Wednesday 27 January 2016

Google conspiracy

The Diverted Profits Tax [DPT] announced in 2014 was designed to “deter and counteract” companies that “seek to avoid creating a UK permanent establishment” for purposes of avoiding UK corporation tax, and exploit tax arbitrage. The DPT tax rate is 25% and was deliberately set higher than corporation tax currently at 20%.

It was instantly dubbed the “Google Tax” as multinationals that book profits through another EU member state, and claim to have no UK presence, were clearly its target. Google argues it has “no fixed base” in the UK, despite employing thousands of staffers in London alone. However Google will now evade the DPT as part of the backroom deal.

Even the French got more [3 times more] out of Google than we did!

Google’s UK “business” is in Ireland, and the company pays the UK Exchequer only on profits from UK transactions. While our taxmen have failed to challenge the legality of this arrangement, the French have not and look set to extract far more from the search giant, the Times reports. The paper also says France will get three times as much as HMRC, even though its UK revenue and profits are greater. The French are pushing for €500m, while a concession that Google’s French operation is really French could be worth even more.

MPs have launched an inquiry into the UK’s tax system after the government was accused of allowing Google to pay too little in a £130m deal. The House of Commons Treasury committee announced that it would examine whether a radical shake up of corporation tax was needed, amid concern that Google has been allowed to get away with an effective rate of 3%. The inquiry is not directed at Google, but will investigate the UK’s shrinking corporate tax base more widely and whether HMRC is doing enough to tackle avoidance.

Cosy meetings do not do it justice, the government have got this wrong.

Monday 25 January 2016

Business Growth

Profit warnings from listed companies are at their highest level since the 2008 credit crunch because of stock market and economic volatility and increased competition. Although companies are operating in a growing economy, more and more are issuing profit warnings because of increased competition and structural changes taking place in their sectors, as well as increased economic and market volatility.

The dramatic collapse in the price of oil led many firms in the sector to issue profit warnings. Half of the companies that provide services to oil and resources groups issued earnings alerts last year. Economists predict that the Office for National Statistics will say that the UK economy grew by 0.5 per cent during the fourth quarter of 2015, a slight improvement on the 0.4 per cent recorded for the third quarter.

George Osborne said that to ensure the UK remains on a sound economic trajectory and that 2016 should be a year of action on a number of fronts. "For as that Chinese saying goes, talk does not cook rice," he said. "In turbulent times we need action to deliver economic security at home. At its heart are sound public finances."

Reaffirming the Conservatives as the party for business, Mr Osborne made a dig at his political rivals. Mr Osborne's 20 minute speech covered a number of areas, including the need to reform global bodies such as the G20 and the World Trade Organisation to make sure they work towards a more competitive environment. He also touched on global markets, repeating his comments from a fortnight ago when he spoke of a cocktail of global risks.

"My main message on China is that we won’t rubberneck and fret about each new bump on the road. We are in it for the long haul. We are going to support China on the difficult route of economic reform that it is following."

All this comes at a time when the UK is suffering growth at less than 1% and inflation nearer deflation. China currently has a growth rate of over 6% per year, if only we could match that.

Friday 22 January 2016

European Project

There are two parts to the European project, the Euro and Shengen, we are not part of either but it is having an effect on Britain.

Is the European model dead or can it be saved?

We are living through one of the most unstable periods of contemporary history, or at least since the Second World War. There are so many issues all around the world. Europe is paralysed by multiple crises, the Middle East is in full-blown war, with no hope of a political solution. In China, the economy is slowing down, and nobody really knows how it will evolve. And the famous BRICS [BRICS is the acronym for an association of five major emerging national economies: Brazil, Russia, India, China and South Africa.] are not emerging.

The world has been plunged into great uncertainty, into a crisis unlike anything we have seen before. What is very striking is the absence of political hope, like we had in the past, during the Cold War. It is an explosive situation. And there are no political leaders that are up to the task. The PM David Cameron is trying to renegotiate a deal with Europe that best suits Britain, but what is it and can it succeed?

We can no longer say that the enlargement was a big success. It is clear that countries like Romania and Bulgaria are not making progress and that the problems of modernising these states are unresolved. We can see that the countries of Central Europe share little of Europe's political vision. Opinions may differ over refugees, but the way the Czech, Slovakian and Hungarian leaders speak is so dripping with visceral xenophobia, with rejection of the “other”, with misunderstanding of the world and nationalist withdrawal, that I do not think this vision has a constructive role to play in building a political Europe, and how does Greece protect it‘s border with thousands of islands?

This morning [Friday 22-Jan-2016] Manuel Valls, the French prime minister, said the whole of European civilisation is under grave threat and the region must stick together in its own self-defence, warning that the departure of the UK would be a fatal blow. "It would be a tragedy," he said while talking to Lyse Doucet. Mr Valls warned that the European system is alarmingly fragile. "Europe could lose its historical footing and the project could die quickly. Things could fall apart within months," he told the World Economic Forum in Davos.

The best defence against pathogens is a strong immune system. And that is what Europe lacks today, in the form of political leaders who provide an inspiring and forward-looking vision to their people. With political disenchantment reaching levels not seen since the continent’s darkest times in the
1930s, the risk that Europe will succumb to the destructive forces of populism looms ever larger.

So while David Cameron tries to negotiate a new deal for Britain, can Europe save itself?

Thursday 21 January 2016

World Economic Forum

Politicians and business leaders gathering in the Swiss Alps this week face an increasingly divided world, with the poor falling further behind the super-rich and political fissures in the United States, Europe and the Middle East running deeper than at any time in decades.

Just 62 people, 53 of them men, own as much wealth as the poorest half of the entire world population and the richest 1% own more than the other 99% put together, anti-poverty charity Oxfam said on Monday. Significantly, the wealth gap is widening faster than anyone anticipated, with the 1% overtaking the rest one year earlier than Oxfam had predicted only a year ago.

Rising inequality and a widening trust gap between people and their political leaders are big challenges for the global elite as they converge on Davos for the annual World Economic Forum, which runs from Jan. 20 to 23.

But the divisions go far beyond those that exist between the haves and have-nots. In the Middle East, the divide between Shi'ites and Sunnis has reached crisis point, with Iran and Saudi Arabia jostling openly for influence in a region reeling from war and the barbarism of Islamic extremists. The conflicts there have spilled over into Europe, causing deep ideological rifts over how to handle the worst refugee crisis since World War Two and - with Britain threatening to leave the European Union - raising doubts about the future of Europe's six-decade push towards ever closer integration.

The shock emergence of Donald Trump as the front-runner for the Republican presidential nomination has exposed a gaping political divide in the United States, stirring anxiety among Washington's allies at a time of global turmoil.

The next wave of technological innovation, dubbed the fourth industrial revolution and a focus of the Davos meeting, threatens further social upheaval as many traditional jobs are lost to robots.

What can we really expect from Davos?

Wednesday 20 January 2016

G4S again

Last week [Wednesday 13-Jan-2016] G4S were in the news because of abuse at the Medway secure unit:-

caldariborderzone.blogspot.co.uk/2016/01/g4s-should-be-closed.html

It was just another item in a list of catastrophe's cause soley by this company.

Now they are at it again and this time it is connected with asylum seekers in Middlesborough.

For more than fifty years Yorkshire councils had provided housing for refugees. Now that was being handed over to the world’s biggest surveillance and detention company, with a well regarded local charity acting as front man and figleaf. Just as children’s charity Barnado’s rents its reputation to G4S and the Border Agency at the Cedars family detention centre, providing cover for the continued detention of children, Target Housing was to give a credible face to G4S, as it moved from its profitable asylum markets into the expanding markets for private capital in social housing.

Despite all their undertakings to keep asylum seekers and families in the same areas where councils have housed them, G4S and the UKBA are now simply tearing up agreements.

G4S is becoming so desperate that it is, remarkably, trying a form of ‘reverse privatisation’ by paying local authorities, and housing associations, like InCommunities in Bradford, to allow them to take over and manage asylum accommodation with sitting asylum seeker tenants from previous local council contracts. This is because G4S and their private contractors cannot find any local private rented sector accommodation to put the families in, when they have to leave local authority housing. Campaigners in Kirklees, Huddersfield say the council there has turned down at least two offers from G4S.

When will this stop?

Monday 18 January 2016

Global stocks

Amid a sell off that erased more than two years of gains from global stocks now on the brink of a bear market, at least earnings stood as a potential bright spot. Those hopes are fading. Analyst profit downgrades outnumbered upgrades by the most since 2009 last week, according to monthly data from a Citigroup Inc. an index that tracks such changes.

Last week the chancellor George Osborne hinted at trouble ahead, does he have a better insight to the future market trend, hardly, or does he expect growth to be stifled and what plans does the government have in place when it happens to remove the possibility of another recession.

Declines in oil and other commodities, the withdrawal of Federal Reserve support, Europe’s fragile recovery and China slowdown fears are combining to jeopardise one of the few remaining stock catalysts after a global rally of as much as 156% since 2009. And profit growth estimates are still too high for this year and 2017. Investors are running for the door, they pulled about $12 billion from global stock funds last week, and the MSCI All-Country World Index is near its lowest level since August 2013. The Footsie 100 is still below 6000 since the middle of December last year and the rallies have been minimal.

Economists’ projections for worldwide expansion in 2016 have dropped steadily in the past months to just 3.3%, with estimates for China and the U.S. falling since the summer. The biggest bears are getting more bearish.

Friday 15 January 2016

Energy companies UK

My pet hate.

Today on Radio 4's 'Today' programme, Justine Webb asked OFGEM all the right questions and as usual did not get any sensible replies. He accused them of being "toothless and spineless" and he is absolutely right. They are also useless. This is not a new complaint, I have been writing about the energy companies for years and still nothing has been done about it to provide the consumer with a fair deal.

caldariborderzone.blogspot.co.uk/2013/11/energy-companies-spit.html
caldariborderzone.blogspot.co.uk/2013/12/the-truth-behind-excess-energy-bills.html
caldariborderzone.blogspot.co.uk/2012/10/energy-debate.html

Thursday 14 January 2016

Banker Justice

A lot of people have been dismayed at the lack of reform by bankers after the 2008 global financial crisis. Next year that might change.

Six defendants accused of conspiring to manipulate a key interest-rate benchmark while working at Deutsche Bank AG and Barclays Plc will stand trial in September 2017 in a London court.

Former Deutsche Bank trader Christian Bittar and one-time colleague Achim Kraemer, as well as ex-Barclays employees Philippe Moryoussef, Colin Bermingham, Carlo Palombo and Sisse Bohart appeared in court in front of Judge Nicholas Loraine-Smith. All six are scheduled to enter pleas.

The group is among 11 traders accused of conspiring among themselves and with other bank employees between Jan. 1, 2005, and Dec. 31, 2009, to "procure or make submissions" in relation to the euro interbank offered rate that were false, according to court documents. They are the first to face charges globally in relation to Euribor, the euro counterpart of the London interbank offered rate. A number of former traders are facing prosecution for allegedly rigging Libor.

The other five defendants in the Euribor case worked at Deutsche Bank and Societe Generale SA and live in Germany and France. They didn’t appear at the first court hearing Monday to face the charges from the U.K. Serious Fraud Office. Loraine-Smith said the SFO must inform the court how it would proceed with those five at a hearing.

Iceland, which suffered a deep recession after the 2008 crash, set up a prosecuting team to investigate 21 alleged reports of illegal banking practice. This resulted in the chiefs of Iceland’s three biggest banks – Glitnir, Kaupthing and Landsbanki – being convicted. Maybe next years trials will be the start.

Wednesday 13 January 2016

G4S should be closed

G4S should have been closed after the Olympics scandal, G4S had failed to recognise that its practices and management framework needed augmenting for the Olympic contract, very little was done to address the concerns after the government had to send the army in just to make sure the Olympics ran smoothly.

The only thing that happened after the Olympics was Two G4S directors have resigned after a review found that the firm failed to take account of the unique and complex nature of its contract to supply security for the Olympic Games.

Now they are seen as being useless at running centres for juveniles, this after they have been found to be useless at running prisons. How much more do we have to put up with before something is done?

The most recent specific incident is seven members of staff have been suspended by the company at Medway secure training centre in Kent, following abuse claims to be aired by Panorama.

Given that this looks like institutional failure on behalf of G4S, there needs to be a far reaching investigation that does not just concentrate on the individuals concerned but also looks at what was done by those in managerial positions.

G4S [previously Group Four] is a complete waste of time and should be wound up.

Monday 11 January 2016

New Housing

Last year we were told that half a million new homes were needed each year to cope with demand and currently only a fifth of that was being built. Rumours of green field sites to be used and flood plains to cope with the demand. Then the flooding started and flood plain building took a knock and so did the possibility of more social housing.

This week we here the government has an idea to knock down all the crummy estates put up since the second world war to enable social turnaround, are they throwing these ideas out because they are good, or are needed, or are the releasing a torrent of unfunded ideas because of a useless opposition?

For decades “affordable housing” meant exactly what it said on the tin – homes that were affordable, even to those on low incomes. Prior to 2010 traditional affordable homes, whether council housing or housing association properties, stayed true to the adage that their purpose was to provide an affordable place to live for even the less well off. Affordable housing was, in short, affordable.

No more. One of the most worrying proposals in the government’s recently announced planning reforms is a fundamental redefinition of affordable housing. Under the plans, the increasingly catch-all term “affordable housing” would stretch to include even properties that are affordable only to people on some of the highest incomes, the top 1%.

There is, of course, no problem with housing products aimed at those for whom market housing is beyond their means, but who do not qualify for traditional affordable housing. There are products available to aid people to get their home and they used to be called sub-prime mortgages, they have a new name today but essentially they are the same product.

As far as this new scheme for the removal of sink estates is concerned, will we be getting any further details like what to replace them with, where will the locals be resident while the alterations take place and where will the money come from to finance the project.

David Cameron will make a speech today, will we get any answers to these questions?

Saturday 9 January 2016

Banking culture review

A review into Britain’s banking culture in the wake of the Libor rate-rigging scandal has been dropped. The Financial Conduct Authority [FCA[ said it had decided instead to “engage individually with firms to encourage their delivery of cultural change”. This means a return to 'take the chap out to lunch to give him a stiff talking too'.

Earlier this year, the FCA told banks to sharpen up their efforts to learn lessons from scandals such as foreign exchange and Libor rate-rigging, which have already cost them billions of pounds in fines. They also often lacked the urgency required given the severity of recent failings, the watchdog said. So what has changed?

The move to scrap the review comes after Martin Wheatley, the watchdog's chief executive, was also dropped by the Treasury in the summer and reflects a more positive tone towards the City of London following the Conservative party's election victory. Banking culture has come under fire since the financial crisis over foreign exchange and Libor rate-rigging scandals that have led to multibillion pound fines. Mis-selling to consumers has also cost the banks, with payment protection insurance alone forcing them to earmark more than £26bn for claims.

The review was intended to determine whether programmes to shift culture in retail and wholesale banks were "driving the right behaviour". It focused on a range of issues such as bankers' pay, appraisal and promotion decisions of middle management, and how concerns were dealt with. However, the Conservatives seem to have reverted to their old ways of looking after the chaps with a series of private meetings that have no public scrutiny. The acting head of the FCA Tracey McDermott will be called before the Treasury Select Committee next week to answer why the review has been dropped. We are not expecting much from this as all the pals will stick together.

Thursday 7 January 2016

New Kinder Politics

This was a rather strange opening when Jeremy Corbyn became leader of the labour party and political commentators did not know what to make of it.

Perhaps now we are seeing it emerge in one of the longest running reshuffles ever.

The Tories seem to have adopted the new approach too as David Cameron decides that ministers will be allowed to campaign for the leave movement over the EU referendum without the possibility of being sacked, this is a novel move.

Removing flood defences from river banks connected with flood fields allowing farm land to be flooded instead of town centres seems like a good move and charging property developers council tax on properties they are taking to long to release to the market is another good mover, perhaps this new kinder politics will finally benefit those who vote for the politicians in the first place, 'The People'.

Monday 4 January 2016

China abandons market trading

China has a message for currency speculators: the free lunch is over.

China's central bank has suspended at least three foreign banks from conducting some foreign exchange business until the end of March. Included among the suspended services are liquidation of spot positions for clients and some other activities related to cross-border, onshore and offshore businesses.

By closing loopholes in its regulations, China is trying to stabilize the yuan after a surprising revamp of its currency-valuation system in August led to capital outflows and prompted policy makers to tap $213 billion of foreign reserves to support the yuan. The risk is that discouraging arbitrage will cause the exchange rates to diverge further, undermining the goal of unifying the two markets.

Today [Monday 4-Jan-2106] China suspends trading after shares slide 7%.

Trading on the Shanghai and Shenzhen stock exchanges was ended early on Monday, the first trading day of 2016 after shares fell 7 per cent, the first time China's new "circuit breaker" intervened to curb market volatility. The drop in the CSI300 index, which covers both bourses, for the first time triggered an automatic early closure under the new system, after an initial 15-minute trading halt failed to stem the declines.

The falls followed poor data from official and private surveys of manufacturing in the world's second-largest economy. In addition, measures introduced to curb China's mid-2015 share slump are about to expire.

Naturally all the worlds stock markets have and will follow suit with substantial drops on opening. It really does not bode well for the year.