Decrease in unemployment rate offset by rising levels of inflation – ONS

Miranda Wadham
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Decrease in unemployment rate offset by rising levels of inflation – ONS

The UK unemployment has fallen to its lowest level in 42 years, with the unemployment rate falling to just 4.6 percent.

According to figures from the Office for National Statistics released on Wednesday, the number of people unemployed fell by 53,000 to 1.54 million in the three months to March.

This significant increase drove the employment rate to a new record high of 74.8 percent. However, the gap between inflation – at 2.7 percent in April – and basic pay growth – 2.1 percent between January and March – has widened, driving real wages down and creating difficulties for the average household consumer as Britain prepares to leave the European Union. Professor Geraint Johnes, Director of Research at the Work Foundation, told the Guardian that Wednesday’s figures constitute a “remarkably strong performance”, but added that the data was “less encouraging” concerning pay. “The pay data indicates a collapse in wage settlements in the construction industry, and this is significant because much of the employment growth in the last part of 2016 came from that sector. “While welcoming the strong employment growth evidenced in the first quarter’s figures, sustaining this into the longer term may therefore prove challenging,” he said.

Labour to impose £48bn worth of tax rises in election manifesto

Miranda Wadham
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Labour to impose £48bn worth of tax rises in election manifesto
Labour have announced plans to impose £48.6 billion of tax rises on the wealthy and businesses, as part of their official 2017 election manifesto. The extra money raised will fund an equivalent surge in public sector spending. In a document entitled ‘For the Many, Not the Few’, Labuor addressed their tax goals: “We believe in the social obligation to contribute to a fair taxation scheme for the common good. We will take on the social scourge of tax avoidance through our Tax Transparency and Enforcement Programme, and close down tax loopholes. “But we will not ask ordinary households to pay more. A Labour government will guarantee no rises in income tax for those earning below £80,000 a year, and no increases in personal National Insurance Contributions or the rate of VAT.” The biggest tax rise in Labour leader Jeremy Corbyn’s proposals is an increase in corporation tax to 26 per cent, a 7 percent increase on the current rate of 19 per cent. High earners would also take a hit, with a dramatic proposal to lower the threshold for the 45p additional rate from £150,000 to £80,000 and reintroducing the 50p rate on earnings above £123,000. The changes to the higher tax rate will raise another £6 billion a year, with the Institute for Fiscal Studies says Labour’s plans forwould take tax as a proportion of GDP to its highest level for 70 years Carolyn Fairbairn, director general of the Conferation of British Industry, said: “Some of the Labour policies deserve ‘three cheers’ and show what business and government can achieve together in partnership, for example on apprenticeships and innovation. “Others, such as the future of the UK’s digital infrastructure, pose important questions yet need real collaboration with business to make them work. But too many – from renationalisation to new rules that potentially undermine the UK’s flexible labour market – are far wide of the mark.”

Greek economy sinks into recession for first time since 2012

Miranda Wadham
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Greek economy sinks into recession for first time since 2012

Greece’s gross domestic product sunk by 0.1 percent in the first quarter of the year, falling back into recession for the first time sine 2012.

According to official figures from Eurostat released on Tuesday, the country’s GDP fell by a further 0.1 percent between January and March of this year, after shrinking by 1.2 percent in the final quarter of 2016.

The figures are set to worsen the Greek financial crisis, as the country struggles to secure a new bailout from international lenders almost two years on from a major crisis in 2015. Greek unions are set to begin two days of industrial action against cuts to pensions and tax rises insisted on by creditors, as the country continues to fight against increasing austerity. The Greek government are hoping a further loan payment will be approved by a meeting of eurozone finance ministers on 22 May.

JP Morgan to invest heavily in Dublin as part of Brexit preparations

Miranda Wadham
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JP Morgan to invest heavily in Dublin as part of Brexit preparations
International bank JP Morgan has announced its intention to invest heavily in the Irish capital of Dublin, revealing plans to create a “significant” number to jobs. The jobs will largely be part of custody and fund services business, and comes after an initial announcement that they would be moving some jobs to the Irish capital from London as part of its planning for Brexit. On Monday the news broke that the Wall Street bank is also buying the city’s Capital Dock building, which can accommodate up to 1,000 people. As reported by Irish news agency RTE, the deal was agreed with Kennedy Wilson, in a joint venture with Fairfax Financial Holdings Limited and the National Asset Management Agency. JP Morgan are said to be paying €125 million for the new office building, which is due to be completed by the third quarter of 2018. “Dublin has the vibrant business and technology communities that suit a global firm like ours,” commented Carin Bryans, senior country officer for JP Morgan in Ireland. “Given the momentum of our local businesses, this new building gives us room to grow and some flexibility within the European Union,” Bryans added. JP Morgan have already begun to make plans for when Britain eventually leaves the European Union, and is expected to move hundreds of jobs abroad in order to maintain its presence in Europe. As Britain leaves the EU, it is uncertain as to whether passporting rights – those allowing banks to operate across Europe – will still apply to banks in the UK.

Oil prices jump over 2pc as Russia and Saudi extend cuts

Miranda Wadham
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Oil prices jump over 2pc as Russia and Saudi extend cuts
Oil prices jumped over 2 percent on Monday, after Saudi Arabian and Russian oil ministers confirmed their intention to extend supply cuts into 2018. The two countries agreed that current cuts should be prolonged for at least another nine months, taking it to March 2018. This signifies a longer period than originally agreed. Oil prices rose on the news, after sinking last week on fears that the supply cuts would not be extended. The cuts were agreed by OPEC in November of last year and represented the first agreement of its kind in eight years. “There has been a marked reduction to the inventories, but we’re not where we want to be in reaching the five-year average,” Saudi Energy Minister Khalid al-Falih told a briefing in Beijing alongside his Russian counterpart Alexander Novak. “We’ve come to the conclusion that the agreement needs to be extended.” WTI Crude is currently trading up 3.03 percent at $49.29 per barrel, with Brent Crude up 2.93 percent at $52.33 (1126GMT).

Fevertree shares rocket in early trade as strong sales boost yearly results

Miranda Wadham
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Fevertree shares rocket in early trade as strong sales boost yearly results
Shares in drinks company Fevertree (LON:FEVR) rose nearly 4 percent in early morning trading on Monday, after a positive statement from the company’s chairman. Ahead of the company’s AGM later today, chairman Bill Ronald confirmed that results for the full year to December 31st 2017 would be comfortably head of expectations. He said the year so far had been “exceptional” for Fevertree, adding that the group had “continued to gain market share in both the on and off trade across all markets.” “Fever-Tree remains the pioneer and market leader of the premium mixer category and the momentum seen in 2016 has continued in the first four months of 2017”, he concluded. Fevertree are famous for their premium mixer drinks, including tonic water and ginger beer, and operates across the United Kingdom, Europe and North America. Shares in the company rose almost 4 percent on the news, before recovering to trade up 1.88 percent at 1,736.00 (0822GMT).

BT announce 4,000 job cuts amidst 19pc profit fall

Miranda Wadham
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BT announce 4,000 job cuts amidst 19pc profit fall
BT (LON:BT) have announced plans to slash 4,000 jobs alongside steep cuts to executive pay, alongside a 19 percent fall in pre-tax profit. Pre-tax profits fell nearly 20 percent to £2.3 billion for the year to the end of March, with the final quarter seeing a 48 percent drop to £440 million.
BT’s chief executive Gavin Patterson will see his pay cut by £4 million, being paid £1.34 million for the year to the end of March. The figure consists of an annual salary of £993,000, a 74 percent reduction on the £5.28 million he received the previous year. The company slashed executive pay and scrapped bonus payments after £530 million accounting scandal at its Italian Global Services operations. The chair of its remuneration committee Tony Ball said the past year had been “challenging”. “Although good progress has been made in a number of areas, unfortunately our performance has been significantly affected by the accounting irregularities in our Italian business, the issues that arose in Openreach around deemed consent and the significant challenges we faced in the UK public sector and international corporate markets. “The committee has made a number of difficult decisions this year in light of these circumstances and exercised its discretion accordingly,” he concluded. The 4,000 jobs will be cut from its Global Services division, with the telecoms giant hoping to save £300 million over two years and “offset market and regulatory pressures and support investment”. Shares in BT are currently down 2.40 percent at 304.60 (0940GMT).

Italy’s first tech conference to debut in Rome this week

Miranda Wadham
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Italy’s first tech conference to debut in Rome this week
Italy’s first tech conference will begin on Wednesday in the country’s capital city, bringing together investors and entrepreneurs from all over the world in a three day event. Blast, which will take place from 10th – 12th May, will provide a valuable networking opportunities for 150 of the best global startups in the pre-seed or early stages of funding. Thirty of those will also have the opportunity to enter the Blast Startup Competition, a three-day battle to win a £30,000 cash prize. Blast is in partnership with Fiera Roma, one of the largest exhibition centres in Europe, where the event will take place. The boutique conference is the first one of its kind to take place in Italy, a country vying to become the next start-up hub. Unlike other major conferences, Blast will focus its events on five main categories; food tech, an obvious choice for the founders after Rome played host to the first startup bootcamp focusing solely on the foodtech industry, as well as Fintech, Artificial Intelligence, Virtual Reality/Artificial Reality and IOT & Industries 4.0.

Crowd2Fund’s venture debt: the new kid on the alternative finance block

Miranda Wadham
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Crowd2Fund’s venture debt: the new kid on the alternative finance block
In the latest sign of an ever more developed alternative finance market, Crowd2Fund have announced a new venture debt product targeted at established businesses who have a short term requirement to access cash to facilitate their growth. The interest rates on these loans will be between 10 and 15 percent, with venture debt typically being used for a particular projects such as purchasing new stock upfront, entering a new market or opening an additional retail unit. The time period required to borrow funds is short, normally for not more than 12/18 months, as associated revenues from the new business activity should trickle through once the project up and running. The first venture debut campaign to launch on the platform is Planks Clothing, a manufacturer of ski clothes, who are borrowing funds to purchase stock for the next ski season. Specifically, they are choosing to raise venture debt as this ties in with their own working capital cycle, and gives them the flexibility they need to service the debt. Additionally, this means that they won’t have to sell any equity within the business.

What is venture debt?

Venture debt is a form of short term financing, typically used as project based finance for a specific purpose. It differs from traditional debt due to the duration of the loan being relatively short, and due to carrying a higher interest rates, normally at more than 10 percent. It will be typically used by businesses which are already generating revenues, and will be able to service the debt. Unlike traditional debt these businesses do not necessarily have to have two years trading history and revenues over £100,000. Crowd2Fund’s credit assessment of businesses seeking venture debt takes into account reviewing strategy plans of the business, the previous business activity of the founders, as well as the company’s historic trading data. The increased APR of venture debt is indicative of the increased level of due diligence carried out. Whilst this enhanced form of due diligence will mean that only the most credit worthy venture debt deals make it onto the platform, and Crowd2Fund still maintains a 0 percent default rate, some failures should still be expected.

What types of businesses is venture debt suitable for?

Venture debt is suitable for earlier stage businesses which are fast growing, typically at a rate of 50 percent revenues year on year, and who would not normally have access to traditional to debt. They key metric is their revenue growth trajectory, typically double digit growth year on year. Whilst these businesses could sell equity to raise funds, this is often not their preferred option due to them not wanting to sell parts of their company, at a relatively low price early on in their lifecycle. The profile of these businesses is high quality, typically run by people who already have a proven track record.

Why would a business choose to take out a loan with an interest rate as high as 15 percent?

Whilst a 10 percent -15 percent interest rate sounds high, this is relatively cheap due to the terms of venture debt being for a short period of time, and due to the associated overall interest payments cost being relatively low once this is factored in.
Additionally, businesses suitable for this kind of debt will be able to increase their value during the loan duration due to the nature of them being high growth. Therefore, making the associated debt repayments will be cheaper than them selling equity. In turn, venture debt is a simpler and faster means of financing than equity financing due to the latter requiring time consuming and costly changes to a company’s legal structure.

What are the implications of venture debt for the investor market?

Venture debt will allow retail investors to participate in a new asset class, generating higher returns than existing comparable products on the market. As these types of investments are riskier than other debt crowdfunding products, only sophisticated investors will be able to deploy funds in these campaigns. The weighting of venture debt opportunities in an individual’s portfolio will be based on their risk appetite and investment objectives. Sophisticated investors with less tolerance for risk will be encouraged to mitigate this by including venture debt as a relatively small percentage of their portfolio.

Innovative ski brand Planks seeks first £100,000 Venture Debt on Crowd2Fund

Miranda Wadham
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Innovative ski brand Planks seeks first £100,000 Venture Debt on Crowd2Fund
Innovative skiwear brand Planks Clothing is seeking a £100,000 venture debt, payable at an APR of 15 percent to manufacture and purchase stock ahead of the next ski season.
They are the first company to use Crowd2Fund’s new venture debt product which allows early stage high growth revenue businesses to access short term project finance.
The company first began trading in 2009, and was started by Jim Adlington, a former professional skier whose work has taken him all over the world. He was inspired to start Planks when he noticed that the increasing popularity of free-skiing – a type of skiing akin to extreme sports – created the opportunity for a brand to capitalise on the changing reputation of the sport.
The philosophy of the company is comes from a collective passion for skiing, alongside creative functional high quality products, which have a broad appeal to a wide range of consumers who love the mountains. This is perhaps best summed up by the slogan of the company, which is “Drop cliffs not bombs.” Adlington said, “At Planks, we feel very fortunate for every moment we get to spend in the mountains. Skiing can provide an amazing sense of freedom & creativity. It allows us to express ourselves in any way we like – how we ski, where we go, who we’re with & what we wear. Planks Clothing is available to purchase through the company’s website and through a range of Planks retail units in key ski resorts in France, such as Morzine, La Plagne and Meribel. Additionally, the product range is available to purchase at third party retailers globally; in Europe, North America and Australasia.” The Crowd2Fund venture debt loan will allow the company to procure stock for the next ski season ahead of time, with follow on revenues from the new lines allowing the company to pay back the loan. This will help the business achieve their long term aim of continuing to achieve growth, entering new markets and sports, whilst enhancing company wide efforts to become more conscious about Planks’ impact on the planet by taking a lead on sustainable production. The company have chosen to raise venture debt on Crowd2Fund due to its ease of use and flexibility, neither of which are provided by traditional finance institutions. Adlington says, “Crowd2Fund fills a gap in the market that the banking sector is currently unable to meet by providing debt, or short term financing to small businesses. For businesses like Planks that have an annual working capital cycle this provides a great, flexible solution to short term financing needs.” For more information on the campaign and how to get involved, visit their campaign page here.
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