Tag Archive | "cbi"

Government needs to fix the tax code, CBI president says


Enough of the moral debate, says the president of the Confederation of British Industry – the government needs to fix the UK’s loophole-riddled tax system.

Sir Roger Carr has finally had enough of the government’s posturing and finger-pointing when it comes to accusatory comments towards which company might have avoided paying their fair share. Instead, it’s time for the UK government to take action with other governments to ensure that the tax laws are enforced worldwide. This is the best way to put an end to tax avoidance, Sir Roger insisted, and it would also prevent any problems with becoming a less competitive business market in comparison to a foreign tax regime.

The CBI president also issued the warning that governments absolutely must consult with firms when devising new tax laws. Not engaging the business community could lead these very same firms to not buy in to any new legislative movements – and a law that is ignored or flouted is not exactly a very good law if you ask him, or me for that matter!

Transparency is the absolute first and most important step that any government can take when it comes to taxation. All you need is a few worthwhile companies to justify their tax regimes by explaining them in full, acting as a brilliant example as far as what works and what to do for the rest of the business community. If you ask me, this could go a long way in clearing up a lot of the problems with the current tax climate, as transparency will have a direct impact on the reputation of the businesses in question – and consumers will be quick to condemn any firm that acts in a publicly reprehensible manner when it comes to tax avoidance, now won’t they?

Taxes are legal responsibilities, said Sir Roger, and I can’t help but agree with him. The CBI president took issue with interpreting paying taxes as a ‘down payment’ on the part of a business for being socially acceptable, but that a firm absolutely must keep close in mind the social obligations they have to any local communities that they impact -and how the public mood can completely destroy a firm if it turns against it!

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Global financial sector job postings decreased in Q1


Although the slowdown in financial sector recruitment that was evident last year has not abated, the situation in the UK is not as bad as it is in Middle East or the US.

The latest data supplied by the quarterly jobs barometer from eFinancialCareers shows that job opportunities in global financial markets fell in the first quarter of this year.

In the UK, there were 2, 923 financial job postings in the first quarter of 2012. This compares with 3,270 in Q1 last year and gives a decrease of 11%.
The year-on-year decrease in the US was 13% and in Central Europe and in the Middle East the drop was 14%. Asia Pacific did slightly better than the UK with a fall in job opportunities of 10%

However, the drop in monthly vacancies between the final quarter of last year and Q1 this year was slightly better at just 8%.

eFinancialCareers managing director, James Bennett, said that companies have been focusing their efforts on restructuring and only replacing critical members of staff. Companies throughout the world are still extremely cost conscious and are therefore concentrating on finding ways to improve efficiency and productivity.

Meanwhile, the CBI expects to see the UK economy begin to grow in the second half of the year. However, the QBE thinks it will take at least two years before the economy recovers. Despite the pessimism over the economy, 34% of professionals surveyed by QBE expect to increase their headcount before the year is out.

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SMEs display pessimism about hiring intentions this year


The results of a recent survey of SME owners on their hiring intentions for 2012 provides a disturbing outlook for 2012.

1,000 SMEs were questioned by Huddlebuy, the discount site, and two thirds of them said they are not planning to employ any new staff this year.

Job seekers in the North of England, the Midlands, Scotland and Wales will find it extremely difficult to find work as 70% of small businesses said they would be unlikely to employ new staff in 2012. In the south, 60% of SMEs are not planning to increase their headcount this year.

Economists expect unemployment to increase significantly over the coming months and could reach 2.9 million by the summer. The public sector is making redundancies twice as quickly as originally predicted and the private sector is unable to create enough jobs to absorb them.

The biggest concern amongst business leaders is the UKs youth unemployment rate, which is currently standing at 22%. This is expected to rise further as business confidence falls and the number of entry-level vacancies drops.

The deputy director-general of the CBI, Neil Bentley, said action is needed now to prevent a lost generation of youngsters. The government’s £1 billion youth contract will create apprenticeships and placements but more still needs to be done.

The MD of Pertemps recruitment, Carmen Watson, said training providers should focus on getting young people ready for work and into appropriate roles. Employers also have a role to play and they should ensure new employees receive the mentorship they need to get used to a new working environment.

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Is there a glimmer of hope in otherwise dismal economic times?


You cannot have failed to notice that there’s been a bit of trouble brewing in the Eurozone recently.

The UK’s membership of the European Union has never suited everybody and sure enough, the “Get out of Europe” brigade is having a field day.

Since we joined the EU, it’s been quick to impose thousands of regulations on us, many of which are expensive to implement and heap pointless bureaucracy on British businesses.

Take the Agency Workers Directive for example. The CBI warned that 250,000 jobs could be at stake if it was implemented and Open Europe has estimated that 80% of those affected will be in the UK. Furthermore, the impact assessment conducted by the Government estimated that it would cost British businesses £3.7 billion to prepare for AWR.

Then we have health and safety regulations. It has been estimated that health and safety regulations have cost the British economy £176 billion over the last thirteen years and 71% of that can be attributed to legislation from the EU. That’s almost £125 billion the UK has spent courtesy of the bureaucrats in Brussels.

If countries continue to muddle through the current crisis, the chances are that nations like Greece, Italy, Japan, Portugal and Spain plunge back into recession. There would also be a 70% chance of that happening in the UK.

Amid all the chaos it would have been easy to miss one piece of good news from the ONS! The UK CPI inflation rate dropped to 4.8% and the RPI fell to 5.2% last month; both down 0.2 percentage points. The Bank of England now expects inflation will drop to under 2% within the next 18 months. That will be something to look forward to!

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Contractor accountants told global economy is in a bad state


Trevor Williams, the corporate chief economist for Lloyds TSB, recently took the stage at the Meet the Experts conference to tell contractor accountants that the global economy is in a bad state.

Of course, this news will come as no surprise to anyone; we know the world is struggling to recover from the 2008 credit crisis, and in fact problems in the Eurozone are increasing the risk of a double-dip.

Williams told accountants they must pay close attention to funding costs and liquidity trends and keep an eye on default rates if they are thinking about applying for credit.

He went on to say that the probability of Greece defaulting on their debts in the coming few years is more than 100%. Surprisingly, he felt the probability of an Italian default was just over 5%, and for Ireland about 10%.

In the wake of all this worldwide doom and gloom, the CBI has cut its growth predictions for the UK economy. Previously the business organisation predicted growth of 1.3% this year and 2.2% next. These figures have been lowered to 0.9% and 1.2% respectively. The CBI also expects unemployment to rise to 8.5% next year.

On the positive side, the UK is expected to narrowly avoid dropping back into recession this winter but the government must continue with its spending cuts if we are to protect our AAA credit rating. The CBI also pointed out that if mainland Europe goes into recession, UK exports would be badly hit.

Finally, the CBI agrees with the Bank of England’s prediction that inflation will start to ease next year and by 2013 it will have dropped to the Bank’s 2% target rate.

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Will the base rate remain at 0.5% for the rest of 2011?


Savers and online accountants who have been hoping to see the Bank of England’s MPC raise interest rates sooner rather than later will be dismayed to learn that the Institute of Directors has said there is no case for rates to rise this year.

It said that it would be an unprecedented move to raise rates when the broad money supply was not experiencing double digit growth. Furthermore, a rise now could plunge the UK back into recession.

The BCC and the CBI both supported the decision to keep the base rate at its historic low 0.5% at the last MPC meeting.

David Kern, the BCC’s chief economist, said the MPC was right to keep the base rate down in order to help the fragile economic recovery and relieve some of the pressures both individuals and businesses are currently facing.

He went on to point out that the MPC is concerned about the current high rate of inflation and the prospect that it may rise further in coming months. However, it would be a major mistake to tighten policy at this stage. Increasing the base rate prematurely could damage economic growth and lead to more redundancies.

He added that the MPC could consider increasing the quantitative easing programme if the economy were to weaken any further.

The CBI’s chief economic adviser, Ian McCafferty, said the MPC was in a difficult position and will have to draw a fine balance over the coming months. However, he feels that if inflation reaches 5% by the autumn, the MPC might consider a change of policy before the year ends.

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Do accountants for contractors want to cut holiday entitlement?


New research has discovered that a lot of private sector employers, including some contractor accountants, are thinking of reducing holiday entitlement to cut the cost of employee benefits.

Insurance provider Metlife surveyed 403 SMEs and found that 27% think holiday entitlement is too generous and 25% are thinking about reducing paid holiday leave.

Full-time workers in the UK are entitled to 28 days paid holiday per year, including bank holidays. Employers would like to cut 4 days paid leave to reduce costs and 36% say they are thinking about offering staff additional unpaid leave.

Dominic Grinstead, the MD of MetLife, said employers are questioning the value of employee benefits packages and paid holidays form an expensive part of the bundle. A lot of employees show that they are prepared to be flexible, but they do want something in return.

The survey also found that more than 33% of employees would work longer, but only if they received more money. However 60% of employees do not think they will get an annual salary increase in the next year and 28% have not seen their wages rise for more than two years.

Public sector employees are facing a salary freeze and although some private sector wages are increasing, the average 3% settlements are below inflation. 16% of private sector organisations are operating pay freezes, 31% intend to offer increases below RPI inflation and 17% say they will offer targeted salary rises for some of their employees only.

John Cridland, the CBI’s director-general, said he was confident that growth in the private sector will compensate for public sector job losses but inflationary pressures are causing the majority of employers to make tough decisions when it comes to pay.

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Employment statistics contain a glimmer of hope


The latest employment statistics released by the ONS last week should bring a crumb of comfort to Britain’s younger generation.

895,000 young people were registered as unemployed between February and April this year, the lowest number since April 2009. Unemployment across all age groups also dropped to 2.43 million.

Kevin Green, the chief executive of the REC, said the reduction will be welcomed but warned that this could be the calm before the storm. Ten of thousands of young people will be leaving full-time education in the next few months and a large proportion of them will not have a job waiting for them.

The picture looks mixed for those in the 50-64 age bracket. 36,000 more people in this age group joined the working populous but the number claiming Jobseeker’s Allowance also increased and this group also has the highest proportion of people who are long-term unemployed; i.e. without a job for more than 12 months.

Meanwhile, prospects are improving in the City. The MD of Marks Sattin, Dave Way, said there has been a visible boost in middle tier employment amongst the 35 – 49 age group in City firms and finance and accountancy workers are confident they will receive a salary increase in excess of 8% this year.

The director for employment at the CBI, Neil Carberry, said the private sector seems to be creating jobs and he hopes this trend will continue. However, long-term unemployment is still a serious problem and the government must tackle the structural causes of this in order to get the UK working.

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Contractor accountants could be in demand this year


Accountancy recruitment is continuing to increase according to the latest Ashdown Group Jobs Index.

The profession registered a 13.52% rise in recruitment during December and January and a 5.95% increase last month.

The BCC and the CBI have predicted Q1 economic growth and as business confidence returns to the marketplace companies will be looking to increase their headcounts. Financial professionals will be in demand as their numerical ability is vital for businesses looking to implement sustainable growth strategies.

Ashdown’s director, John Lynes, said it is not clear whether churn or departmental expansion is responsible for the increase in vacancy numbers. He pointed out that the considerable growth in online recruitment has made it easier for financial professionals to apply for new positions. Whatever the reason, more accountancy positions are now available.

He continued by saying that unless large numbers of accountants are quitting the profession, the trend points to new hirers. This bodes well for contractor accountants this year, both in terms of prospects and the ability to command higher rates.

Meanwhile, entrepreneurs are concerned that limited company contractors may be receiving poor business development and marketing advice from their accountants.

On the whole, accountants do not understand marketing and business development. Robert Craven, a marketing consultant, said a lot of accountants appeared to be interested solely in surviving and are making no attempt to win new business.

It has been suggested that this lack of interest in marketing could lead accountants to give aggressive cost-cutting advice to business owners.

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Would accountants for contractors benefit from lower corporation tax?


The CBI believes the government needs to reduce corporation tax further than its intended level of 24% if the UK is going to remain competitive.

John Cridland, the director general of the business group, said that tax reform should improve competitiveness and make the UK a more attractive place for investors. Lowering the corporate tax rate will go some way towards encouraging organisations to base their operations in this country but the government also needs to address the tax burden which is making the overall system uncompetitive. Furthermore, the 50% higher income tax rate is seen as a barrier to attracting much needed talent to the UK.

The CBI also has concerns about the proposals for taxing foreign companies that are owned by UK businesses. The anti avoidance measures that have been included in the proposed controlled foreign companies regulations make the regime cumbersome, it says.

Foreign companies perceive HMRC as very aggressive when it comes to CFCs and whilst it is important to keep the UK tax base, any anti-avoidance measures have to be proportionate to risk and aimed at specific abuse. Investment could be deterred if measures are perceived to be too heavy-handed.

The CBI does support the Patent Box to complement the current Research and Development Tax Credit scheme but believes that more thinking is required to make the UK more competitive. The government should also implement measures to incentivise intellectual property development after the research stage but before the patentable product creation stage.

Cridland’s comments were made as part of the Confederation’s submission to the Corporate Tax Reform government consultation.

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Implementation of Bribery Act to be delayed until mid-Summer


Accountants for contractors might want to tell their clients that Kenneth Clarke, the Justice Secretary, has confirmed that the government intends to review the new Bribery Act legislation and will therefore be delaying its implementation.

Originally the Act was due to be implemented in April, but this delay in publishing the official compliance guidance means the target date is now mid-Summer.

The head of the OECD’s anti-corruption efforts, Professor Mark Pieth, was not pleased with the decision saying it hurts the competitiveness of industry in the UK if companies are still allowed to secure contracts through bribery.

The CBI, on the other hand, has backed the Ministry’s decision as it will give companies more time to prepare for implementation. It warned that in its current form, the legislation was unworkable. The CBI’s director of employment policy, Katja Hall, said the Confederation backed the principle of a comprehensive, strong anti-bribery law but the delay is essential if the government is to protect the competitiveness of the UK. The delay will ensure that the guidance is correct and the legislation workable.

The ACCA also believes the delay will be good news for businesses. The head of ACCA UK, Andrew Leck, said that businesses must understand how the Act will affect them and have time to prepare. Of particular concern to the ACCA, is the impact the new legislation will have on SMEs. The Association is calling on the government to make sure the guidelines are relevant to the small business sector as SMEs are the ones in most need of clarity and support.

In related news, construction companies have complained that British embassies do not help them when they are faced with bribery demands overseas. The Serious Fraud Office advises companies to report overseas bribes in order to be in compliance with the Bribery Act.

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Business failures mean less demand for accountants for contractors


More businesses closed than started up in 2009, according to recently released statistics from the ONS.

Last year about 279,000 businesses closed their doors, the highest number since 2000 when the business demographic survey started.

As far as business births were concerned, the highest rate was in business administration and support services at 13.9%. 48,000 new businesses were created in professional, scientific and technical, representing a birth rate of 12.5%.

Over 44,000 construction companies died in 2009, whilst 42,000 professional, scientific and technical faded into oblivion. Business administration and support services had the highest death rate of all at 14.8%.

London had the highest birth and death rate, recording 12.6% of all new start-ups and 13.7% of business closures. Northern Ireland, on the other hand, recorded the lowest rate in both categories with 6.6% of new businesses and 9.2% of business deaths.

The CBI has now predicted that business growth next year will be slower than it had first thought. The employers group now predicts growth of only 0.2% in quarter one next year with a total growth for 2011 of 2.0%.

The first few months next year are expected to be especially sluggish due to the VAT rate hike, according to the CBI.

Ian McCafferty, the chief economic adviser to the CBI, said that economic growth had surpassed expectations in 2010 but this is not expected to continue as government austerity measures and VAT rises enter the economic equation.

The CBI has also predicted that economic growth will increase by 2.4% in 2012.

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2011 looks encouraging for most industry sectors


Contractor accountants with clients operating in or relying on a number of UK sectors will be pleased to hear of some positive growth.

For example, new research from the EEF shows that the UK’s manufacturing sector reported strong output and good order balances in quarter three.

Manufacturers have already started hiring new staff and making new investments which will undoubtedly come as welcome news for contractors. Ms Lee Hopley, the chief economist at EEF, said that the manufacturing industry was ending 2010 on a high and this will provide the sector with a strong footing to begin the New Year. EEF also predicts that manufacturing and engineering will outperform other contributors to the UK economy in 2011.

It’s not only the UK that has witnessed this welcome boost in manufacturing either. Markit Economics recently reported that last month, the manufacturing sector across Europe increased at its fastest rate for 4 months.

But manufacturing isn’t the only sector planning to expand next year. Research by PwC shows that 28% of firms in the UK intend to increase recruitment in 2011. In addition to manufacturing, the technology and services industries should see vigorous recruitment, the study showed.

The recent Growth Review from the government also contained encouraging news for a lot of UK contractors.

David Frost, from the British Chamber of Commerce, said that enterprises will be reassured now that the focus is to return to balanced, sustainable growth. The review talks about creating a framework for growth and also acknowledges the vital contribution made by SMEs. However, it remains to be seen whether the coalition can bring down the barriers that have been preventing firms from thriving.

One piece of not so positive news regarding the service sector has come from the CBI. Although professional and business services have remained steady over the past few months, consumer services have tumbled. The CBI cited reduced consumer discretionary spending as a contributory factor along with rising costs and falling prices.

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Online accountants in for a rocky ride


Contractor accountants should take note that the CBI warned recently that although the economy has been showing signs of improvement, challenges and uncertainty still lie ahead.

The comment came after the Bank of England decided to maintain the historically low interest rates at 0.5% last week.

The head of economic analysis at the CBI, Lai Wah Co, said that although the move was widely expected, there is growing disparity amongst members of the Monetary Policy Committee over the strength of the economic recovery.

GDP has increased by 1.1% in the past three months according to government figures but this is expected to slow down during the second half of 2010. The recovery is being supported by an exceptionally loose monetary policy and it may be sensible to move towards gradually withdrawing this monetary stimulus, the CBI expert remarked.

Meanwhile, the majority of the UK’s small businesses and limited company contractors have still not returned to pre-recession levels of profitability. 70% of British entrepreneurs have not seen their profits return to normal after the credit crisis, according to RSM Tenon’s Business Barometer.

9% of entrepreneurs believe they will have to wait for at least another 3 years before their business returns to normal, 20% think between 2 and 3 years and 27% say 1 to 2 years.

Over 40% of entrepreneurs have had to review their business through fears of a double dip recession and 22% think that a lack of cash flow could seriously threaten their operation in the coming 12 months.

The head of recovery at RSM Tenon said that they are expecting to see corporate insolvency levels remaining the same as over the past two years as business owners still struggle to secure additional funding.

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