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Tuesday's Business and Politics round-up

03 Jul 2018

Person reading a daily news round up on their tablet

Good morning.

There was welcome news in the search for twelve young footballers who along with their coach had become trapped in a cave system in Thailand, as they have reportedly been found alive. While officials stressed that high water levels in the caves meant that the rescue mission could take up to months, the football team appeared to be in relative good health despite being trapped for nine days. Footage from divers who managed to reach the boys shows them as responsive and confirming that all thirteen missing individuals were present.
 
Meanwhile British banks are facing further costs relating to PPI sales after a court ruling opened up the possibility of claims being made even in cases where the policy was not mis-sold. Banks have already paid out £30bn to customers who were proven to have been mis-sold PPI and while the ruling does not mean further claims for these customers, others are now able to make a claim if the size of the commission paid on the sale is found to be excessively high.
 
Finally hopes are building for England’s World Cup campaign as they face off against Columbia in Moscow this evening. Indeed the potential impact on the economy of a sustained campaign by Southgate's boys was noted in a survey from the Bank of England last week.
 
The BoE monthly agents survey said that “among the factors likely to affect consumer sales volumes over the next 12 months, the World Cup was expected to give a positive sales boost, for example in sales of electronics and alcoholic drinks."


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Custom customs union

Reports emerged yesterday of a ‘new’ plan for post-Brexit customs arrangement with the EU which is said to offer the UK both independence over its trade policy and importantly, friction-less trade with Europe. The plan is set to be put to Ministers at Friday’s Chequers summit.
 
The IoD, back in February, proposed its own customs union solution which would significantly reduce barriers to trade with the bloc while still allowing the UK to pursue trade deals with other countries. The partial customs union suggestion would cover industrial goods and processed agricultural products and would help maintain the competitiveness of some of the UK’s key industries, while also allowing future governments to fulfil the promise of an independent trade policy.
 
Meanwhile Sky News reports that Brexit Secretary, David Davis has invited business leaders from some of the UK’s largest companies to talks at the government’s country retreat, Chevening House. The meeting is set to take place a week after the planned publication of the government’s white paper on the UK’s post Brexit relationship with the EU.

Merkel fights on

German Chancellor Angela Merkel has defused a dispute with her interior minister Horst Seehofer after the two came to an agreement on how to stem illegal migration across the countries border with Austria. Seehofer had threatened to resign, demanding the power to turn migrants away at the border. Instead transit centers will be set up to process arrivals before returning them to the EU country which they first arrived at.
 
Merkel said the deal represented a good compromise between her party, Christian Democrats (CDU) and the Christian Social Union (CSU) which Seehofer leads. While the deal may temporarily heal internal divisions there is still the issue of the willingness to embrace the new plan from countries which Germany will be returning migrants too. While she did secure agreement from Greece and Spain in late night talks last Friday, Italy which is where most of the migrants arrive, has indicated it was not happy with the arrangement.   

Rates reform badly needed

The UK’s high street continues to be buffeted by a lethal cocktail of low consumer confidence, increasing wage bills and higher business rates than their online competitors. Research by rates advisory firm Altus Group shows that the business rates bill for a department store rose by over 26% this year with large high street shops increasing over 10% in the same time frame.
 
Meanwhile many online retailers, who typically occupy large out of town warehouses, have seen their rates fall. This imbalance has led retailers to call for reforms to the system which they argue is giving an unfair advantage to online stores.
 
The IoD, in its submission ahead of the November 2017 Budget, urged the Chancellor to take action on the issue of business rates. 

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