Global threat to growth
B ritain may be an island, but it cannot possibly isolate itself from global turbulence. away from the squabbling at Westminster following Philip Hammond’s expansionary Budget, the storm clouds are gathering over the economy.
the FtSE 100 may have been cheered by the Chancellor’s optimism, but elsewhere financial markets remain enveloped in gloom.
a record breaking £26bn deal by iBM to buy red Hat was not enough to ease tension on Wall Street.
the fall-out from trump’s trade war, and more significantly the rise in US interest rates, has speeded up the shift from shares to US-government bonds and there are concerns that the sugar-rush in earnings from corporate tax cuts could be fizzling.
Geo-political uncertainties are also increasing. in Germany angela Merkel’s resignation as leader of the CDU is being viewed on the markets as the start of a long period of uncertainty. the battle between italy and Brussels remains unresolved and the euroland recovery, supported by the European Central Bank, looks as if it is coming to an end. the election of rightwing populist Jair Bolsonaro in Brazil adds to uncertainty in Latin america where argentina is borrowing heavily from the international Monetary Fund and Venezuela casts a long shadow. the tectonic plates in the Middle East are shifting as a result of the Jamal Khashoggi affair.
in spite of such turmoil, the Office for Budget responsibility (OBr) is forecasting that the long upswing in the UK economy, since the financial crisis, still has legs.
One hopes that this time round the independent OBr is more correct than it has been in the past.
But if the nervousness on Wall Street is any guide, there must be concern that the global recovery could die away and disturb the upbeat budget-growth forecasts.
Rich are different
aMOnG the frustrating aspects of tax policy in the UK is the ingenious ways the rich find to avoid paying a full whack while anyone on PaYE, or small businesses, have few opportunities.
indeed, one of the best things that successive chancellors have done in recent years is to step up attacks on aggressive tax planning, raising £185bn in additional tax revenues since 2010.
it is not terribly surprising that tax avoidance is widespread among celebrities and sports stars, who are often advised there is one rule for them and another for the little people. What one certainly expects is that the bosses and prospective bosses of public companies, who are more often than not richly paid and have responsibilities towards a broad range of stakeholders, including employees, investors and consumers, are scrupulous in their tax behaviours.
the disclosure on Budget day that the soon-to-be-employed, generously paid chief executive of Bt Philip Jansen was part of the notoriously aggressive tax avoidance scheme ingenious Film Partners 2 that saved sports stars, celebrities and some financiers some £700m in taxes between 2006 and 2011 is disheartening.
Bt tells us Jansen did invest in the film production partnership on the recommendation of his financial advisers. But when HMrC ‘expressed concern’ about the scheme, he paid it back. One suspects Jansen had little choice if he didn’t want a lengthy battle with the tax inspectors.
the idea that a private equity, telecoms financier with Jansen’s skills was persuaded against his better judgement to become involved in a tax avoidance scheme looks a little far-fetched. He is among the privileged few who could afford the best tax advice. in so doing, Jansen, like other clients of such schemes, regards making a bigger personal contribution to society as second best to minimising their own personal welfare.
as a person of substantial means, following his stewardship and sale of Worldpay, Jansen had an opportunity to put corporate and public interest above his own. His past tax history and his generous new pay and benefits package does not signal humility.
Belfast bonus
tHE fire in Belfast which wrecked the Bank Building, home to Primark, in the city centre has gone largely unremarked in the rest of Britain. But it has ripped the heart out of retail in the centre of the city where safety barriers around the damaged building have brought nearby commerce to a stop.
the Chancellor’s promised £2m of assistance is an unexpected fillip. the DUP’s alliance with the tories delivers again.