Yesterday this briefing predicted fireworks over news of widespread tax evasion in the Paradise Papers’ data leak, and 24 hours on, the party shows little sign of stopping.
Apple, Nike, President Trump’s commerce secretary, even Mrs Brown’s Boys and the Queen… They are all named in the haul of over 13.4 million documents, containing more than 1,400GB of data recording offshore financial information for some of the world’s wealthiest individuals and companies between 1950 and 2016.
Perhaps the most significant revelation in monetary terms was evidence that the tech giant Apple had sidestepped a 2013 crackdown of controversial tax practices in Ireland by moving the majority of firm’s untaxed offshore cash, now $252 billion, to the Channel Island of Jersey. Up until 2014, Apple had exploited a tax loophole known as the ‘double Irish’ in which the company could channel its non-US sales – currently about 55% of its revenue – through the Republic of Ireland as effectively ‘stateless’, avoiding Irish corporation tax of 12.5% and 35% in the US.
Elsewhere, Formula 1 champion Lewis Hamilton was shown to have ‘dodged’ paying VAT on a £16.5 million luxury jet, receiving a £3.3 million tax refund after its import to the Isle of Man in 2013. The leasing deal organised by his advisers was deemed non-compliant with EU and UK bans of refunds for private use, but suitable ‘for business purposes’.
Whilst the revelations are scandalous, it is worth remembering that their damage is only reputational. Tax havens have a legally-accepted role as neutral spaces for business deals that might be otherwise be subject to expropriation by rogue governments. But considering the extent of evasion among the ultra-rich for seemingly personal gain, and the fact it comes only two years after the larger leak known as the Panama Papers, it begs the question what governments can do in response.
If the prime minster was sincere in her ambition set out to the Confederation of British Industry yesterday that her government seeks an economy that ‘works for everyone’, the Paradise Papers show that she will soon need to think beyond Brexit about the broader - and perhaps more creative ways – that inequality can be tackled in our society.
Nazanin Zaghari-Ratcliffe, a charity worker currently imprisoned in Iran, could face five more years in jail following comments made in error by the foreign secretary Boris Johnson. The Iranian judiciary cited Mr Johnson’s comments to a parliamentary committee last week that Zaghari-Ratcliffe, 38, may have been training journalists in Iran as grounds for further charges of ‘propaganda against the regime’. This has been denied by her family and employer, the Thomson Reuters Foundation, who have joined cross-party calls for the Mr Johnson to ‘correct his mistake’ and consider his position.
Former four-time Italian prime minister, Silvio Berlusconi, is poised for a comeback in Italian politics ahead of May’s general election as his party candidate triumphed in regional elections. Forza Italia’s Nello Musumeci was elected as governor of Sicily, winning nearly 40 per cent of Sunday’s vote, five points ahead of anti-establishment Five Star Movement on 35 per cent, and the governing centre-left Democratic Party on just 19 per cent.
Business & Economy
Walt Disney has held talks to acquire a majority stake in Rupert Murdoch’s 21st Century Fox. Under the terms of the very early talks, Mr Murdoch would retain ownership of US broadcaster Fox’s news and sports assets, but would sell his company’s 39 per cent stake in UK-based Sky. US telecom groups Verizon and Charter Communications, as well as internet giant Amazon are thought to be interested in the sale of Fox.
Oil prices hit a two-year high yesterday, jumping almost 3 per cent, following an anti-corruption purge in Saudi Arabia. Brent crude passed $64 a barrel, the highest since June 2015, as investors forecast potential supply disruption. The suspected power grab was led by heir-to-the-throne Crown Prince Mohammed bin Salman who favours continued supply curbs and wants higher oil prices to support a flotation of Saudi Aramaco.
The British Retail Consortium has reported a 1 per cent fall in consumer spending in October, requesting a ‘shoppers budget’ to stimulate confidence in the economy. The figures revealed the weakest growth non-food spending in more than five years, coming amid separate news that new UK car sales have also fallen for a seventh consecutive month. The 12.2 per cent year-on-year fall in new car registrations has been attributed to a collapse in demand for diesel vehicles and a fall in confidence among consumers following a hike in interest rates.
What happened yesterday?
Medicines were up and financials were down as the FTSE 100 broadly flatlined in the first day of trading, nudging up just 1.93 points. A little can go a long way, however, with yesterday’s 7,562.28 finish signaling a second consecutive record close for the market.
In the financial sector, Barclays was down 0.7 per cent at 182.00 points after Deutsche Bank cut its target price for the UK bank’s shares. Standard Life Aberdeen and RSA Insurance were also down 1.4% and 1.6% respectively. Shares in medical products and technologies company Covnatec finished as Monday’s biggest riser, climbing by 4%. The rest of the mining sector also gained as investors got the jitters over revelations that Glencore (down 2.9%) was found to be among clients of the offshore law firm Appleby, currently embroiled in the Paradise Papers data leak.
Elsewhere, brent crude finished near $64 a barrel – its highest level in over two years - as a crackdown in Saudi Arabia led by heir-to-the-throne Crown Prince Mohammed bin Salman raised concerns about stability in the world’s largest crude exporter.
On the currency markets, the pound gained 0.5% on the dollar at $1.31 and finished 0.6% higher against the euro at €1.13.
Associated British Foods
Up Global Sourcing Holdings
Direct Line Insurance Group
Jardine Lloyd Thompson Group
Jupiter European Opportunities Trust
UK Economic Announcements
(08.20) Halifax House Price Index
International Economic Announcements
(10.00) Retail Sales (EU)
(20.00) Consumer Credit (US)
Columns of Note
As the sexual harassment scandal worsens at Westminster, Rachel Sylvester comments in The Times that Theresa May’s position is becoming increasingly untenable as the party looks to Amber Rudd as a potential favourite to succeed. Sylvester suggests the budget could be the prime minister’s last chance to seize the agenda with Rudd emerging a favourite – in the absence of many, if any viable opponents in Cabinet - to bridge ideological divides and secure national popular support if Mrs May were to resign.
As Theresa May spoke to the Confederation of British Industry yesterday over her government’s plans to prioritise free trade as a part of the ‘global Britain’ vision for Brexit, Martin Sandbu suggests in the Financial Times that the hard Brexiteers’ economics are misplaced. He criticizes a report by the Legatum Institute, suggesting claims of the European Union’s perceived protectionism are false and Britain’s departure stands to exclude it from a golden age of trade.
Did you know?
Donald Trump is the first President since Andrew Johnson (1865-69) without any pets. Among other presidential pets, John Quincy Adams and Herbert Hoover both owned alligators, whilst Calvin Coolidge kept two lions, a wallaby, and a pygmy hippopotamus. Theodore Roosevelt also kept a badger called Josiah who was thrown onto his train by a passing girl.
House of Commons
Business, Energy and Industrial Strategy (including Topical Questions)
Debate on a motion on temporary accommodation – Siobhain McDonagh
General Debate on matters to be raised before the forthcoming adjournment – Ian Mearns
House of Lords
Eliminating Japanese knotweed - Baroness Sharples
Digital resilience programmes and young people - Lord Cotter
Symptoms of neurotoxicity caused by prescribed prophylactic drugs - The Countess of Mar
Report from the Communications Committee 'Growing up with the internet' - Lord Best
Topical Questions (if selected)
First Minister Statement
Apologies to those convicted for same-sexual activity that is now legal
Stage 1 Debate and Financial Resolution
Forestry and Land Management (Scotland) Bill
Daniel Johnson: Respect for Shopworkers Week, 13 to 19 November
House of Commons
No business scheduled
House of Lords
No business scheduled
Rural Economy and Connectivity
Environment, Climate Change and Land Reform
Stage 3 Proceedings
Child Poverty (Scotland) Bill
Andy Wightman: Homes First