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Friday's Business and Politics round-up

14 Dec 2018

Person reading the IoD's news round up with breakfast

Good morning!

Thousands of people have been protesting in Budapest after the Hungarian government passed controversial new legislation.

3,000 protestors gathered outside the national parliament, mostly demonstrating against new rules which grant employers the right to demand 400 hours of overtime a year.

Another controversial new law exempts the government from independent control by the courts.

Hungarian President Viktor Orban is currently in Brussels for an EU summit which sees leaders discussing topics including migration and the euro zone.

Orban’s reforms of the electoral system and a lack of cohesive opposition means he enjoys a two-thirds majority in parliament, with only one-third of the public in support of him. Still, polls suggest he has more popularity than most his rivals put together.

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Commission admission

The EU has played down hopes of the UK securing assurances to the Withdrawal Agreement, after European Council President Donald Tusk said the deal was “not open for renegotiation”.

European Commission President Jean-Claude Juncker said there could be “clarifications” but no renegotiation and called on Britain to set out in clearer terms what it is seeking from the future UK-EU relationship.

Juncker added that the Commission will publish its no-deal Brexit preparations on December 19.

Conclusions published by the European Council following yesterday’s EU summit say the bloc is to use "best endeavours to negotiate and conclude expeditiously a subsequent agreement that would replace the backstop” so that the backstop is deployed only “for as long as strictly necessary".

The Prime Minister had returned to Brussels in a bid to seek legal assurances on the agreement – specifically on the controversial Irish backstop, which critics argue would keep Britain tied to EU rules indefinitely.

Many MPs from within May’s own party had called for the backstop to be time limited and for the UK to have the ability to unilaterally withdraw from the arrangement.

On Tuesday she delayed a House of Commons vote on the deal, having anticipated a loss. She later won a confidence vote by the Conservatives. Speaking from Downing Street that evening, May said she had “listened” to her MPs.

Big Four, no more?  

A report commissioned by Shadow Chancellor John McDonnell has recommended measures to reform Britain’s accounting sector, including placing a market share cap on the ‘big four’.

The report suggests the market share of the UK’s biggest auditors be capped at 50% of the UK’s largest listed companies. Deloitte, PwC, EY and KPMG audit 340 firms out of the FTSE 350.

It says, “Auditors have been unable to deliver independent and robust audits and the auditing industry is in disarray, dysfunctional and stumbles from one crisis to another”.

It also proposes the creation of an independent body to audit the accounts of banks and other institutions, as well as breaking up accounting firms to separate auditing from other activities.

McDonnell said “A lack of openness, transparency and accountability [in the accounting sector] means nobody ever seems to be punished for their transgressions”. He has in the past called the big four a “cartel”.

The report comes in a time when there is increasing public anger over the collapse of companies such as Carillion and BHS – events which have raised questions about the quality of their accountants and the regulatory framework.

It is reported that next week the Competition and Markets Authority will also recommend a market share cap on the big four in addition to calling for joint audits, which would see smaller companies working on accounts alongside one of the big four.

However, the CMA has called anything published before next week as “speculation”. 

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