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Recession fears may be overstated

UK failures drop
Experian says UK businesses are riding out the credit crunch with few problems,
finding that the number of businesses failing last year fell by 8.9%, with just
4,674 businesses sinking into the ether. The firm said the last quarter of 2007
saw the lowest number of failures since Q3 2006 – but found that post and
telecoms and agriculture experienced the highest failure levels.
www.experian.co.uk

Finance sector booms
The financial intermediation sector was the UK’s fastest growing industry
between 1996 and 2006, the Office for National Statistics reported in the
January issue of its Economic & Labour Market Review. Including banking,
investment trusts, insurance and pension funds, the sector grew by 76.4% over
the period, measured by constant price gross value – putting it just ahead of
transport and communication, sectors, which experienced growth of 74.5%.
www.statistics.gov.uk

Property feels le crunch
Jones Lang LaSalle has it that the credit crunch will have an effect on the
already contracting commercial property markets in Europe this year, though not
as badly as many fear. Leasing activity is to “remain upbeat”, with gross office
take up shrinking by 10%, while rental growth will keep growing, albeit more
slowly than last year. Demand is going to soften in key cities such as London,
Madrid and Frankfurt. The impact of the credit crunch on commercial property
will be unpredictable, according to the firm, while predicting yields to
increase by 0.4% by end of year. Total transaction volumes for 2008 will be
around 20% lower than 2007 estimates, though the economic backdrop will be
strong enough to maintain positive demand from Europe’s occupiers.
www.jonesla
nglasalle.co.uk

CCCTB for your consideration
Almost half of UK multi-nationals have not looked into the effects of
implementing a common consolidated corporate tax base (CCCTB), says
PricewaterhouseCoopers, even though three-quarters of those businesses are sure
the directive will take place in the near future. Around 21% of tax directors
from European-based multinational companies, questioned at the annual PwC Tax
Symposium, believe CCCTB will reduce their effective tax rate. PwC Tax partner
Peter Cussons said UK companies ignored the directive’s approach at their peril
and highlighted that CCCTB would be on the agenda at the September 2008 Ecofin
meeting, making it a reality as early as 2011.
www.pwc.com

No UK recession
The UK is not going to enter a recession, says Ernst & Young’s ITEM Club,
using the Treasury’s own model of the economy. The club says it expects the
economy to grow by 1.8% this year, a slowdown on last year’s rate of 3.1%, and
added that inflows of investment cash from sovereign wealth funds to the UK
would counter the effects of the credit crunch. It also expects the Bank of
England to cut interest rates to about 4.75%, the report claims. “The reversal
in the credit markets in 2007 could lead to a sharp fall in economic growth, but
there is room for interest rates to be cut to cushion this.”
www.ey.com

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