January 2020 News Update – featuring additional news developments from our newsletter series.
Welcome to the January 2020 News Update – Latest Purchasing Managers’ Index showing some positive New Year growth for UK Business, ONS release latest productivity statistics with a little growth evident in late 2019, and HMRC publish guides to help people understand self-assessment.
Growing “Optimism” Among UK Businesses After Last Year’s Conservative General Election Victory,
According to IHSMarkit/CIPS UK Services Purchasing Managers’ Index, December was one of the most successful months since September 2018. As the “fear” of a “left-wing” Labour Government led by Jeremy Corbyn subsided, Boris Johnson’s Government has been given the thumbs up from UK Business.
According to Reuters:
“Optimism among companies in Britain’s dominant services sector surged after Prime Minister Boris Johnson’s landslide election win last month, despite continued economic stagnation, a business survey showed on Monday.
The business expectations component of the IHS Markit/CIPS UK Services Purchasing Managers’ Index (PMI) hit its highest level since September 2018, while order books increased for the first time in four months.
The overall PMI in December improved to 50.0 from a preliminary reading for the month – based on responses before the election – of 49.0. It was also higher than November’s 49.3.
Still, the index has not exceeded the 50 threshold denoting growth since August – the longest run below that mark since 2009 – and survey compiler IHS Markit said its readings were consistent with no growth in the economy in the fourth quarter.
Investors are watching for early signs of the impact of Johnson’s emphatic victory over the opposition Labour Party under left-wing leader Jeremy Corbyn, and sterling – already on a rising trend on Monday – rose modestly after the PMI report.
“Today’s release suggests that there could be a post-election bounce in the data over the next few months as confidence improves,” said Thomas Pugh, UK economist at consultancy Capital Economics.
“If this is confirmed in January and February then it should be enough to convince the Bank (of England) to keep rates at 0.75%.”
The upward revision to the business expectations index was the largest in the services PMI since mid-2015.”
ONS – Productivity Increase for Q3 2019 – Green Shoots for 2020?
The Office of National Statistics (ONS) have published official statistics this month showcasing an improved July-September 2019 period after four quarters of contraction across the UK economy. Producivity is the biggest issue, one the new Prime Minister intends to focus upon to help UK business thrive.
According to the ONS:
“Productivity in Britain, a major vulnerability of the country’s economy that Prime Minister Boris Johnson has promised to fix, improved only slightly in the July-September period of last year, according to official data published on Wednesday.
After contracting in the previous four quarters, output per hour worked rose by 0.1% in the third quarter compared with the same period of 2018, the Office for National Statistics said.
Growth in productivity is key to the long-term prospects for growth and prosperity of an economy.
“Although productivity grew on the year, the underlying picture is of sustained weakness since 2008, with growth over the past year being only a third of the average over the last 10 years or so,” ONS statistician Katherine Kent said.
Over the last decade, annual growth in productivity has yet to even touch its pre-financial crisis average between 1972 and 2008. (Graphic: UK productivity growth yet to touch pre-crisis average click, here)
Johnson and his finance minister Sajid Javid are planning a big increase in infrastructure investment to tackle Britain’s weak productivity record which lags behind those of other countries such as Germany and France.
Responding to the latest data, Javid said low productivity had held back Britain for too long and that he planned to address this in his March 11 budget.
“The government’s spending ambitions for our broadband and transport networks offer some hope for uplift down the line,” Tej Parikh, chief economist at the Institute of Directors, said.
“But long-term capital investments must not displace efforts to jump-start improvements to our business environment today,” he said, calling for more incentives to small companies to invest, less red tape and more access to training.”
HMRC Publishes “Self-Assessment Manual” In Time For January 31st Deadline
HMRC, in the run-up to January’s self-assessment tax return period, have published new guidance manuals to help self-assessment users. The website has a range of educational resources – from webinars to blog articles – designed to help you understand self-assessment and beyond.
According to HMRC:
“Available webinars known as talking points can last up to an hour. To attend a live webinar, register and sign in at least 5 minutes before it starts. You can ask your host questions using the on-screen text box.
Self-employment and HMRC – let’s get started
Watch YouTube videos about Self Assessment help and deadlines to find out about:
- registering for Self Assessment
- your self-employed tax return
- expenses if you’re self-employed
Watch a recorded webinar about an overview of self-employment and HMRC which looks at records, business expenses and more. We will also show you the help available from HMRC.”