Business News (March 2017)

The start of formal negotiations on Britain leaving the EU will be held on 29th April 2017. Teresa May will send notification to European Council President Donald Tusk, starting the two year countdown to complete our generations most important negotiation.

The meeting will be directed by Michel Barnier, a French Republican politician, leading the task force for the Preparation and Conduct of the Negotiations with the UK under Article 50. In a statement Mr Barnier has been reported of saying that he wants the talks and negotiations to be completed by October 2018. Teresa May told cabinet ministers that activating Article 50 would go down in the history books and described the move as a “bold new chapter… as a prosperous open and global nation”.

It has been reported that Donald Tusk, President of European Council confirmed that priority will be to guarantee specific rights to EU residents and business, as quoted on Twitter “Watchword – Citizens first!” #brexit. In a separate statement, it was reported that Mr Tusk said “he regretted but respected the UK’s decision to leave the EU and wanted the “process of divorce” to be as “painless as possible” for the European Union”.

Following the start of the negotiations, the primary attention will be on EU nationals that are residing in the UK and UK citizens living in European countries, including any costs that the UK will have to incur in the EU’s budget, covering potential or existing obligations. Discussions and recommendations to EU leaders on how this is to be arranged will take place in April.

It is believed that a survey by the National Centre for Social Research of over 2000 people in February and early March, showed that the majority of leave and remain voters wish for Teresa May to ensure that there are secure restrictions put in place on immigration from EU countries. It is also been reported that some 88% of those that voted to leave the EU want to continue free trade with the Eurozone.

Banking giant Goldman Sachs has confirmed that some positions will be moved away from England’s capital city London in order to concentrate on expanding its European business. However a senior executive has reported that London will continue to be a financial pivot following Brexit.

A lengthy court battle between the IRS (Internal Revenue Service) and Amazon has been finalised with a positive outcome, when Judge Albert Lauber ruled in favour of the online retailer Amazon. The judgement has meant that Amazon has avoided a possible tax bill of $1.5 billion.

The IRS had accused Amazon of dodging higher tax bills by funnelling its European sales through a low-tax Luxembourg sub-company during 2005 and 2006. Reports have shown that Amazon are not the only US Company to use such organisations; it has been reported that Pepsi and Apple have also made use of Luxenbourg’s heavily discounted corporate taxes.

The accusations have been raised following the sale of parts of Amazon’s UK technology and trademarks to its European affiliates – this involved transactions of lump sums plus yearly instalments resulting in Amazon Europe to be running self-sufficiently, thus avoiding the US Government tax office. Even so, following a revenues investigation, the IRS deemed this arrangement to be corrupt.

Amazon’s financial strategy was referred to as Project Goldcrest (named after Luxembourg’s national symbol, a golden bird), and began way back in 2004. It showed that Amazon Europe wasn’t a ‘shell company’, in other words a company which serves as a vehicle for business transactions without itself having any significant assets or operations. Amazon Europe was used to create new services in the UK, France, Germany and Ireland. The IRS were adamant that despite Amazon’s Goldcrest strategy, a long winded 28 step scheme, the online giant should pay for the ‘invisible’ belongings of US Amazon. However, the court ruled that the IRS were being random, fickle and unreasonable with their demands.
It has been reported that the avoidance of tax bills amongst technology and other multi-national companies is common, and following this recent monumental ruling, other countries tax authorities will have to think twice before pursuing possible overseas taxable earnings.

New mums in the UK are receiving a rough deal when it comes to SMP (Statutory Maternity Pay) following a recent analysis by the Trades Union Congress (TUC). The report has shown that many UK parents are forced back into work early as a result of financial reasons, and not being able to make ends meet whilst receiving SMP.

European League tables showed that the UK came 22 out of 24 European countries, with the UK being described as in the relegation zone when it comes to maternity leave. Only Ireland and Slovakia were the lowest on the league table, being listed as receiving the lowest amounts of entitlements. Croatia came top in the poll.

It has been argued that SMP should be paid the same amount as the minimum wage, giving new mums a chance to bond with their children, rather than forcing them back into the workplace.
The majority of new mothers that are employed have an entitlement of 52 weeks maternity leave, with SMP being 90% of their usual weekly wage for the first 6 weeks, and £139.58 per week or 90% of their weekly wage (whichever is lower) following the first initial period. Women that earn less that £112.00 per week are not eligible for SMP, although the majority in these circumstances can claim maternity allowance.

It has been reported that the TUC have called for more flexibility with ‘parental leave’ so that new parents can share the load with reduced leave, replacing the requirement that leave should be taken all at once.

Over 700 employees from the Royal Bank of Scotland (RBS), which includes Nat West, Ulster Bank and Coutts within its main business, will either be redeployed or made redundant following the decision to close nearly 160 branches around the UK. These closures follow what has been described by the bank as a ‘dramatic shift’ in banking due to in-house branch transactions dropping by 43% since 2010. Reports have shown that there has been a significant rise in mobile and online transactions by a phenomenal 400%, with over 4.2 million customers now using mobile apps for personal and business banking.

Gail Cartmail, Acting General Secretary for Unite Union said “Banks have a duty to the wider community and that is especially the case for banks like RBS that have large taxpayer-owned shareholdings”.

“People like the face-to-face contact that having a physical presence in the high street provides. It’s time for banking regulators and government to intervene, to force banks to maintain an adequate network that properly serves communities across the UK.” Following this statement it has also been reported that Ms Cartmail has accused the banks of “turning it’s back” on customers that have kept them in business for generations.

RBS have not taken this decision lightly and have announced that they will be creating “Community Banking” roles – bank personnel will be able to offer customers assistance and personal support with a focus on rural communities. Fifty Community Bankers will be in place across the UK by the end of 2017, however, following the closures RBS announced that 151 branches will remain alongside 856 NatWest branches. It has been confirmed that specialist roles within branches will be introduced to support customers with training and support for digitalisation of accounts.

Following the introduction of the newly designed One Pound coin, which is entering general circulation on the 28th March, consumers are being urged to spend or trade in their old shaped coins sooner rather than later. 1.5 billion of the new coins have already been produced by the Royal Mint. The old shaped coin will no longer be classed as legal tender or be in circulation from 15th October 2017. Following this date, the old one pound coins will lose their legal tender status and be worthless.

It was during the 2014 budget that the changes to the pound coin were announced, and it has since been described by the Royal Mint as the most secure coin in the world. Counterfeiters will find it tough to produce forgeries with its new 12 sided distinctive shape, bimetallic material with a hologrammatic pattern that changes from a “£” to a “1”, additional micro-lettering, milled edges and an unrevealed hidden high security feature.

The new coins created this year have new designs with ‘strong pioneering themes’, featuring the achievements of Jane Austen and Sir Isaac Newton. A new £2 coin will be celebrating Jane Austen, 200 years after her death, alongside a Royal Flying Corps £2 coin adding to the collection. A new 50p coin has been introduced with the achievements of Sir Isaac Newton, described as a one-time Master of the Royal Mint.

Supermarkets are currently taking steps with the integration of the new coins. Tesco’s have confirmed that their trollies are to be unlocked whilst adapting their trolly locks to accommodate the new shaped coin. Morrison’s, Asda and Sainsbury’s will be introducing trollies that will take both coins in the near future.  It is estimated that £1.3 billion of the current £1 coins are actually stored within household savings tins and piggy banks.

Business News (February 2017)

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