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IMF upgrades UK’s growth forecast for 2017

The International Monetary Fund (IMF) has upgraded its growth forecast for the United Kingdom (UK) this year, citing a better than expected economic performance since the June referendum.

The IMF noted that economic activity in the the country has “held up better than expected,” prompting the monetary body to revise its 2017 forecast from 1.1 percent to 1.5 percent.

The monetary body’s updated forecast closely mirrors projections made by the Bank of England and the Office for Budget Responsibility, which both see the UK economy edging higher by 1.4 percent this year.

IMF’s growth estimates for the global economy remains unchanged at 3.4 percent in 2017, and 3.6 percent in 2018.

Commenting on the updated projections, a Treasury spokesperson said that the fundamentals of the UK economy are robust, adding that the country was the fastest-growing major advanced economy in 2016, and that the revised figures from the Washington-based fund confirm such assertions.

The latest figures from the Office for National Statistics shows that the country’s GDP grew by 0.6 percent in the third quarter of 2016, while surveys suggest growth of 0.5 percent in the last three months of the year, nudging UK’s full year GDP growth to approximately 2.1 percent.

The World Bank, meanwhile, has downgraded its growth forecast for the UK. It expects the UK economy to grow at a rate of 1.2 percent, down from its previous estimates of 2.1 percent.

The World Bank’s numbers are also broadly supported by the forecasts published by the Organisation for Economic Cooperation and Development, noting that reduced growth prospects and increased volatility, as a direct consequence of the June vote, will mitigate the country’s growth potential in the near term.

Several other countries, including the United States and China, also saw their growth forecasts upgraded. The US economy is projected grow by 2.3 percent this year, slightly up 0.1 percent from a previous forecast of 2.2%. Growth figures for China were likewise updated to 6.5 percent from 6.2 percent.

Contact Assured FD Services today, to provide stability to your business and strengthen growth.

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Snapchat Chooses The UK For International HQ

Snap, the American company that owns popular messaging app Snapchat, has established its international headquarters in London, where it will book all non-US ad sales, in what some analysts note as a vote of confidence for the post-Brexit United Kingdom.

The decision to open an international hub in the UK by the California-based startup sets it apart from its peers in Silicon Valley. Top American technology companies like Apple, Facebook, Google, Microsoft, Uber, Twitter and several others have chosen Ireland, Luxembourg or the Netherlands as their international HQs to shelter their earnings from US tax laws, taking advantage of lower tax rates in these European countries.

United Kingdom’s corporation tax rates is also one of the lowest in the world, but plans to reduce it even further have made the country an attractive option for many companies with international operations.

Snap Group Limited, which is the company’s new UK entity, will be booking all revenues from customers in the UK and in all countries where it has no local office.

The company’s newly-minted international HQ will be stationed near its existing Soho office in London, which was established back in 2015. It currently has 75 people on staff, but will hire additional workers, including engineers.

“The UK is where our advertising clients are, where more than 10 million daily Snapchatters are, and where we’ve already begun to hire talent,” said Claire Valoti, general manager of Snap Group in the UK.

Snapchat’s move to establish a headquarters in Britain comes amid criticism of American companies’ practice of avoiding US taxation by setting up shop outside the US even though most its operations are inside the US.

Google chairman Eric Schmidt defended the industry’s much-criticised tax avoidance tactic, saying they do it “based on the incentives that the governments offered us to operate.”

The company is set to go public as early as March this year, with an estimated valuation of $25 billion.

If you are looking for expert Part Time FD Services in the Leeds & Yorkshire area contact Assured FD Services today.

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UK manufacturing soars to 30-month high on strong domestic and overseas demand

United Kingdom’s manufacturing sector closed 2016 with a bang, hitting a two-and-a-half-year high in December, an industry survey revealed.

The Markit/CIPS purchasing managers’ index (PMI) went up to 56.1 last month from 53.6 in November. Industry players monitor the seasonally-revised index for signs of expansion or contraction in the manufacturing sector. When the index is at 50 or higher, that means the sector is expanding. Conversely, any figure below 50 indicates contraction.

manufacturing-pmi

UK manufacturing production and new business rose last month, with new export business growing for seven straight months, as British manufacturers reported increased orders from major markets including China, Europe, U.S., and the Middle East.

Not only was last month’s PMI reading the highest in 30 months, it was also the fastest in terms of growth rate for both production and new orders in nearly three years.

The December survey attributes the rise of the index to robust demand from abroad, which was boosted by the weaker pound. The British currency has fallen sharply against rival currencies in the past year, making UK products more affordable for overseas buyers.

The weakened sterling, however, is proving to be a mixed blessing for the sector.  While the pound helped boost the country’s manufacturing sector get off to a strong start this year, cost for British manufacturers remain high due to reduced importing power, the Markit/CIPS survey found.

The weakness of the British currency has nudged the price of imported goods higher, which has translated to higher costs for a number of manufacturers.

The survey noted that price pressures continued to be at elevated levels in December, with inflation for input costs and output charges remaining among the fastest in the survey’s history.

To negate the higher input costs, some manufacturers have started to pass on the burden to their clients by increasing their selling prices, with prices consistently rising over the last eight months.

Some analysts expect these higher costs to push the inflation up in the coming months.

If you are a UK business within the Manufacturing sector looking to boost your company finances, a Part Time FD can provide the direction and financial guidance you need to ensure maximum success. Contact Assured FD Services today to see how we can help.

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UK firms ramp up investments amid Brexit worries  

British businesses appear to have shrugged off worries over the Brexit vote, increasing investments by a rate of 0.9 percent over the last three months, according to official government data released on Friday.

Earlier this year, the pound plunged after the Brexit referendum results became clear.

Economists expected the resulting inflation to slow down UK’s economic growth, but the latest data from the Office for National Statistics seem to be showing a different picture.

The increase in capital spending, which helped push the UK economy forward, beat earlier expectations of a 0.6 percent increase. The growth projection was based on a poll of economists conducted by Reuters.

The rise in investments was supported by a rebound in British exports as well as a sizeable increase in household spending, the ONS said in its report.  Overall, Britain’s economy nudged higher by 0.5 percent three months following the June referendum, where the vote to leave the European Union won.

The ONS, however, cautioned that most of the investment data covered by Friday’s report probably included expenditure decisions made prior to June’s vote.

Meanwhile, a separate survey by the Confederation of British Industry shows that UK retail sales likewise trended positively, rising at its quickest rate in more than a year in November. Experts project strong consumer spending to continue until the fourth quarter, driving economic numbers up.

While big firms such as Google, Facebook and Nissan have indicated their intentions to invest in Britain despite the uncertainty over the decision to leave the EU, recent surveys show that smaller companies are holding back plans for capital spending until economic outlook improves.

Anticipating a slow down in private investments in digital infrastructure, transportation and housing sectors in the near term, finance minister Philip Hammond said this week that his office will be borrowing 23 billion pounds to fund investments in these sectors over the next five years.

If you are unsure about your business’s financial future following the Brexit vote then please get in touch. At Assured FD Services we have over 20 years expertise working as a full and part time finance director for companies across Leeds & Yorkshire, aswell as the rest of the UK.

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The Fastest Growing Method Of Raising Finance For Your Business Or Startup.

If you haven’t looked into crowdfunding and you need capital for your business or startup, then maybe this blog post is for you.

The way crowd funding works is when a large number of people invest a small amount of money each. This is beneficial to both parties as you don’t need to convince one person to invest a large lump sum and the investors often spread their investments across a few projects which significantly reduces their risk.

Another perk to crowdfunding is that anyone can invest in it as the minimal amounts are flexible. This allows people who wouldn’t usually be able to afford a business investment get a piece of the pie.

 

How crowd funding works

 

Some of the pros and cons

Obviously, one big pro is that entrepreneurs acquire funding for their ideas which allows them to bring them to life.

Secondly, investors can help with the creation of the final product as they are often the first people to receive a prototype and provide feedback. Because they are invested they provide useful feedback then can really help improvement the product. Like a mastermind. This increase the chance of success for both the entrepreneur and the investor.

If this sounds like a good idea to you then you would also be interested to hear that at the end of the day you would retain the full decision-making power when it came to the business. If investors didn’t agree with anything you were doing, because they only invested a small amount it’s easier for them to exit than if they had invested a larger sum.

Another positive is that it is a very fast way to raise finance when compared to more traditional means, and also you would benefit from no fees.

It can also be good for promotion as unique and clever ideas spread fast on these platforms. Millionaires have been made on platforms like Kickstarter and Indiegogo before the product has ever been produced.

A negative from the entrepreneur’s point of view is you risk the chance of having your product or amazing idea ripped off and duplicated before it’s even been produced.

A bad thing from an investment standpoint is that these are usually riskier projects so a loss must be expected, however as mentioned earlier if they spread their investment through several projects they can greatly reduce risk.

Crowdfunding Models: Broken Down

  1. Donations – These projects are often artistic or cultural rather than business and the investors doesn’t really get anything tangible back. Just the feeling of doing a good deed.
  2. Giving a reward for a donation – Investors in these projects are rewarded for their donation with things like recognition, prizes, raffles or if a physical product is being sold often first editions and prototypes of the product. Under this model generally no money is returned to the investors.
  3. Lending-based crowdfunding – This is where investors agree to lend their money to a business. The business can benefit from getting a smaller interest rate than if they got a loan from the bank as well as the investor benefitting by profiting at the agreed rate.
  4. Equity-based Investments – This is where a business sells off a share to the investors. Typically, in crowdfunding circles it’s common for shares to be offered from around £100 and upwards.

If you require any assistance or guidance with negotiating any of these arrangements an interim CFO is an incredible resource to have.

Is this common?

More and more people are getting involved with crowdfunding every year. In 2015 in the UK alone over 3.2 Billion was raised in crowdfunded loans, investments and donations.

 

Crowding Funding Graph

 

Where to start?

Luke Davis offers some insight into crowdfunding business networking.

 

For this sizeable collection of entrepreneurs who are not fortunate enough to access an affluent group of friends or relatives, a proactive approach is paramount. Business owners or those hoping to start a company should embrace as many networking opportunities as they possibly can to stir up greater awareness of their product and growth intentions. When the time comes to seek initial investment, you will then have established solid connections with like-minded business owners or investors who could be your first point of contact to raise that crucial 30%.

To read more click here.

 

Alternatively, there are platforms out there to promote your crowdfunding project and have their community invest. A number of UK services are provided below.

  1. Crowdcube – Is one of the few crowdfunding companies that solely helps British businesses so this takes our number one spot.
  2. Crowdfunder – Another UK based company – This platform is especially great for community projects but also has some business opportunities.
  3. Ratesetter – Voted the UK’s leading peer to peer lending based service. They boast lending out over £1 billion without any of its customers losing a penny.

There are also dozens and dozens of international platforms available such as Kickstarter, Indiegogo and GoFundMe, but for the purpose of our audience, I’ve tried to keep it to UK.

If you are looking to raise capital for your business or startup there is a huge amount of options available to you, including the SEIS programme we blogged about earlier this year. We, at Assured FD Services, are experts in business finance providing first class business financial management as part time FD across Leeds & Yorkshire and the North of England. Contact us today, to discover how we can help you launch your business idea or accelerate the growth of your current business.

Phil Hall 1 Comment

Need money to fund your start-up? Try the SEIS with Assured FD.

Have you had that fabulous idea that cannot fail, but can’t get funding from your Bank without giving a personal guarantee?

Then the SEIS, or Seed Enterprise Investment Scheme to give it its full name, could be the perfect solution for you.

The problem you face when starting off in business on your own is to get investors willing to back you.

By definition you don’t have trading history to back-up your confidence and you won’t have / or don’t want to offer personal assets to guarantee the debt.

On the other hand an investor knows that funding a startup is high-risk. Most start-ups fail after all.

The SEIS, a little known scheme set up by the former chancellor attempts to solve these problems by giving the investors large tax reliefs from the outset and also providing further tax reliefs as compensation should the business fail.

Who can use this scheme? Just about any start-up or company that has been trading for less than 2 years with few exceptions.

Who can invest? Just about anyone as long as you’re not an existing employee or own 30% or more of the company i.e. You (That rules out your spouse, mum, dad and children too by the way) But friends can invest- up to £100,000 if they have the cash and the tax bill. So can wider family – brothers and sisters.

What do Investors gain? 50% of their investment can be offset against their tax bill straight away even though they have to hold the shares for 3 years. So that £100,000 investment allows the investor to reduce his tax bill by £50,000.

Should he sell his shares after the 3 years have expired, there is no capital gains tax. Should the business be profitable our investor will also be eligible for dividends.

And what if the business fails? The Investor can claim a further relief of his marginal tax rate multiplied by the amount of his investment less the tax he has already recovered. To explain that – our investor above has invested £100,000 and claimed back his £50,000 relief. Should the business fail he, as a higher rate tax payer, can reclaim 40% of £50,000 (£100,000 – £50,000) or £20,000.

If there is a better way to fund your startup, Assured FD Services is unaware of it.

Interested? Contact Assured FD using our contact form or email info@assuredfd.co.uk

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Phil Hall No Comments

Neither a Borrower nor a Lender be…

Well the Banks are keeping to their side of the bargain if you believe what you read in the press. My experience in 2011 though couldn’t have been more different. I found the Banks generally keen to support the businesses I represent. The issue I found was not “if” but “how” and it is with this in mind that I want to put the case for Confidential Invoice Discounting.

The attitude of the Banks has definitely changed post credit crunch. The preference now, it seems to me, is for C.I.D financing over overdrafts, being for them a very capital effective method of lending. My problem is that I have yet to work for an MD that likes to admit using Invoice Discounting – probably because it is too closely associated with factoring – “the lender of last resort”

My experience is that Banks understand this and take the “confidential” part of the name seriously – even when they contact your customers as they can be required to do at the outset and during audits.

But first the “Cons”. My view is that it is not a suitable method of financing an acquisition for example and it can appear expensive – a low rate of interest but a service charge that needs to be paid even when you’re not utilising the facility.

But at a time when the value of other forms of security, like property, have fallen, being able to use your sales ledger to access funds quickly means that this method of financing will increase in popularity. And of course the amount you can access grows as your business grows. Best of all – no personal guarantees – though do watch out for indemnity clauses.
If you need to talk to someone about financing and invoice discounting in particular – contact me.