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Wednesday's Business and Politics round-up

26 Apr 2017
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IoD in the news

Out-Law - Financial Services firms in the UK should 'reward' staff that identify cyber attacks

Taking the biscuit

Confectionary giant Nestle are planning to move production of the Blue Riband chocolate biscuit to one of its factories in Poland, it was announced yesterday, which would result in almost 300 job cuts in mainly York and Newcastle over the next two years. Nestle denied that the decision was linked to Brexit after Tim Roche, the GMB general secretary, urged the Government to 'step in before it's too late - and reassure millions of workers across the country this is not just the tip of the Brexit iceberg.'

'This move would be necessarily irrespective of the decision to leave the EU ,' said Nestle spokesman, adding that the company was acting to help its sites 'operate more efficiently in a rapidly changing external environment.'

Both the GMB and Unite unions have expressed anger at the decision and stated they would be campaigning to 'save as many jobs as possible and pressing Nestle to think again about these plans.' Mr Roache commented, 'These factories should be exporting chocolate - not people's jobs.'

Nestle currently employs 8,000 people in the UK and the decision over the move is expected to be made in the upcoming months. The announcement is subject to 45-day consultation with the trade unions and employee representatives.

The news follows the drinks giant Diageo's decision to cut more than 100 jobs in Scotland due to its concerns over Brexit. PepsiCo has also said that as many as 380 jobs are at risk as it prepares to shut its Walkers Peterlee factory. Such moves are clear warning signs for the Government - ensuring that Brexit does not damage UK economy should be a top priority for whoever occupies 10 Downing Street on 8 June.

'Strengthen my hand' 

Theresa May visited Wales yesterday and urged people to go out and vote on 8 June, as opinion polls predict that the Conservatives are set to make more gains in Labour heartlands. 'This is an election where every single vote counts, and every single vote for me and the Conservative candidates will be a vote that strengthens my hand in the negotiations for Brexit,' said Mrs May. She added that a vote for any other party would be for a 'weak and failing Jeremy Corbyn propped up by a coalition of chaos,' adding that there was a 'very real example here in Wales of Plaid Cymru working with Labour.'

The Prime Minister attacked the Labour Welsh Government's record on health, saying 'If you want to see what Labour want to do to the NHS, just look at the problems here.' She also highlighted that a 'strong and stable leadership' is crucial in order to 'see us through Brexit and beyond.' Hywel Williams, Plaid Cymru's parliamentary leader, responded by saying his party would not allow 'another deliberate destruction of Welsh industry and for the future of generations of young people to be blighted.'

Tories have not achieved a majority of votes in Wales since 1859 - if the polls prove right this would be a remarkable victory for the party and a crisis for Labour. Mrs May's decision to visit Wales so early in the campaign suggests that she senses that Labour could be vulnerable in some normally safe seats.

Meanwhile, Labour outlined their Brexit plans yesterday, stating that they would guarantee the rights of EU citizens resident in the UK before negotiations with the EU start. Keir Starmer, Shadow Brexit Secretary, said that maintaining a strong economy rather than controlling immigration would be Labour's ultimate Brexit goal.

Government borrowing falls

Government borrowing fell by £20bn to £52bn in the year to the end of March – the lowest level since the global financial crisis of 2008 – according to the latest official data from the Office for National Statistics (ONS). The figure is higher than predicted by the Office for Budget Responsibility in Chancellor Philip Hammond’s Budget last month, which may have been resulted by higher than expected public borrowing in March.

The total stock of government debt stood at £1,729.5bn at the end of March 2017, equivalent to 86.6% of GDP. The OBR predicts that net debt will rise to 88.8% of GDP in this financial year as tax receipts fall.

Economists have said that the reduction in borrowing last year was helped by one-off factors. John Hawksworth, an economist at PwC, commented, ‘It is good news that the deficit is coming down, but it is too soon to be complacent about the state of the public finances. As the OBR said last month, a number of one-off factors relating to the timing of tax receipts and spending flattered the deficit figures for 2016-17 but are likely to be reversed in 2017-18.’ He added, ‘while the deficit is now approaching a more sustainable level, there will still be some tough choices ahead on tax and spending for the next Government.’ Many have also predicted slowing consumer spending as inflation rises in the next year, which would lead to lower tax revenues.

The future of taxation has been a prominent topic of discussion since the snap general election was announced, as economists have argued that taxes would probably have to rise to help keep down the deficit. The Chancellor last week hinted that the Tories may drop its 2015 pledge not to raise income tax, national insurance of VAT, saying that there should be ‘flexibility to manage the system’ of taxation. While refusing to deny plans to raise taxes, Prime Minister Theresa May has insisted that the Conservatives will ‘continue to be a party that believes in lower taxes.’

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