10 Oct 2016 09:21am

economia a.m. October 10

A morning round-up of finance and accountancy news

Brexit fears lead large UK companies to plan lower investment

Confidence among CFOs at large British companies has only partially recovered from a post-referendum plunge, with more than half expect to cut investment and hiring over the coming year.

According to the latest CFO survey from Deloitte, risk aversion is high after the Brexit vote, with 88% of finance officers feeling their business is facing abnormally high levels of uncertainty. Concern is growing among businesses that the government has set a course for a hard Brexit deal, which would leave the UK shut out of the single market and with limited access to skilled workers from overseas. (Source: The Guardian, Reuters)

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Faltering service sector shows the strain of Brexit

The UKs dominant services sector is showing signs of faltering, according to one of the first big economic surveys since the Brexit vote from the British Chambers of Commerce (BCC). The organisation took responses from more than 7,000 companies between August and September, in the largest private sector business survey in Britain. The BCC found that manufacturers reported improving sales both in the UK and overseas, while the services sector has seen a sharp fall in sales since the referendum. The BCC said the balance of service sector businesses reporting improved domestic and export sales was at the lowest level since 2012. (Source: The Times, Reuters, Bloomberg, The Guardian, The Telegraph)

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Frankfurt vies for UK banking jobs post-Brexit

Germany is considering changing its labour laws to make Frankfurt a more attractive hub for financial institutions looking to move staff out of London after Brexit. Germany is reportedly looking at imposing an upper salary limit on employee protections of 100,000 or 150,000, which would make conditions such as redundancy terms less generous. The Financial Times says the move could be significant as one of Germanys main drawbacks as an international financial centre relates to labour laws that make redundancies difficult and costly. (Source: The Financial Times)

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UK household spending rose in September

UK household spending bounced back in September, with people splashing out on theatre trips, restaurants and holidays. According to figures from payments company Visa, consumer spending was up 2.4% year-on-year after being broadly flat in August, with people prioritising spending on experiences over buying things. Spending on clothes and shoes was down on a year ago, and the fastest spending growth was in recreation and culture followed by hotels, restaurants and bars. (Source: The Guardian, City AM, The Telegraph)

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Facebook enjoys £11m UK tax credit as it makes £5bn global profit

Social networking giant Facebook generated an 11.3m tax credit last year in the UK, despite the fact that the worlds largest social network making a global profit of 4.97bn. In April, Facebooks UK sales activity was transferred from Dublin to London, following the introduction of a punitive rate of tax for multinationals seen to be artificially shifting British sales overseas. According to the latest company accounts, losses for Facebook UK increased from 28.5m to 52.5m in 2015, and as a result, Facebook UK ended the year with a tax credit. (Source: The Guardian, The BBC, The Financial Times, The Telegraph, Reuters, The Independent, The Daily Mail)

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Speculators bet big against sterling

Bets running against the pound have hit record highs and are expected to rise further as the pound tumbles to some of its lowest levels against the US dollar. The Times reports that in the first week of October, speculators held 97,572 more contracts shorting sterling than those who were betting the currency would rise, according to data collected by the US Commodity Futures Trading Commission - an increase of nearly 10,000 contracts from the previous week. Last Friday the pound experienced a flash crash, plummeting 8% in just eight minutes, the biggest intraday drop since the day after the Brexit referendum. (Source: The Times)

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UK retreats on plans to make companies list foreign workers

The government has watered down plans to make companies reveal how many foreign workers they employ, after an international outcry and claims they were divisive, repugnant and insanely bureaucratic. It was announced by home secretary Amber Rudd last week that companies would have to be clear about the proportion of their workforce that was international, saying she wanted to she wanted to flush out employers who failed to recruit Britons. The comments immediately drew fierce and international pressure, and senior ministers on Sunday moved to backtrack, saying that any information collected on foreign employees would only be used to inform policy on tackling skills shortages, and would not be made published. (Source: The Financial Times, The BBC, The Guardian, Bloomberg, The Daily Mail)

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Macquarie closes in on £2bn Green Investment Bank deal

Australian bank Macquarie is just days away from winning the auction for the UKs Green Investment Bank, in a privatisation worth about 2bn. If the deal is agreed it would be the first major privatisation since Theresa May became prime minister in July, and could take place early next week. The group is understood to have put in a higher offer than its rival, a consortium including the Pension Protection Fund, General Electric and Japanese trading house Mitsui. Although the government had originally intended to retain a stake in the green bank, it is now looking to see it in its entirety. (Source: The Financial Times, City AM, The Telegraph)

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International banks highlight eurozone weakness

Some of the worlds top bankers have added their voices to warnings about the fragility of the eurozones lenders, days after the International Monetary Fund (IMF) said that the European financial services sector posed a threat to financial stability. The FT says bankers at UBS, Goldman Sachs and elsewhere have sided with the IMF in arguing that eurozone banks need to carry out wide-reaching reforms rather than blaming problems on interest rates. Leading bankers are particularly concerned about the health of Germanys biggest lender Deutsche Bank. (Source: The Financial Times)

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House sales drop 20% since Brexit vote

High-end estate agency Knight Frank has reported a 20% drop in housing transactions since the EU referendum compared with the same period last year. The property consultancy said that there had been a drop off in sales for homes above 750,000, and the number of offers for the same type of housing was also 6% lower, with vendors more keen to accept deals. However, the number of people registering interest was consistently higher than last year, and Knight Frank said it was anticipating a boost to residential activity at the upper end of the housing market, due to the fall in the value of the pound and the cut in interest rates. (Source: The Times, The Guardian)

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Helen Roxburgh