The Business: Monday 20 May 2013
Company news, markets and financial talking points, available from 8am Monday to Friday
Marks & Spencer has become the latest UK retailer to face criticism from tax campaigners, reports The Guardian. Internal documents seen by the newspaper show the firm's sales structure involves shipping goods from one country – the UK – while invoicing the transaction to another – Ireland, which has the lowest corporation tax rates in Europe. This process, known as 'transfer pricing', is legal but frowned upon by tax campaigners. M&S said: “All tax is legally and fairly paid both in the UK and in Ireland." However, one accountant compared M&S's system to that of another company under the spotlight, saying: "There is no doubt that this is Marks & Spencer is 'doing an Amazon'”.
Reports in America claim internet giant Yahoo has approved a deal to buy the blogging service Tumblr for around $1bn. The Financial Times says the deal sees Marissa Mayer, chief executive of Yahoo, take her first major gamble to jump-start growth at the stalled web portal company. The $1bn price tag is a big payday for David Karp, 26, the Tumblr founder and chief executive who took up coding before he reached his teens, but it may disappoint investors. In acquiring Tumblr, Yahoo will gain a higher social media presence and enhance its ability to attract younger audiences in its battle with internet rivals Google and Facebook.
Business leaders have attacked Eurosceptic MPs, accusing them of “putting politics before economics”. In a letter to The Independent, 19 signatories including the president of the CBI, the chairmen of BT, Deloitte, Lloyds and Centrica, and Virgin Group boss Sir Richard Branson, estimated membership of the EU is worth up to £92bn a year to Britain. "We should push to strengthen and deepen the single market to include digital, energy, transport and telecoms, which could boost Britain's GDP by £110bn,” they wrote. The move comes as splits deepen within the Conservative Party over Europe.
Footfall on British high streets rose 3.4% year-on-year in April, the biggest increase since the run-up to Christmas in 2011, reports the Daily Telegraph. Helped by warmer weather, high streets were significantly busier than either out-of-town retail parks or shopping centres last month, offering hope to a retail industry that has been shaken by a series of big-name collapses. However, the number of empty shops in town centres jumped to 11.9% last month, the highest level for almost two years. Helen Dickinson, director general of the BRC, called for action on parking, accessibility and rising business costs to “stem the tide of further closures”.
Royal Mail is expected to announce profits of up to £400m as it cashes in on online shopping boom, reports the Sunday Times. The huge jump in profits, up from the £211m it made last year, come as the state-owned business clears the way for a £3bn stock market flotation later this year. Its latest profits follow a decade of cost-cutting which has seen the group's employee numbers fall by around 50,000 to 150,000. The government is now poised to cash in on the turnaround by pressing ahead with a privatisation, evoking the “Tell Sid” campaign that pioneered the public sale of shares in British Gas in 1986.
Britain is set for years of high inflation, warns a leading economic forecaster. The Ernst & Young Item Club says stubbornly high inflation has knocked almost three percentage points off the economy over the past three years, reports Channel 4 News. It expects inflationary pressures to peak over the summer and said it is unlikely the CPI measure will dip below 2.5 per cent over the next four years. “High inflation will remain permanent fixture in UK economy,” it predicted. The latest CPI figures are due tomorrow, with analysts expecting the April figure to drop temporarily to 2.6%, from 2.8% in March.
FTSE-100: up +0.53 to 6723.06
Dow Jones: up +0.80 to 15354.40
Dax: up +0.34 to 8398.00
Cac-40: up +0.56 to 4001.27
Nikkei: up +0.79 to 15138.12
Hang Seng: up +0.17 to 23082.68
US dollar: buys €0.77930 and £0.65920
Sterling: buys $1.51720 and €1.18220
Oil: Brent crude futures $104.58 up +0.8