Nick Parker 5 Dec 2017 10:27am

From the top: Nick Parker

From the Institute this month: warnings aired over prospects for the economy and the implications of no deal on Brexit, personal finance guide launched, and the return of a glass act


Economy on cliff edge

Despite improvements in profit growth, capital investment and sales volumes, UK businesses continue to take a gloomy view of short-term prospects, the latest ICAEW Business Confidence Monitor (BCM) reveals.

The business confidence index stayed firmly in negative territory (-3.4) during Q4 of 2017 although it had improved on the Q3 low (-8) caused by the shock of the general election result. The slightly improved overall result might have been even better if it hadn’t been for London, which is the most pessimistic region with an index rating of -7.8. According to the BCM, the capital has stayed below the national average in all but one quarter since the EU referendum.

This general negativity is surprising given that there are signs of improvements to the business environment. The BCM reports that profits growth has gone up from 3.4% in Q3 to 4.1% in Q4, and is expected to rise further to 4.7% next year on the back of rising sales and a slowdown in input price inflation. After years of flatlining, export sales are beginning to improve and are expected to rise by 3.5% and 3.9% in the next 12 months as the fall in sterling results in more selling.

ICAEW CEO Michael Izza said that the BCM findings highlighted “the cliff edge that the UK economy is on at the moment”. And he warned that, although businesses had taken the recent interest rate rise in their stride because it was not unexpected, any sudden shocks from the chancellor at the Autumn Budget could have a serious impact on their health.

No deal Brexit “very bad” for business

Shadow Brexit secretary Sir Keir Starmer has warned the profession about the dangers of a “no deal” for professional services.

Speaking at an ICAEW event, the Labour MP said no deal would be “a really bad outcome” for the UK and the EU. It would hurt trade, manufacturing and the services sector.

When asked what accountants and business leaders could do to influence the negotiations he advised pushing for transitional arrangements. “It is the single most important thing. You need to make your voice heard. Speak now and speak loud to the government.”

Sir Keir admitted that the government’s approach to the negotiations had recently improved from its belligerent starting point, but that there was still a “deep division as to what they want from Brexit”. He said that the “low tax, free trade” model of the UK post-Brexit recently advocated by foreign secretary Boris Johnson was at odds with others in the cabinet.

Support for financial planners

This month sees the launch of ICAEW’s latest interest grouping – the financial planning community.

Aimed at anyone working in the financial planning and investments sector (including non-ICAEW members), the community will not only be part of a network of like-minded people but will also have access to material on regulation, pensions, investments, tax and estate planning, probate and practice development. The launch coincides with publication of ICAEW’s new Lifetime Wealth Planning Guide. This is designed to help members who are more involved in financial planning because of the introduction of the recently introduced pension freedoms – there are an estimated 400,000 individuals with money purchase pension pots retiring each year – and the subsequent greater demand for advice.

The guide centres on a case study of retiring SME owner Peter Pickle who is looking for a financial planning mentor. John Gaskell, head of personal financial planning at ICAEW, says that Pickle is typical of the kind of client who will increasingly turn to their chartered accountant as they head towards retirement.

“We believe that more chartered accountants should broaden their horizons to factor this personal finance market into their remit, as they are best placed to provide the support that is required for owner/managers to achieve their personal financial goals. If clients cannot receive the type of advice they need from their existing advisers, they tend to look elsewhere.”

Stained glass windows come home

Four Henry Holiday stained glass windows, lost for almost 50 years, recently returned to their rightful home at Chartered Accountants’ Hall where they now hold pride of place in the entrance to the great hall. The four works of art, which commemorate different aspects of the accountancy profession – law, enterprise, commerce and finance – were installed by Holiday, a renowned stained glass artist, in 1897 as an original commission for the building.

They were removed in 1970 to allow for the addition of the Whitfield Tower and the great hall and then spent the best part of the next five decades in a barn owned by the then Led Zeppelin manager, Peter Grant. After his death, his family rediscovered the windows and put them up for sale via auction as a job lot. Thanks to the ICAEW Foundation, whose remit encompasses preservation of heritage assets, they were finally tracked down and reacquired.

Holiday’s original paper designs are housed in the Word and Image Department

at the Victoria and Albert Museum, London, along with an alternative design for the enterprise window.