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You can find the current article at its original source at https://www.theguardian.com/business/live/2017/oct/30/uk-budget-deficit-consumer-spending-spain-economy-gdp-business-live
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| UK faces new £20bn budget black hole – business live | UK faces new £20bn budget black hole – business live |
| (35 minutes later) | |
| 3.19pm GMT | |
| 15:19 | |
| Stella Creasy | |
| Back with the UK public finances, and Labour MP Stella Creasy has found a tax loophole she believes could bring in some £8bn to the public purse. She writes: | |
| There is a country that taxes British residents, and British companies, when they make money on selling commercial real estate, but doesn’t tax foreigners. That country is the UK. Closing the tax loophole around non-UK companies and commercial property sales would level the playing field for British businesses and at the same time help tackle the overheated housing market. It would also generate substantial revenue – enough to cover the entire public health budget for a year, for example. | |
| According to the British Property Federation there is about £871bn worth of commercial real estate in the UK – 10% of our nation’s net wealth. Not only is this hugely important in its own right, its value impacts on the price of land, and hence of new homes. About 20% of commercial real estate is sold each year – worth an eye-watering £115bn in 2015, according to Her Majesty’s Revenue and Customs. | |
| When a seller is a UK individual or company, they are subject to UK corporation tax on their capital gains. Yet where the seller is foreign they are not. Approximately one-third of all UK commercial real estate – including most high value property – is held through offshore companies. Typically these companies are in tax havens, or structured so they pay no tax on the capital gain. Indeed, British taxpayers should be asking tough questions as to why their government turns a blind eye to anyone who holds UK property in offshore companies. | |
| Her full analysis is here: | |
| Updated | |
| at 3.19pm GMT | |
| 3.14pm GMT | |
| 15:14 | |
| Here are some of the comments from the Dallas manufacturing survey: | |
| Chemical Manufacturing | |
| Our input for October is impacted by hurricane effects on the Gulf Coast—month/month improvements were driven by industrial shutdowns and a prolonged recovery effort. | |
| We are having huge problems getting raw materials following Hurricane Harvey. We could not get deliveries due to a lack of drivers when the material was available. These problems are continuing. | |
| Fabricated Metal Product Manufacturing | |
| The shutdowns and damage as a result of Hurricane Harvey and to a lesser extent Hurricane Irma have caused refinery operators to reschedule a lot of their planned work into 2018. This delay is having an increased effect on pricing pressure for what work is available, and the small amount of project work is almost entirely being sourced offshore. We are planning on an extended period of extremely poor market conditions and are adjusting our capacity accordingly. | |
| Our facilities were severely flooded in Hurricane Harvey, so we had little production in September and are still in the process of repairing major production equipment. | |
| The global economies and the U.S. economy are very weak and uncertain—poor environment, business, etc. | |
| We saw a lull in orders in the third quarter and some into the fourth due to hurricane activity along the Southwest and Southeast. However, this short-term lull is due only to weather and will pick up in the fourth quarter and first quarter of 2018. | |
| Nonmetallic Mineral Product Manufacturing | |
| Public infrastructure spending drives the revenue cycle for our business. We need a long-term federal highway bill. | |
| We are seeing the effects of Hurricane Harvey on the activities of our customers. | |
| Machinery Manufacturing | |
| We remain optimistic about the future, although things have slowed down significantly. | |
| Computer and Electronic Product Manufacturing | |
| The world economy and high dollar have been a problem for our customers in the capital equipment industry. | |
| Electrical Equipment, Appliance and Component Manufacturing | |
| Things are generally good—not great. Hurricanes slowed down September and October, which are usually two of our best months. Competitors are pricing erratically, which is hurting profits. | |
| Printing and Related Support Activities | |
| The rebound from Hurricane Harvey’s impact on Houston business is still dragging. Some clients did not make it through and closed. Insurance companies are dragging out compensation on claims and slowing the recovery. Our mail volume from hundreds of customers is still down, and we are hoping that they will finally get their businesses repaired and begin to market their services again because the holiday season is upon us, and everyone knows they have to make it now or things will implode. | |
| We keep waiting for it to get busier, although we are very busy now, which is normal for this time of year. I see November and December possibly being slower than normal, which is concerning as we use the fat from these months to carry us through the lean winter months. | |
| Beverage and Tobacco Product Manufacturing | |
| October is looking better than September, which was weak. The two months will probably net out to about flat compared with the prior year. We have at least made up our first-half decline and are now up 0.2 percent year to date. This is a slight improvement from the 1 to 2 percent annual declines we have experienced the last few years. | |
| Apparel Manufacturing | |
| Military apparel sewing projects are anticipated to increase significantly. | |
| Paper Manufacturing | |
| September and October were good months. | |
| 3.13pm GMT | |
| 15:13 | |
| More positive economic data from the US, more fuel to the flames as far as a December rate hike is concerned. | |
| The Dallas Federal Reserve manufacturing index of general business activity came in at 27.6 in October, much higher than the expected 21 and September’s figure of 21.3. | |
| The manufacturing output index rose from 19.5 in September to 25.6. | |
| 2.23pm GMT | 2.23pm GMT |
| 14:23 | 14:23 |
| Wall Street falls back but Spain regains ground | Wall Street falls back but Spain regains ground |
| US markets have eased back from their record breaking run last week, which was partly fuelled by a surge in technology shares after forecast-beating results from the likes of Amazon and Microsoft. | US markets have eased back from their record breaking run last week, which was partly fuelled by a surge in technology shares after forecast-beating results from the likes of Amazon and Microsoft. |
| As well as some profit taking, investors are playing it cautiously ahead of the latest US Federal Reserve meeting this week - which is not expected to alter interest rates but could point to a rise in December - and crucially, Donald Trump’s decision as to who he will pick for the next Fed chair. | As well as some profit taking, investors are playing it cautiously ahead of the latest US Federal Reserve meeting this week - which is not expected to alter interest rates but could point to a rise in December - and crucially, Donald Trump’s decision as to who he will pick for the next Fed chair. |
| On top of that, traders are also trying to weigh up the latest developments in the enquiry into possible Russian interference in the US election. | On top of that, traders are also trying to weigh up the latest developments in the enquiry into possible Russian interference in the US election. |
| So the Dow Jones Industrial Average is currently down 37 points or 0.16%, while the S&P 500 and Nasdaq Composite both opened a few points lower. | So the Dow Jones Industrial Average is currently down 37 points or 0.16%, while the S&P 500 and Nasdaq Composite both opened a few points lower. |
| Over in Europe, and the Spanish market has jumped 2.4%, recovering all of Friday’s losses and more despite the continuing dispute over Catalonian independence. Some concerns were eased a little after a weekend poll suggested secessionists may lose their majority in elections scheduled for December. David Madden, market analyst at CMC Markets UK, said: | Over in Europe, and the Spanish market has jumped 2.4%, recovering all of Friday’s losses and more despite the continuing dispute over Catalonian independence. Some concerns were eased a little after a weekend poll suggested secessionists may lose their majority in elections scheduled for December. David Madden, market analyst at CMC Markets UK, said: |
| The Spanish government has dissolved the parliament in Catalonia, and has announced a snap election in December. According to the opinion poll that was published in El Mundo, the Catalan separatists might lose their majority in the region. | The Spanish government has dissolved the parliament in Catalonia, and has announced a snap election in December. According to the opinion poll that was published in El Mundo, the Catalan separatists might lose their majority in the region. |
| On top of that, came some positive Spanish GDP figures as we reported earlier. | On top of that, came some positive Spanish GDP figures as we reported earlier. |
| So all in all, the MSCI world equity index hit yet another new peak, up 0.2%. | So all in all, the MSCI world equity index hit yet another new peak, up 0.2%. |
| Updated | Updated |
| at 2.26pm GMT | at 2.26pm GMT |
| 1.47pm GMT | 1.47pm GMT |
| 13:47 | 13:47 |
| Brace yourself for some spooky charts.... | Brace yourself for some spooky charts.... |
| The IFS’s warning that Britain’s fiscal position is worse than forecast has cast some autumnal gloom over the economy. | The IFS’s warning that Britain’s fiscal position is worse than forecast has cast some autumnal gloom over the economy. |
| And with Halloween looming, Anthony Doyle, fixed interest investment director at M&G, has send over some more spooky charts to give us the shivers. | And with Halloween looming, Anthony Doyle, fixed interest investment director at M&G, has send over some more spooky charts to give us the shivers. |
| This one shows how the G20 advanced economies now owe $135 trillion US dollars, or 260% of their annual economic outlook. | This one shows how the G20 advanced economies now owe $135 trillion US dollars, or 260% of their annual economic outlook. |
| As Doyle says: | As Doyle says: |
| Governments, corporates, and households have never lived beyond their means by so much. | Governments, corporates, and households have never lived beyond their means by so much. |
| This chart shows how the European Central Bank’s huge asset purchase scheme has driven down the interest rate on eurozone government debt. So, what happens when the ECB stops buying?.... | This chart shows how the European Central Bank’s huge asset purchase scheme has driven down the interest rate on eurozone government debt. So, what happens when the ECB stops buying?.... |
| With interest rates so low, and central banks so active in the market, investors have been forced to buy riskier assets in search of a decent return. | With interest rates so low, and central banks so active in the market, investors have been forced to buy riskier assets in search of a decent return. |
| So if the markets turn south and investors “head for the exits”, there could be “substantial price declines” if everyone tries to sell these assets at the same time. | So if the markets turn south and investors “head for the exits”, there could be “substantial price declines” if everyone tries to sell these assets at the same time. |
| After decades of weakened unions, workers now face poor wage growth and limited job protection. | After decades of weakened unions, workers now face poor wage growth and limited job protection. |
| Indeed, the situation is so bad that central bankers are now calling for wage increases. | Indeed, the situation is so bad that central bankers are now calling for wage increases. |
| Doyle says: | Doyle says: |
| For the first time, central bankers like Mario Draghi and Haruhiko Kuroda have been calling on unions to increase wage demands, with Draghi stating wages are the “primary driver of inflation”..... | For the first time, central bankers like Mario Draghi and Haruhiko Kuroda have been calling on unions to increase wage demands, with Draghi stating wages are the “primary driver of inflation”..... |
| Unless workers can start demanding higher rates of pay, it is likely they will continue to suffer real-wage declines. This has been the case in the UK, with unit labour costs and inflation growing by 16% and 25% respectively since 2008.” | Unless workers can start demanding higher rates of pay, it is likely they will continue to suffer real-wage declines. This has been the case in the UK, with unit labour costs and inflation growing by 16% and 25% respectively since 2008.” |
| And finally, a chart showing why ‘hard Brexit’ could be scarier than the costumed children who’ll be knocking on our doors tomorrow night: | And finally, a chart showing why ‘hard Brexit’ could be scarier than the costumed children who’ll be knocking on our doors tomorrow night: |
| Doyle explains: | Doyle explains: |
| “In March 2019, unless some form of deal is agreed, the UK will have to negotiate trade deals with the majority of its current trading partners. This would be a major challenge as complex trade agreements are not easy to negotiate and often take years to agree to. | “In March 2019, unless some form of deal is agreed, the UK will have to negotiate trade deals with the majority of its current trading partners. This would be a major challenge as complex trade agreements are not easy to negotiate and often take years to agree to. |
| If the UK finds itself outside the European Union Single market and the EU Customs Union, tariff and non-tariff trade barriers (like quotas, embargoes, and levies) are likely to be implemented between the UK and its main European trading partners. Some sectors and companies may face much more restricted access to the European market, and that will prove to be a significant headwind to UK economic growth in the short-term.” | If the UK finds itself outside the European Union Single market and the EU Customs Union, tariff and non-tariff trade barriers (like quotas, embargoes, and levies) are likely to be implemented between the UK and its main European trading partners. Some sectors and companies may face much more restricted access to the European market, and that will prove to be a significant headwind to UK economic growth in the short-term.” |
| 1.16pm GMT | 1.16pm GMT |
| 13:16 | 13:16 |
| Just in: The cost of living in Germany rose by less than expected this month. | Just in: The cost of living in Germany rose by less than expected this month. |
| Germany’s harmonised consumer prices index rose by 1.5% per year in October, a smaller rise than expected. | Germany’s harmonised consumer prices index rose by 1.5% per year in October, a smaller rise than expected. |
| The European Central Bank will see this as vindication for its strategy of keeping interest rates at record lows (even though it’s very unpopular with German savers). | The European Central Bank will see this as vindication for its strategy of keeping interest rates at record lows (even though it’s very unpopular with German savers). |
| German preliminary HICP inflation down to 1.5% YoY in October as feared. Downside risk to € flash HICP, not necessary to core inflation. | German preliminary HICP inflation down to 1.5% YoY in October as feared. Downside risk to € flash HICP, not necessary to core inflation. |
| 12.52pm GMT | 12.52pm GMT |
| 12:52 | 12:52 |
| US consumer spending jumps | US consumer spending jumps |
| Newsflash from America: US consumer spending has surged at its fastest rate since the early days of the financial crisis. | Newsflash from America: US consumer spending has surged at its fastest rate since the early days of the financial crisis. |
| Consumer spending jumped by 1% in August, a very sharp increase. It may be driven by people replacing furniture and automobiles damaged by the hurricane season. | Consumer spending jumped by 1% in August, a very sharp increase. It may be driven by people replacing furniture and automobiles damaged by the hurricane season. |
| This is the biggest jump since summer 2009, when US launched a ‘cash for clunkers’ scrappage scheme to encourage people to buy new cars. | This is the biggest jump since summer 2009, when US launched a ‘cash for clunkers’ scrappage scheme to encourage people to buy new cars. |
| WASHINGTON (AP) -- US consumer spending surges 1 percent in September, strongest gain in 8 years. | WASHINGTON (AP) -- US consumer spending surges 1 percent in September, strongest gain in 8 years. |
| 12.24pm GMT | 12.24pm GMT |
| 12:24 | 12:24 |
| Goldman CEO: Hope we can fill our London HQ.... | Goldman CEO: Hope we can fill our London HQ.... |
| Lloyd Blankfein, the CEO of Goldman Sachs, has a new hobby -- baiting the UK government over its Brexit strategy. | Lloyd Blankfein, the CEO of Goldman Sachs, has a new hobby -- baiting the UK government over its Brexit strategy. |
| Blankein has just tweeted a photo of Goldman’s new European headquarters, currently being built in the City of London. | Blankein has just tweeted a photo of Goldman’s new European headquarters, currently being built in the City of London. |
| Jolly impressive it looks too.... but Blankein hints that Goldman might not fill the site, if it is forced to relocate staff overseas because of Brexit. | Jolly impressive it looks too.... but Blankein hints that Goldman might not fill the site, if it is forced to relocate staff overseas because of Brexit. |
| In London. GS still investing in our big new Euro headquarters here. Expecting/hoping to fill it up, but so much outside our control.#Brexit pic.twitter.com/XwrIcqwM1t | In London. GS still investing in our big new Euro headquarters here. Expecting/hoping to fill it up, but so much outside our control.#Brexit pic.twitter.com/XwrIcqwM1t |
| This is Blankfein’s second pointed tweet of the month. Two weeks ago, he couldn’t resist telling his 66,000 followers how much he loves Germany’s financial capital, Frankfurt. | This is Blankfein’s second pointed tweet of the month. Two weeks ago, he couldn’t resist telling his 66,000 followers how much he loves Germany’s financial capital, Frankfurt. |
| Just left Frankfurt. Great meetings, great weather, really enjoyed it. Good, because I'll be spending a lot more time there. #Brexit | Just left Frankfurt. Great meetings, great weather, really enjoyed it. Good, because I'll be spending a lot more time there. #Brexit |
| For balance, we should note that the weather in London is rather splendid today.... | For balance, we should note that the weather in London is rather splendid today.... |
| nice and sunny in London today | nice and sunny in London today |
| 11.56am GMT | 11.56am GMT |
| 11:56 | 11:56 |
| Over in the City, sterling has risen this morning despite the IFS’s gloomy prognosis. | Over in the City, sterling has risen this morning despite the IFS’s gloomy prognosis. |
| The pound has gained over half a cent against the US dollar to $1.318, largely driven by expectations that the Bank of England will raise interest rates from 0.25% to 0.5% on Thursday. | The pound has gained over half a cent against the US dollar to $1.318, largely driven by expectations that the Bank of England will raise interest rates from 0.25% to 0.5% on Thursday. |
| It could be a split decision; some BoE policymakers, including deputy governor Jon Cunliffe and Dave Ramsden, have sounded a little nervous about a rate hike recently. | It could be a split decision; some BoE policymakers, including deputy governor Jon Cunliffe and Dave Ramsden, have sounded a little nervous about a rate hike recently. |
| But the BoE, led by governor Mark Carney, has dropped a lot of hints that a rate hike is coming.... so it would be real shock if it doesn’t happen. | But the BoE, led by governor Mark Carney, has dropped a lot of hints that a rate hike is coming.... so it would be real shock if it doesn’t happen. |
| Kallum Pickering of German bank Berenberg explains: | Kallum Pickering of German bank Berenberg explains: |
| When it comes to monetary policy, talk matters almost as much as action. Now that the market is ready and waiting for a hike this week, the BoE would risk a major hit to its credibility if it did not meet this expectation. In short, if the BoE didn’t intend to hike it probably would have told us by now. | When it comes to monetary policy, talk matters almost as much as action. Now that the market is ready and waiting for a hike this week, the BoE would risk a major hit to its credibility if it did not meet this expectation. In short, if the BoE didn’t intend to hike it probably would have told us by now. |
| Updated | Updated |
| at 11.58am GMT | at 11.58am GMT |
| 11.28am GMT | 11.28am GMT |
| 11:28 | 11:28 |
| If you’re just tuning in, here’s the key message from the IFS today : | If you’re just tuning in, here’s the key message from the IFS today : |
| A large productivity downgrade in the Budget would almost certainly mean a higher borrowing forecast https://t.co/QcsZzOhn0u #Budget2017 pic.twitter.com/6bONkiunSx | A large productivity downgrade in the Budget would almost certainly mean a higher borrowing forecast https://t.co/QcsZzOhn0u #Budget2017 pic.twitter.com/6bONkiunSx |
| As you can see, Britain is probably going to have to borrow more than expected over the next few years, and a lot more if the Office for Budget Responsibility concludes that UK productivity growth will remain ‘very weak’ in the next few years. | As you can see, Britain is probably going to have to borrow more than expected over the next few years, and a lot more if the Office for Budget Responsibility concludes that UK productivity growth will remain ‘very weak’ in the next few years. |