Britain leads the way as Global markets shake-off recession
The first green shoots of global manufacturing recovery are emerging as Europe, the US and Japan shake off the recession scare, and China comes back to life after a deep industrial slump.
The JP Morgan/Markit index of global factory orders rose to a seven-month high of 51.9 in October and output rose to 51.4, fuelled by a wave of monetary stimulus across the world and an end to fiscal austerity in the West. “We think this is just the beginning of a long recovery for the whole western world after five years of post-crisis blues,” said Charles Dumas from Lombard Street Research.
Japanese industry has shaken off its mid-year malaise with the strongest data in a year, suggesting that East Asia may at last be through the worst. Britain’s index rocketed to a 16-month high of 55.5 and is now the strongest in the world, despite the overvalued pound.
Banks limit SME overdrafts in attempt to reduce risk
Overdrafts for small firms are being withdrawn or reduced by the high street banks at an alarming rate, restricting working capital for hundreds of thousands of businesses and hampering their growth.
Around 17% of the UK’s small-to-medium-sized enterprises (SMEs) have reported that their overdrafts have been removed altogether and almost a third have seen reductions imposed over the past two years. Separate data from the Bank of England show £5 million of SME overdrafts have been cut every day since 2011, as banks seek to reduce risk on their balance sheets.
Businesses that have periods of feast and famine, such a hotels that secure most of their business during the summer, will often have their overdrafts removed when cash is plentiful, only to find they are no longer available in February when money is tight.
HMRC’s performance is ‘woefully inadequate’
HM Revenue and Customs (HMRC) is still failing UK taxpayers, a group of MPs has said. It accused HMRC of only answering half the phone calls to its customer care centres, and not carrying out enough prosecutions. Members of the Public Accounts Committee (PAC) said customer service is so bad that it could be affecting tax collection. HMRC denied this and said it has recruited 3,000 more staff to help.
In 2011-12, HMRC answered 74% of calls from the public, but by the start of 2015, it only answered half before people gave up or the service disconnected. The committee says HMRC is only answering 39% of phone calls within five minutes, against a target of 80%. As to tax avoidance, the PAC described HMRC’s record of 11 prosecutions for offshore tax evasion in the past five years as “woefully inadequate”. Despite being handed a list of 3,600 people who had hid money in Switzerland, it prosecuted just one person involved.
The PAC believes we have the worst of both worlds – honest people who want to pay their taxes cannot get through because phone calls go answered, while tax evaders are not prosecuted when they are caught.
EU economic recovery slowly gathering pace
The economic recovery within the European Union and the eurozone should continue at a modest pace next year, the EU has forecast. The economy of the 28-member state EU is set to grow by 1.9% this year, 2% in 2016 and by 2.1% the year after. The 19-nation eurozone is expected to grow by 1.6% this year, rising to 1.8% next year and 1.9% in 2017.
The EU said growth was being helped by factors such as low oil prices and a weaker euro exchange rate. However, its report also warned of new challenges to growth, including the slowdown in China and among emerging market economies.
The European Commission admits gains will not be even between member states. Greece, which is receiving up to 86 billion in a three-year bailout, is expected to see its economy shrink this year and in 2016, but is forecast to grow by 2.7% in 2017.
Interest rate rise hopes again disappear over the horizon
Interest rates are set to remain at their record lows well into 2016, the Bank of England said, as it lowered its growth and inflation forecasts. It says the UK economy will grow 2.7% this year, down from a previous estimate of 2.8%, while also cutting next year’s outlook to 2.5% from 2.7%. It also predicted that UK inflation will remain below 1% until the second half of next year, even if interest rates remain at 0.5%.
The Bank’s projections show that inflation in two years’ time may be slightly above its 2% target if market expectations for interest rates are followed, and that points to a rate rise not coming until at least the end of 2016.
Closures will see Tax offices replaced by 13 regional centres
HM Revenue and Customs (HMRC) is to close all 170 of its offices across the country in favour of 13 new regional tax centres. This is part of a major restructuring designed to take hundreds of millions of pounds from its budget. The radical plan will leave towns and cities across the country without a tax office. The cuts are expected to be so severe that there will be no tax office in England west of Bristol, with little or no coverage in East Anglia. The closures risk intensifying concerns about the organisation’s poor customer service record.
HMRC, which has already cut its staff numbers by almost half to 56,000 since it replaced the Inland Revenue, is expected to tell its employees that it will minimise redundancies, but expects some workers to travel or change roles, with the closures taking as long as 10 years to happen.
Champions League and replica kit deal swells Man UtD’s coffers
Manchester United reported that quarterly revenues to 30th September rose 39% to £123.6 million. The record revenues were boosted by sales of its new Adidas replica kit, and Champions League football. The club expects overall revenue for the year to be £500-£510 million. No club has exceeded £500 million before.
The Old Trafford club failed to qualify for Europe’s premier club competition last season but its return to Champions League competition has seen a big leap in match day and broadcast revenues. In July 2014, Manchester United signed a record-breaking deal with Adidas, worth £750m over 10 seasons.
Billing tops energy providers’ complaints
Co-operative Energy received 50% more complaints per 100,000 customers than any other energy provider in the UK from July to September, new data reveal. The energy ombudsman, that helps resolve customer complaints, accepted 663 complaints from its customers in just three months. Customers not receiving bills, receiving late bills or getting an inaccurate invoice formed the majority of complaints.
Scottish Power and Npower took second and third place in terms of receiving the most complaints per 100,000 customers in the third quarter, the ombudsman said. The actual figures per 100,000 customers are 135.9 for Co-operative Energy, 89 for Scottish Energy and 71 for Npower.
Most married couples miss out on tax break
Fewer than one in 10 households eligible for the married couple’s tax allowance is benefiting from the perk. An estimated 320,000 couples make a tax saving of up to £212 a year via the Government’s flagship family-friendly policy, but this is just 7% of the 4.2 million households the Government originally said would be better off.
The marriage tax break was announced in the 2014 budget after years of pressure from family campaign groups. It allows one partner to transfer £1,060 of their unused tax allowance to the other, saving their spouse £212 in tax. The giver must be a non-taxpayer and the receiver must pay 20% basic rate tax. Once an application has been received, HMRC must adjust the tax code of the highest earner to ensure they pay less tax. Many claimants, however, have struggled to hand over identity details or have been forced to wait for months for a reply from HMRC to rubber-stamp their application.
HMRC has begun a publicity and advertising campaign to encourage more people to apply for the tax break.
Smart machines put 15m jobs at risk
As many as 15 million jobs are under threat of replacement by smart machines, the Bank of England’s chief economist has warned. Andy Haldane said a new generation of creative robots could replace at-risk jobs over the next 20 years. “Occupations most at risk include administrative, clerical and production tasks. Those most at risk from automation tend, on average, to have the lowest wages,” he said.
There are presently 33.7m jobs in the UK, meaning that the number at threat represents close to half of all positions. In the US, he estimates that up to 80m jobs are at risk of automation. But he highlighted historical evidence that suggested automation can create new job opportunities.
“There is no evidence to suggest technology has damaged jobs and plenty to suggest it has boosted wages,” Mr Haldane said. However, he admitted that this time may be different, highlighting concerns that middle income jobs could be hit by the rise of machines, leaving only low-paid and high-paid jobs behind in the workplace.