruiters reporting a 349% jump in banking jobs advertised. But tech is driving job creation with KPMG’s quarterly tech monitor revealing that in the three months to March, UK tech sector firms hired staff at the fastest pace seen since the second quarter of 2019. Robert Walters’ UK managing director, Chris Poole, said: “March was incredibly busy for us. It almost felt like a line in the sand – it was incredibly busy across all sectors. Technology has been busy all the way through, but there has been a lot of pent-up demand within legal, within accountancy, within financial services. Even manufacturing, procurement, supply chain – it has been across the board.”
FINANCIAL SERVICES NEWS – WEEKEND TO 25TH APRIL 2021
Equivalence or no equivalence, London will stay financial services leader
KPMG ’s head of Financial Services Karim Haji has said if the UK and the EU fail to agree a deal on equivalence it won’t be the end of the world. Although it would “make life easier”, it was not mandatory for a successful financial services sector. “If you take a step back, the UK has been one of the leaders in financial services regulation and infrastructure, it’s one of the key innovators in the space as well, and one of the leaders in the world, and that’s why the UK has been successful in exporting financial services – that isn’t changing as a result of Brexit,” he continued. Mr Haji’s comments come after EU commissioner Mairead McGuinness said there was no pressure to reach agreement with the UK on financial services.
City AM Daily Express
ECONOMY NEWS – WEEKEND TO 25TH APRIL 2021
UK economy rebounds with demand surging
Private sector activity grew at the fastest rate since November 2013 in April, hitting a reading of 60, according to IHS Markit’s purchasing managers’ index (PMI). This is up from 56.4 in the previous month and above the 58.2 forecast by economists. Service sector business activity rose from 56.3 to 60.1, while manufacturing output was up from 56.6 to 59.1. Chris Williamson, chief business economist at IHS Markit, said: “Companies are reporting a surge in demand for both goods and services as the economy opens up from lockdowns and the encouraging vaccine rollout adds to a brighter outlook.” Looking forward, Williamson added: “Business activity should continue to grow strongly in May and June as virus restrictions are eased further, setting the scene for a bumper second quarter for the economy.”
Data from the ONS show retail sales in Great Britain rose 5.4% in March compared with the previous month – a much stronger reading than the 1.5% forecast by economists. Sales of clothes was particularly strong rising by more than 17% while the easing of travel restrictions towards the end of the month led to an 11% increase in fuel sales. Howard Archer, chief economic advisor to the EY ITEM Club, said: “It does appear that many people were intent on having an enjoyable Easter break and this likely lifted retail sales later in the month.” Also commenting, Lisa Hooker, consumer markets leader at PwC, said: “Much though these figures will give cheer to the whole sector, retailers will be hoping that these positive signs translate into a sustained return to the physical stores as they reopen across the UK over the course of April. The real test of whether pent-up demand can be turned into actual sales w ill come with next month’s figures.”
Covid response pushes UK borrowing to highest since second world war
Figures from the ONS show UK government borrowing hit £303.1bn in the year ending in March, a jump of £246.1bn on the previous year when the figure was only £57.1bn. The coronavirus pandemic has driven the UK’s total accumulated public debt to £2.14trn, or 97.7% of GDP, the highest level since the early 1960s. As a percentage of national output, borrowing in the year between April 2020 and March 2021 stood at 14.5% – the highest since the financial year ending in March 1946. KPMG senior economist Michal Stelmach said rising debt was a consequence of shielding the economy from COVID-19.
The deputy governor of the Bank of England predicts “very rapid growth at least over the next couple of quarters” as Britons spend cash accumulated during the pandemic and save less of their forthcoming income. Ben Broadbent is more bullish than most of his Monetary Policy Committee colleagues on whether people will spend their savings but he warns that the year ahead is likely to be bumpy regarding inflation with multiple shifts in demand and supply.
Campaigners have called on ministers to write off old tax credit debts after it emerged payments to a number of Universal Credit (UC) claimants have been cut during the pandemic. HMRC has been deducting up to £100 a week from benefits to recoup mistaken tax credit overpayments and an investigation has shown that officials have targeted 47,000 low earners a week since January 18 because they were overpaid credits from up to 17 years ago. The analysis shows that HMRC has sent over 2.2m letters to UC claimants since 2016 telling them to expect deductions due to historical tax credit overpayments amounting to over £2bn, with claimants seeing £63m deducted from April to November last year. Sir Iain Duncan Smith, the former Work and Pensions Secretary, said clawing back tax like this was “a major mistake” causing “profound difficulties”. Stephen Timms, Labour chairman of the Work and Pensions Committee, said the process is “deeply unfair”, adding: “It shouldn’t be happening. These reductions ought to be suspended until the pandemic is over.” StepChange, Britain’s largest debt advice charity, said that almost one in five of its clients with Government debts had been told they had been overpaid tax credits.
Shashi Prashad and Jo Bateson of KPMG offer advice to businesses going into the new tax year, with guidance on issues including the super deduction which will allow companies to cut their tax bill by up to 25p for every £1 invested – a policy that was described by the Chancellor as “the biggest business tax cut in modern British history”. They also offer advice on research and development tax credits; emergency measures rolled out amid the pandemic, including VAT and business rates reductions; and a possible move to near real-time collection of income tax, corporation tax for small companies, and capital gains tax.
A report from trade credit insurer Atradius suggests global insolvency rates are set to rise by 26% this year, with state support amid the coronavirus pandemic having delayed insolvencies that would have occurred in 2020. The report, 2021: A turn of the tide in insolvencies, suggests that a number of markets are set to exceed the average by a significant margin, with failure rates in the UK expected to rise by 56%. The report also says 2021 will bring “new hope” as recovery sets in after a year of global recession. Global GDP saw a 3.7% contraction in 2020 but 2021 is expected to deliver growth of 6%. While the UK saw a 9.9% drop in GDP in 2020, Atradius forecasts the UK economy will expand 5.9% in 2021.
ADS Group, a trade body that represents more than 1,100 employers in the aerospace, defence, security and space sectors, has written to Business Secretary Kwasi Kwarteng warning that the potential failure of Liberty Steel could see supplies of specialist metals disrupted. Liberty is under threat after the collapse of Greensill Capital, the commercial lender and main backer of the steel business’s owner, GFG Alliance. Liberty’s immediate survival depends on a standstill agreement being reached with Grant Thornton, Greensill’s administrator.
Flybe is set to be relaunched after regulators granted the airline permission to return to the skies. The airline closed down in March 2020 but a new company affiliated with Cyrus Capital, which was part of a consortium that bough the airline in 2018, has bought Flybe’s business and assets. It will be known as Flybe Limited and is expected to fly many of the previously operated routes. The deal between Cyrus Capital and administrators at EY excludes Flybe’s aircraft, which were mortgaged to lenders by the previous owners, but includes Flybe’s take-off and landing slots.
FINANCIAL SERVICES NEWS – THURSDAY 15TH APRIL 2021
Financial services firms see optimism increase
Financial services companies are seeing confidence in the economy surge at the fastest pace in more than seven years, according to a report from the CBI and PwC. The analysis shows that optimism rose at the fastest rate since December 2013 in March. A net balance of 52% of respondents said that they felt confident about the future, up from 44% in December. While businesses were hit during the most recent lockdown, a net balance of 43% said that they expected volumes to improve over the next three months. Businesses in the financial services sector expect profitability to rise in the next quarter, with a net balance of 32% forecasting higher profits. While employment fell for a fifth consecutive quarter in March, with a net balance of -12% reporting increased headcount, the pace of decline is expected to ease in Q2. Rain Newton-Smith, chief economist at the CBI, said: “It’s encouraging that financial services firms are feeling optimistic about the months ahead, likely warmed by the prospect of a phased reopening of the economy.”
Morgan McKinley’s quarterly London Employment Monitor shows that financial services job posting s returned to growth in March. The sector saw a 70% increase in job postings and a 4.8% rise in job seekers. Available roles were up 50% year-on-year. Hakan Enver, managing director at Morgan McKinley UK, said: “As the vaccine rollout continues apace and the road out of lockdown clears, we are seeing the sector recover at a faster rate than anticipated.” Separate analysis shows that London remains a global financial centre, retaining second place behind New York in the Global Financial Centres Index, while PwC’s annual survey of chief executives revealed that the UK is a more attractive investment proposition than it was before Brexit. The Telegraph’s Simon Foy says the Morgan McKinley report appears to pour cold water on suggestions that Brexit would lead to a mass exodus of financial services professionals from the City. He notes EY analysis showing that 7,600 financial service s jobs have moved out of the UK due to Brexit, a “tiny proportion” of the UK’s finance sector roles and far less than many analysts had predicted.
Young black and Asian workers have been the hardest hit by the rise in unemployment during the coronavirus pandemic, a study by the Resolution Foundation think-tank has found. Over the past year, the UK jobless rate for young black people rose by more than a third to 35%, while for young people of Asian descent saw the jobless rate increased to 24%. For young white people, the unemployment rate hit 13%. Overall, the unemployment rate among 18 to 24-year-olds rose from 11.5% to 13.6% between Q2 and Q3 2020. The 18% increase marks the largest quarter-on-quarter rise among this age group since 1992. Kathleen Henehan, a senior research and policy analyst at the Resolution Foundation, said the furlough scheme “has done a fantastic job of minimising job losses amidst unprecedented shutdowns of our economy” but warned that the pandemic “has created a highly generationally unequal unemployment surge and widened pre -existing gaps between different ethnic groups”.
Analysis from Halifax shows that house prices have hit a record high despite rising at a slower rate than a year ago, hitting an average of £252,765. The report reveals a 5.7% year-on-year increase in Q1, with this down from a nearly five year high of 7% recorded last year. On a quarterly basis, prices rose 0.3% in the first three months of the year, marking a slowdown on the 2.5% increase seen in Q4 2020. Reflecting on the figures, AJ Bell analyst Laith Khalaf was optimistic about the outlook for the sector, saying: “While there might be a few bumps along the way, particularly at the end of the stamp duty…the property market has proved itself to be unbelievably resilient.” He notes that much of this “comes down to the efforts the Government and the Bank of England have made to make mortgage borrowing incredibly easy and cheap.”
Daily Express City AM
ECONOMY NEWS – THURSDAY 15TH APRIL 2021
Productivity rises amid the pandemic
Office for National Statistics data show that productivity increased last year, with output per hour, the main measure of productivity, increasing by 0.4%. The climb comes despite lockdowns causing economic output to shrink by almost 10%, with the headline figure increasing largely because the lower-paying and least productive jobs had borne the brunt of the pandemic. Output per worker in 2020 was 9.5% lower than in 2019. Howard Archer, chief economic adviser to the EY Item Club, said that “the sectors which saw a fall in their relative share of hours worked typically had lower productivity levels”, while higher productivity industries “increased their relative share of hours worked”.
HM Revenue & Customs has cut payments to hundreds of thousands of Universal Credit (UC) claimants during lockdown because they were mistakenly overpaid tax credits as long as 17 years ago. As many as half a million struggling families have been affected. HMRC data shows such deductions have been occurring “at a rate of 47,000 cases per week” since January 18. Figures also reveal that between April and November last year it cut £63m from claimants’ payments. UC architect Sir Iain Duncan Smith said using the benefits system to claw back tax in this way is “a major mistake” that is “causing profound difficulties.”
Wales – Labour vows ‘no income tax rise in Covid recovery’
Mark Drakeford has promised not to increase income tax while the economy is recovering from the impact of coronavirus if his party is re-elected into government at the Senedd election. The Welsh Labour leader pledged to create a “stronger, greener, fairer Wales” if in power after the 6 May vote.
Denmark charges 3 Americans and 3 Britons in tax fraud scandal
Three British citizens and three US nationals have been charged by Danish authorities with defrauding Denmark of $175m as part of a European investigation into dividend tax fraud. The cum-ex trading scheme is also being investigated by authorities in Germany, Belgium and Britain.
Defence contractor Babcock has warned of writedowns totalling some £1.7bn, more than double analysts’ estimates, following a review of historic contracts and future income. In a trading update, the firm noted that the “vast majority” of impairments are one-off in nature and non-cash affecting, with group underlying operating profit expected to be reduced by around £30m annually. Babcock’s annual results are likely to be delayed because of the volume of work needed on the writedowns and write-offs and because the company effectively has two auditors as Deloitte prepares to take over from PwC.
The Times reviews the move by Philip Day’s right-hand man to rescue Peacocks, with the backing of Day himself. The “phoenixing” of Day’s various retail interests in new vehicles fronted by Steve Simpson, his long-term lieutenant, has led to criticism. The Peacocks move infuriated rivals who have accused FRP Advisory, the administrators to Day’s assets, of “merely going through the motions, wishing to create the appearance of a fair and equal bidding process, when in fact they have a settled intention to compete with one particular party — an insider”. FRP insists it ran a full and fair process and rejects allegations that it had frustrated other bidders, such as Frasers Group’s attempts.
Working from home can turbocharge women’s pensions
Former pensions minister Ros Altmann has welcomed the move to flexible working, adding that it will “alleviate” some of the pension discrepancies between men and women. She says: “The more women can combine their caring duties with their careers, the better. It is certainly a good thing if workplaces make it easier for women to continue working full-time hours while balancing their other responsibilities.” But, she adds: “Lots of women are still unable to commit to full-time hours even when flexible working is an option.”
Daily Mail This is Money
SMEs NEWS – WEDNESDAY 14TH APRIL 2021
HMRC gives update on SEISS payments
HMRC has issued an update on SEISS grants, stating that the service to claim the fourth grant will be available from late April 2021. HMRC said: “If you are eligible based on your tax returns, HMRC will contact you in mid-April to give you a date that you can make your claim from. It will be given to you either by email, letter or within the online service.” HMRC added that self-employed claimants will need to confirm they meet all the eligibility criteria when making their claim – which has to be made on or before June 1, 2021.
ECONOMY NEWS – WEDNESDAY 14TH APRIL 2021
Positive Covid data pressures Johnson to reopen faster
New official figures show 23% of recorded coronavirus deaths are now people whose primary cause of death was not COVID-19. Additionally, daily death figures by “date of death” reveal that Britain has had no more than 28 deaths a day since the beginning of April while Oxford University has calculated that the number of people in hospital with an active Covid infection is likely to be around half the current published daily figure. Covid deaths now make up just 4.9% of deaths registered in England and Wales, compared with 45% in mid-January, according to the ONS. MPs are now calling on Boris Johnson to take a less cautious approach to lifting restrictions to reduce the other harms caused by lockdown. Prof Carl Heneghan, the director of the Centre for Evidence Based Medicine at Oxford University, commented: “The issue is as we go about our daily lives there will be a slight increase in cases, but the key is not to panic. I think this over-cautiousness c an be overcome by using a data-driven approach.”
The Office for National Statistics has released figures showing that UK trade with the EU recovered in February, with exports increasing by £3.7bn, or 46.6%, after a £5.7bn decline a month earlier. AJ Bell financial analyst Danni Hewson commented: “There is small comfort to be had in February’s trade figures. Exports to the EU, which dropped so dramatically off a cliff in January, have bungeed back up, though they are still £2bn down on pre-Brexit levels. Notably imports from the EU were less resilient and remain more than £5bn down.”
SEC says warrants issued by blank-check companies may be liabilities
The Securities and Exchange Commission has issued guidance indicating that the warrants issued to early investors in SPAC deals should not be classified as an equity, but rather “a liability measured at fair value, with changes in fair value each period reported in earnings.” In a statement late Monday, SEC officials said: “The evaluation of the accounting for contracts in an entity’s own equity, such as warrants issued by a SPAC, requires careful consideration of the specific facts and circumstances for each entity and each contract.” Forbes reports that uncertainty over how the SEC will treat warrants has stopped all new SPAC offerings as accounting firms will not sign-off on any financial statements or company audits until they receive clarity from the government.
US should require crypto-trading to be reported to help close tax gap
Internal Revenue Service Commissioner Charles Rettig estimates that the US now has a $1trn tax gap – up from the last official estimate of a $441bn annual average from 2011 to 2013. Rettig reckoned trading in cryptocurrencies was escaping taxation, as was rising foreign-sourced income and abuses of business income passed through as personal income. Among his recommendations Rettig suggested new legislation requiring transactions in cryptocurrencies such as Bitcoin be reported.
OTHER NEWS – WEDNESDAY 14TH APRIL 2021
Katie Price owes £3.2m to creditors
Former glamour model Katie Price reportedly owes more than £3.2m to her creditors after accountants submitted a report raising concerns about her financial conduct. Price allegedly owes the cash from her company Jordan Trading Ltd, despite being declared bankrupt in 2019 and vowing to pay back £12,000 a month through an individual voluntary arrangement. The reality star was once worth more than £45m.
Daily Mail The Sun Daily Mirror
Bank of England’s chief economist to run Royal Society of Arts
Andy Haldane is leaving the Bank of England after a 30-year career to join the Royal Society for Arts, Manufactures and Commerce (RSA) as chief executive in September. The Bank of England’s chief economist has been among the most optimistic forecasters throughout the pandemic. “Haldane’s departure means the Bank of England is losing its major – and maybe only – current hawk,” said James Smith, economist at ING. “In theory, at the margin this tilts the committee towards a more favourable view on negative interest rates if more stimulus were needed, though we still think this is unlikely.”
American CEOs say Biden’s tax hikes will slash wages, hiring and profits
A majority of CEOs in the US have said the Biden administration’s plans to hike corporation tax from 21% to 28% would have a “moderately” to “very” significant adverse effect on their company’s competitiveness. A Business Roundtable Survey found 98% of American CEOs believe the rate increase will stunt wage growth, weaken expansion, innovation and hiring. Raytheon Technologies CEO Gregory Hayes said: “The tax system needs to support innovation, R&D, capital investment and economic growth.” He continued: “As we look toward recovering from the COVID-19 pandemic, keeping competitive tax policies in place is needed to help reinvigorate the U.S. economy and lead to more opportunity for Americans.” Meanwhile, writing in the FT, Richard Murphy says Biden’s plan for international tax reform would need robust country-by-country reporting if it’s to stop international tax arbitrage. Finally, Conservative MP Sir John Redwood has warned that a new global minimum corporation tax rate of 21% would seriously harm investment flows into Ireland, which has used a 12.5% tax rate to build its economy.
UN chief calls for wealth tax on rich boosted by pandemic
United Nations secretary-general Antonio Guterres has urged governments to impose a “solidarity or wealth tax” on rich people who profited during the coronavirus pandemic. “We must make sure funds go where they are needed most. Latest reports indicate that there has been a $5trn surge in the wealth of the world’s richest in the past year,” Guterres told a UN meeting on financing for development. “I urge governments to consider a solidarity or wealth tax on those who have profited during the pandemic, to reduce extreme inequalities,” he added. The call from Guterres follows a similar plea from the International Monetary Fund which has advocated a “temporary COVID-19 recovery contribution” to be levied on those companies and individuals that have benefited financially during the pandemic.
City AM Daily Mail The Independent
SMEs NEWS – TUESDAY 13TH APRIL 2021
City to boost Square Mile’s recovery with fund for SMEs
Catherine McGuinness, Policy Chair of the City of London Corporation, details in a piece for City AM a new Covid Business Recovery Fund to help underpin the Square Mile’s economic recovery. “The scheme is designed to support SME businesses which contribute to the Square Mile’s vibrancy at street level and directly provide services to returning City workers, visitors and residents.” McGuinness adds that most workers are keen to return to the Square Mile while City leaders have stressed their commitment to central London office space. She concludes: “The vibrancy of our unique ecosystem relies on each part of the City community – multinational businesses to domestic SMEs, international workers to local residents – working in partnership. Together we can bring back the buzz of life in the Square Mile.”
SMEs should use delays to customs changes to implement new systems
Experts are warning Britain’s small businesses to get systems in place so they can export smoothly to the EU whilst the rollout of new border procedures are delayed. Management consultant Neil McEvoy said: “Businesses need systems in place that provide scheduling and planning tools, in order to ensure every shipment is compliant when sent to the EU.” He added: “If SMEs get their selling systems ready for May they will survive, because Europe offers ‘low-hanging fruit’, with lots of people looking to spend. There will be many businesses that don’t and they will go to the wall. For those that get it right, the market is huge.”
Research from Hargreaves Lansdown shows the gap in peoples’ retirement plans has widened as a result of the COVID-19 pandemic. The investment platform found the number of people who wanted to give up work between the age of 50 and state pension age had more than doubled from 4% before the pandemic to 10% after. Conversely, for those that wanted to carry on working full time, the figure increased from 38% to 42%. Hargreaves’ Sarah Coles said the pandemic had forced people to make decisions about their retirement. “While a fifth of people still plan to gradually ease out of the workplace, it has fuelled a rise in all-or-nothing retirement plans,” she said. Meanwhile, Darren Dicks, head of wealth management at Age Partnership, said: “Since February we have seen a marked increase in the volume of clients getting their retirement plans back on track.”
A study of more than 7,000 women aged 55 to 65 out of King’s College London warns that raising the retirement age as a means to reduce pension costs would mean a reduction in in-family care resulting in more pressure on the NHS. Research fellow Ludovico Carrino said longer working hours cut the probability of women providing “intensive” or “meaningful” care and urged officials not to consider policies in institutional silos. Sir Steve Webb, former pensions minister and partner at consultants LCP, said: “If governments are going to raise pension ages, much more needs to be done to support people who will be working longer as a result.” The Telegraph notes that the state pension age for men and women will rise to 67 by 2028 with recent increases saving the Government billions of pounds every year.
Liberty Steel has failed to file accounts for some of its biggest British businesses in time. Sanjeev Gupta is urgently seeking finance to shore up his industrial empire after its main backer, Greensill Capital went bust. Credit Suisse, a lender to Greensill, is trying to recover money lent to Gupta’s companies via court action in the UK and Australia. An insider said most of the companies had not filed audited accounts for the year ending on 31 March 2020 because they would no longer represent an up-to-date view of the businesses.
The Guardian, Page: 26
Taxpayers on the hook for Monarch airlift
papers released by KPMG show Greybull, the owner of collapsed budget airline Monarch, lost £25m from the administration process, which was completed last month. The Civil Aviation Authority was forced to charter planes to fly customers back to the UK after Monarch went bust in 2017 and it was hoped some of the costs of the airlift could have been recouped, but tax payers will have to foot the entire £60m bill.
Daily Mail, Page: 79
ECONOMY NEWS – TUESDAY 13TH APRIL 2021
North West business leaders optimistic
With coronavirus restrictions lifting across the country allowing hospitality and non-essential retail to open up again, leaders from across the North West are looking ahead with optimism. Neil Sturmey, a senior partner at Grant Thornton in the North West, noted that it had been “the longest winter” for high street retailers and the hospitality sector, with both “overdue some good news”. “That is coming,” he said. “Most of us are desperate to go out again and many businesses are hoping that we are heading for a golden summer.”
Jon Holt has been voted in as KPMG UK’s new chief executive with partners overwhelmingly backing the appointment, although he was the only candidate put forward by the board. The vacancy was created by the resignation by Bill Michael as chair and chief executive after a staff backlash in February over comments he made at a virtual town hall meeting. Mary O’Connor, who took over the day-to-day running of KPMG on an interim basis after Michael left, will now step aside. The firm’s chair Bina Mehta commented: “I’m delighted that Jon received the overwhelming backing of the partnership. Jon’s extensive experience and inclusive leadership style means he is well placed to deliver the next stage of our growth strategy and support our clients as the country emerges from the pandemic.”
An associate director at investment management company Smith & Williamson Corporate Services was sacked fairly, a tribunal has heard, after he gave a colleague a “seven out of ten” rating on a night out. Tom Skinner asked his junior colleague Jessica Lennox what would happen if they were the last people left alive and had to “repopulate the Earth.” During the same evening, he also made inappropriate comments to a woman named as ‘Ms J’ and twice followed her into the toilet and refused to leave. After he was sacked for gross misconduct, he launched an unfair dismissal claim, saying he had been discriminated against because he suffered from anxiety. His case was dismissed by a central London tribunal that ruled his “inappropriate behaviour” meant his sacking was justified.
How will Biden’s tax plan affect investment in Ireland?
The BBC’s John Campbell talks to experts about the possible impact of the Biden administration’s global corporate tax proposals on Ireland, which has famously lured multinationals to its shores with a 12.5% tax rate. This tax advantage could be wiped out with a global minimum rate which could be set at 21%, according to a suggestion from US Treasury Secretary Janet Yellen. But Peter Vale, tax partner with Grant Thornton in Dublin, thinks a figure in the teens is more likely, adding that another key issue will be exactly how what rate a company is paying is worked out.
Supply chains will fight for tougher regulation if corporates fail them
Rashmi Dube asserts in the Yorkshire Post that it is small businesses that pay the price for corporate governance failings at large businesses, along with Big Four conflicts of interest. Companies such as Carillion and BHS are forced into insolvency by board-level failings and suppliers want to know how they are going to be protected going forward. “It’s time for regulation and legislation to become stronger and better.”
SME confidence soars
A survey of over 1,500 firms by the Federation of Small Businesses found that confidence was at its highest since 2014 with 51% expecting their revenues to grow over the next three months, the highest proportion since the summer of 2015. Only 24% expected sales to fall.
The Daily Telegraph profiles how savers have started hunting for £40bn in lost pension savings ahead of Government proposals to use forgotten pensions and other dormant assets to launch £800m of funding for charities and social enterprises in a bid to help local economies bounce back from the pandemic. Duncan Stevens of Gretel, an asset tracing firm, said there had been an increase in the number of people inquiring about lost savings during lockdown. “People have more time on their hands and financial concerns are at front of mind,” he said. The firm estimates that 20m people have a share of around £50bn in lost savings of some kind today.
Prospects improve as Brexit-related uncertainty wanes
New research from BDO indicates that employment prospects are improving amid the success of the vaccine rollout and extension of the job retention scheme. Although the pandemic has seen the number of payroll employees go down by 693,000 on a year ago, the absence of Brexit-related uncertainty has also helped to fuel renewed optimism, BDO said.
The Times, Page: 33 The Guardian, Page: 27 The I, Page: 8 Daily Express, Page: 43 The Sun, Page: 13
INDUSTRY NEWS – MONDAY 12TH APRIL 2021
Shared audits will not provide market resilience – Herbinet
David Herbinet, the head of audit at Mazars, has called for the eventual introduction of joint audits as part of a shake-up of the industry. He told the Telegraph that managed shared audits, which have been proposed in the Government’s white paper on audit reform, do not go far enough to increase competition and choice and he would only support them as a stepping stone to joint audits. These were proposed in a 2019 review by the Competition and Markets Authority and would mean two or more firms are appointed to take equal responsibility for an entire group. Mr Herbinet said: “The main concern is that, fundamentally, managed shared audits are not going to have any meaningful impact on the market’s resilience, which I think has got to be one of the key objectives in all of this.” Business Secretary Kwasi Kwarteng’s proposals for reform also include a requirement for Big Four firms to ringfence their audit and consulting arms to reduce conflicts of interest and the creation of the Audit, Reporting and Governance Authority, which will replace the Financial Reporting Council and could have power over large unlisted companies as well as those on the stock market.
A poll of FTSE 350 finance directors by Deloitte has revealed that the proportion expecting a reduction in capital spending over the next three years has fallen to 19% from 65% last summer. Additionally, 29% now expect to reduce hiring, down from 74% last summer. Hiring expectations have increased markedly while two-thirds of bosses expect the bulk of their workforces will return to the office by the third quarter of the year.
Letter: Mid-tier auditors fear the scrutiny of big mandates
Kingsley Napley’s Julie Matheson says not all mid-tier auditors want the extra regulation that comes with auditing listed companies, as per proposals for shared audits, and the prospect of significant sanctions.
Kwarteng makes concession on new UK takeover regime
The Business Secretary has revised the Government’s National Security and Investment Bill so fewer takeovers of British companies will need to be scrutinised by the state. Kwasi Kwarteng has revised the stake threshold at which the business department must be notified about a deal, from 15% to 25%. It follows a move last month when Mr Kwarteng narrowed the list of which type of foreign investments will fall foul of the new takeover regime. The business secretary will still have the power to call in deals below the 25% threshold if there is a suspicion that a minority stake could give the foreign investor material influence over a company. But the Henry Jackson Society think tank, said the change “risks very real security risks being allowed to sail by without scrutiny,” adding: “The Government must urgently explain its justification for this reversal.”
EY ‘s latest IPO Eye report shows the UK had the strongest first quarter for initial public offerings in 14 years with 12 main market and eight Aim IPOs raising a total of £5.6bn. This is more than half of the £9.4bn raised in the whole of 2020. The same period in 2020 saw just three IPOs on the main market and two on Aim, which raised a combined total of £615m. EY said confidence in the UK’s IPO markets as an exit route had been reinforced by significant private equity activity in the quarter. The report also showed that the UK has maintained both its position as the leading listing location in Europe and its third place position globally behind the US and China.
The Telegraph considers the fate of Bonmarché as administrators try to decide how many stores will reopen when Covid restrictions are lifted on Monday. Just over 70 of the chain’s stores were taken over four months ago and are set to reopen today but some or all of the remaining 148 stores may never reopen. Administrators at RSM have been reviewing the options but declined to say how many stores will reopen this week.
Full extent of pandemic’s high street casualties yet to be revealed
More than 17,500 chain store outlets disappeared from British high streets last year as the pandemic drove the worst decline on record. As the survivors prepare for reopening, figures compiled by the Local Data Company and PwC show fashion retailers were the hardest hit, followed by betting shops, pubs and bars and restaurants. Lisa Hooker, the head of consumer markets at PwC, commented: “The full extent will be revealed in the coming months as many of the [company restructures] and administrations in the early part of 2021 still haven’t been captured, including department stores, fashion retailers and hospitality operators that will leave big holes.” Separate figures from the British Retail Consortium show the closures wiped out 176,000 retail jobs at a rate of 484 jobs a day with a further 11,986 jobs were lost through CVAs.
Consumer confidence returns
New analysis by YouGov and the Centre for Economics and Business Research shows consumer confidence has risen to its highest level since August 2018. Employment security is close to pre-pandemic levels, the research found, and for the first time since the start of the pandemic, more households than not believe their finances will improve in the year ahead.
US tax plans could prove costly for British businesses
Although UK officials have welcomed moves by the Biden administration to force multinationals to pay more tax, the Treasury is urgently reviewing how the plans might affect UK businesses. The Telegraph reports that there is concern in Whitehall that British companies could end up paying more elsewhere in the world as a result of the proposals, potentially reducing revenues for the Exchequer. Washington’s plans would see a global minimum corporation tax and levies for companies based on the location of their sales. While tax campaigners and the Labour party urge the Chancellor to publicly back the plan – Tax Justice UK estimates the blueprint would bring in an extra £13.5bn a year for the public purse – Suren Thiru, head of economics at the British Chambers of Commerce, said while a co-ordinated international approach to addressing tax avoidance is preferable to a disjointed nation by nation approach, “significant questions remain on how it would work in practice.” In the FT, DeAnne Julius says Biden’s plans are brave and bold and could save companies a lot of time in tax planning.
HMRC has said that nearly 3.8m cheques sent to taxpayers between 2015 and 2020 have not been deposited in accounts, amounting to a tenth of all tax rebates sent by post over the period. Less than 2% of tax refunds are made by cheque, according to HMRC, which said it pays money into people’s bank accounts directly where possible.
The Times, Page: 57
Could global tax reform at last be within reach?
Several sources cover news of the Biden administration’s corporation tax proposals with the FT reporting that the political battle lines in the US are being formed with many Republicans on Capitol Hill warning that the changes could harm US multinationals while two of the most influential Democratic lawmakers on tax policy have backed the plans. Elsewhere, the Observer’s business leader argues that the move from Washington has raised hopes of a breakthrough for a global agreement on tax and describes the proposals as a change that could make the world a fairer place and “kill tax havens dead”.
No IHT for Philip’s bequests, unless you’re a minor royal
The Sunday Times reports that due to a deal struck with former PM John Major bequests from Prince Philip to the Queen, the Prince of Wales and the Duke of Cambridge will be tax-free. However, anything from the Duke of Edinburgh’s estate which is passed to his other children or grandchildren, including his second son, the Duke of York, and the Duke of Sussex, would be taxed at the standard 40%, above the £325,000 threshold. The “sovereign to sovereign” rule was negotiated with the Conservative government in 1993 when the Queen and the Prince of Wales first agreed to pay income tax.
The Sunday Times, Page: 4
CORPORATE NEWS – WEEKEND TO 11TH APRIL 2021
Suspect Sanjeev Gupta invoices used in Greensill loans raise fraud concerns
Several European metals companies have denied doing business with Sanjeev Gupta’s Liberty Commodities, raising questions over invoices purporting sales to the businesses which formed the basis of funding from Greensill Capital. Separately, the collapse of Greensill has led to 440 staff losing their jobs, administrators have revealed. Grant Thornton said 305 redundancies would be made at the firm’s head office in Warrington, with the rest in London.
John Lewis chief says no more store closures expected
Pippa Wicks, John Lewis’s chief executive, has insisted there will be no further shop closures, as she defended the partnership’s revival strategy two weeks after shutting eight outlets. The Times cites analysis by PwC which shows nearly 99m sq ft of retail space has closed in the past year while 5,500 out of 30,000 non-essential retail stores remained closed between the three lockdowns and may never reopen.
Mike Ashley’s Frasers Group is anticipating a £200m hit due to coronavirus, warning that further restrictions on retail are “almost certain”. Chris Wootton, chief financial officer, said the additional writedown had not been the result of pressure from RSM, its new auditor, and that the decision had not been reviewed by RSM although the group had informed the firm before telling investors.
The British division of US clothing retailer Brooks Brothers has entered administration, after suffering from a lack of demand for its products as people worked from home. Begbies Traynor has been appointed as the company’s administrators.
Italian consortium to bid for National Lottery
The Sunday Telegraph reports that investment firm CVC Capital Partners is backing a bid to run the National Lottery led by portfolio company Sisal, the operator of Italy’s most popular lottery. The bid will be made in conjunction with children’s charity Barnardo’s, which will provide expertise on raising money for good causes in the UK. The Sisal-led consortium is attempting to displace incumbent operator Camelot, which has run the National Lottery since its launch more than a quarter of a century ago. The auction is being run by Rothschild, EY and Hogan Lovells on behalf of the Gambling Commission and is scheduled to culminate this autumn.
The Sunday Times reports on claims that Philip Day engineered the administration of his Peacocks business so it ended up being bought by Steve Simpson, his closest lieutenant. The paper’s Sam Chambers says the deal has ensured the key components of Day’s Edinburgh Woollen Mill Group have ended up being controlled by Simpson and that other suiters had no chance, leaving questions for advisers from FRP Advisory and RSM.
Scotland’s entrepreneurs need vision and investment
Gillian Bowditch says in the Sunday Times that Scotland’s small businesses need investment from the Scottish government and leadership from Scottish Enterprise – an organisation she says, “has proved to be a bloated and inefficient body that ought to be disbanded.” SMEs are the key to economic growth and instead of dreaming about unicorns, Nicola Sturgeon’s government should recognise that uncertainty over independence makes business leaders nervous and red tape ties up entrepreneurs: what’s needed is “vision, courage and calculated risk” or there is little hope for economic growth.
A report from Hitachi Capital shows confidence among small businesses has returned to pre-pandemic levels, with 36% of business owners predicting they will grow during the second quarter, up from just 14% a year ago. The percentage fearing collapse has also fallen from 29% over the past year to 7%.
Sunday Express, Page: 59
FINANCE NEWS – WEEKEND TO 11TH APRIL 2021
Banks prepare to claw back billions in Covid loans
HSBC, NatWest, Barclays and Lloyds have begun writing to businesses warning them that repayments on emergency support loans will soon be expected. Banks have handed out more than £75bn to 1.6m firms under a number of schemes set up by Rishi Sunak, the Chancellor, and are expected to spend millions on recovery. One senior banker warned that lenders could go in hard to recover debts after a recent court case found banks do not have a duty of care to borrowers who fail to repay.
PENSIONS NEWS – WEEKEND TO 11TH APRIL 2021
Pension schemes take legal action over reformulation of inflation measure
Trustees of the Ford, BT and Marks and Spencer pension schemes are seeking a judicial review of the decision to change the calculation of inflation, which they say will leave millions of retirees with lower annual payouts. The Government’s recent decision to align the Retail Prices Index (RPI) with the Consumer Prices Index including owner occupiers’ housing costs (CPIH) will have “far-reaching implications” which have not been “fully considered” by officials, the trustees argue. The reform is also seen as likely to lead to an increase in scheme funding shortfalls because it reduces the value of RPI-linked assets. This in turn would add pressure on sponsoring employers, the trustees pointed out.
The Telegraph reveals how pensioners were able to recoup thousands of pounds of pension underpayment after reaching out to Sir Steve Webb, the former Pensions Minister. Figures released last week by the Office for Budget Responsibility revealed the average arrears payment for the first time. More than 74,000 married women are to receive up to an average of £23,000 over the next five years, while widowed retirees are owed an average £17,000. Sir Steve, who has led the campaign resulting in thousands of women applying for back payments, said: “While it is good news that some married women will now be contacted and awarded an increased pension as part of the DWP’s exercise, even this group may have to wait up to five years to be put on the right rate.”
Britons may have to work an extra four years before retirement
Experts have suggested a recent study concluding that the average retirement age has risen from 64 to 66 may be off the mark by four years or more. Neil Moles, CEO of financial advice firm Progeny, says his research indicates “people are expecting to work for up to two years more, however, we could be looking at three, four or more years longer than this for many people.” Moles suggests this is a result of fears over high levels of government debt and future tax hikes, as well as concerns over looking after other family members after they retire.
PROPERTY NEWS – WEEKEND TO 11TH APRIL 2021
House prices expected to continue rising
Figures from Halifax on Friday show house prices rose 1.1% during March, the biggest increase in six months. In annual terms, prices rose 6.5%, the strongest reading in four months and taking the average house price to a record high £254,606, Halifax said. The lender added that it expected the upturn to persist in the next few months as consumer confidence grows on the back of Britain’s swift COVID-19 vaccine rollout. “However, with the economy yet to feel the full effect of its biggest recession in more than 300 years, we remain cautious about the longer-term outlook,” Halifax added.
Property developer boss says workers must return to the office
Land Securities CEO Mark Allan is urging the Government to change its guidance that states people should continue work from home if they can until June at the earliest. A safe return to the office should be accelerated if we are to see economic activity in Britain’s cities revived, Allan said. His comments come as employers including HSBC, Lloyds, Grant Thornton and PwC have said they will slash office space after the pandemic recedes.
Daily Mail, Page: 91
NCP’s landlords gear up for battle over restructuring plans
Landlords are fighting back against demands from Japanese-owned car park operator NCP that substantial rent arrears are written off. Sky News reports that a group of landlords is said to be lining up AlixPartners and Hogan Lovells to advise them in a bid to overturn NCP’s proposals. Melanie Leech, the chief executive of the British Property Federation, said: “This Restructuring Plan, if approved, will signal to businesses that they can use this new business rescue procedure to simply walk away from debt owed to property-owners […] who represent local authorities and millions of pensioners and savers invested in commercial property, to a business’ shareholders.” NCP, which is being advised by Deloitte, has warned that it is likely to collapse unless the restructuring is implemented.
The Express reflects on the creation of a taskforce to claw back cash lost to furlough fraud during the pandemic. Official figures from HMRC show reports of furlough themed fraudulent activity have risen to just over 26,000; at the time of the Budget HMRC had 10,000 live inquiries. Iskander Fernandez, Head of White Collar Crime and Investigations at BLM, said of the Chancellor’s £100m funding for the taskforce that it may be considered “a conservative sum given the potential scale of fraud.”
MPs call for fairness as IR35 changes rolled out
The All Party Parliamentary Loan Charge Group has called for off-payroll reforms currently being rolled out to be re-examined during the passage of the Finance Bill this year. A report from the group stated that: “All ‘inside IR35’ workers should get full rights under all legislation dealing with agency workers, with a clear and transparent right to holiday and sick pay.” The APPG recommended an alignment of tax and employment law to ensure fairness, declaring: “We call on the Government to accept it is unfair for workers who are taxed as employees to be denied the rights and benefits of an employee or recognition in employment law. Anyone who is taxed as an employee should also receive the corresponding benefits; thus, by aligning tax and employment law, certainty for both contractors and hirers will ensue.”
ECONOMY NEWS – WEEKEND TO 11TH APRIL 2021
Consumers chomping at the bit
Experts are predicting a spending spree next week as shops reopen on what is being dubbed as “Bounceback Monday”. Analysts predict £4.5bn could be spent in the first seven days of post-lockdown shopping with Lisa Hooker, head of consumer markets at PwC, saying: “You will see a big bang, particularly if the weather is good. There is enormous pent-up demand. Retailers were quite cautious when we came out of lockdown last year but this time there is far more excitement.”
Daily Mail, Page: 43
Trade with France returns to pre-Brexit levels
March saw trade between the UK and France return to pre-Brexit levels raising hopes of a swift recovery as businesses get to grips with customs arrangements. Analysis by French customs officials shows imports from Britain climbed to 107% of typical levels after taking Covid effects into account, the research found – with exports back at 96%.German figures for February also showed improvement with the sharp slump witnessed in January shrinking markedly. However, trade experts said Anglo-German trade is still struggling badly with exporters hit particularly hard.
Take care of emerging markets, your future depends on it
The International Monetary Fund warned last week that the multi-speed recovery from the pandemic was leaving developing nations behind. The worst-hit countries will be emerging Asian economies which could suffer a near-8% loss in GDP by 2024 compared to pre-Covid projections. The US, by comparison, will be larger by 2024 than it would have been if Covid had never hit. “Last year, everyone spent like crazy, it was a big widening of fiscal deficits everywhere in advanced economies and in emerging markets,” explains Marcelo Carvalho, head of global emerging markets research at BNP Paribas. “The difference is the room for manoeuvre; the fiscal space is more limited for emerging markets. In advanced economies, you can print your own hard currency, it’s not the case for emerging markets.” The Telegraph’s Tom Rees concludes: “Advanced economies could soon put Covid in the rear-view mirror but for many poorer countries a longer, rougher road to recovery lies ahead.”
Wall Street investors look warily at gathering tax ‘storm’
While many laud President Joe Biden’s corporation tax plans, analysts are warning they pose a serious risk to profit margins for US companies and could derail hiring plans. As if to illustrate the point, the Times reports on an exodus of millionaires from New York to Florida and Texas as tax rises threaten a drastic reduction in the city’s tax receipts.