President Joe Biden was officially inaugurated on 20 January, offering a dramatically changed political outlook from the outgoing Trump administration. Equally significant, Biden enters office buoyed by a “blue wave” that has seen Democrats gain majority power in the Senate while retaining a majority in the House of Representatives, granting the party effective control of both the legislative branch and the presidency for the first time since 2011.
Though the new administration will be faced with numerous economic challenges, it will have the political clout to enact drastic policies to tackle them. What does this mean for investors on the hunt for prime stocks? What are safe bets, and what bubbles may soon burst?
Green Energy
“Build Back Better” has been a common slogan ever since the 2020 campaign, broadly summarising the new administration’s aim for the US economy. The Biden-Harris campaign website specifies the creation of “an equitable, clean energy future” as a key plank in this. With the spectre of climate change becoming an ever-greater threat to the global economy, we can expect to see a good deal of renewed attention given to green business.
Naturally, this is good news for companies with a focus on renewable energy. Investors may soon see positive movement in NextEra and other utilities with wind and solar assets. Clean energy system manufacturers such as First Solar and Emphase Energy are also worth a look – as are electric vehicles companies. With Biden having voiced ambitions of creating 1 million jobs in the auto sector and incentivise EV production, the future looks bright for the likes of Tesla and Workhorse Group.
Infrastructure
Alongside Biden’s promises of greater green energy investment is a pledge to invest comprehensively in American infrastructure. Roads, bridges and energy grids are all noted as areas of concern that will soon see government investment.
With the spectre of climate change becoming an ever-greater threat to the global economy, we can expect to see a good deal of renewed attention given to green business.
A natural beneficiary of this focus on infrastructure (if Biden is serious) would be construction companies like building materials supplier Martin Marietta and equipment maker Caterpillar, both of which were heavily impacted by the onset of the COVID-19 pandemic but have since rebounded. It’s a telling portent that the Global X US Infrastructure Development ETF (PAVE), which tracks some of the largest industrial, construction and transportation companies in the US, saw a rally in the week of the election and an overall jump of 26% in the past three months.
While the optimistic rumours of a big infrastructure deal may not come to anything under the new government, telecom providers in particular can expect a boost from Biden’s promise to work towards universal broadband. AT&T, Comcast and Verizon, among other big players, can be expected to make significant gains.
Big Tech
Tech giants like Amazon, Google and Facebook occupy a strange position in the US economy. Though their market values have never been higher, and they have managed to keep up consistently high performance during the COVID-19 pandemic while other businesses have foundered, politicians from both sides of the aisle have managed to find an opponent in big tech.
Now, with majority power in Congress, Biden and his party are in a position to heavily regulate or even break up the “Big Five” of Amazon, Apple, Facebook, Microsoft and Alphabet. Notable Democrats like Elizabeth Warren have come out in support of breaking up tech giants; the Democrat-led House antitrust committee has found that the Big Five “hold monopoly power”. Biden himself has publicly criticised Facebook for providing a platform for his predecessor to “spread fear and misleading information”, though he has stopped short of recommending its breakup.
With tech companies enjoying more influence than ever before, it remains to be seen just how far the new administration will go to curb their power. The September and November tech selloffs have shown that the Big Five’s stock is not invincible; 2021 may see the end of tech giants as a sure bet for investment.
Though their market values have never been higher, and they have managed to keep up consistently high performance during the COVID-19 pandemic while other businesses have foundered, politicians from both sides of the aisle have managed to find an opponent in big tech.
Cannabis
Though not as high-profile an issue as climate change, the debate surrounding the regulation of cannabis played a role in the outcome of the presidential election and will likely have consequences for the markets. Biden’s campaign platform included the decriminalisation of cannabis at the federal level, which – while not the same as outright legalising the drug – would pave the way for long-awaited cannabis banking reform and greater acceptance of the substance’s recreational use over time.
Several other Democrat leaders, including New York governor Andrew Cuomo, have vocally supported the legalisation of cannabis, as have 66% of Americans, which bodes well for the future of the industry. Worldwide cannabis sales tripled to almost $11 billion from 2014 to 2018; Wall Street analysts predict that figure could land anywhere between $50 billion and $200 billion a year by 2030. In the shorter term, investors may want to keep a close eye on Canadian cannabis producers such as Organigram Holdings or Harvest Health & Recreation Inc – or Tilray, which managed to double its value in January alone.
More Broadly
One of the final sectors that is sure to see movement in the Biden era is healthcare. Looking past the headline-making pharmaceutical companies producing COVID-19 vaccines, and the fact that Biden has not embraced “Medicare for all” like many of his fellow Democrats, the health industry will undoubtedly be boosted in at least some areas by the new president’s policies. Biden has promised an option “like Medicare” for individual health plans, a boon for existing Medicare supplemental plan providers like UnitedHealth Group. As many as 23 million Americans could be made eligible for Medicare under Biden’s policies, which is sure to elevate healthcare fortunes.
And to move back from specific industries, there is reason for investors across the board to take note of the incoming administration’s policies. Biden has stated his intention to raise the corporate tax rate back to its pre-Trump level of 28% and to tax foreign income more aggressively, which obviously bodes poorly for the stock market. But before that can occur, a $1.9 trillion COVID-19 stimulus package is sitting on the table, sure to lift US markets broadly should it pass Congress.
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This stimulus package and the measures that may follow it, with a second spending plan slated to arrive “in the first few weeks” of Biden’s term, should give traders plenty to be optimistic about in the short term. Whether the specific industries listed above ultimately see their fortunes raised will depend on negotiations in government and the evolution of external factors like the ongoing pandemic, but prospective investors would do well to plan for the new president’s policy objectives in the years ahead.
HSBC said on Tuesday that it planned to close 82 of its high street bank branches in the UK between April and September this year as its customers shift towards telephone and internet banking.
“The COVID-19 pandemic has emphasised the need for the changes that we are making,” said Jackie Uhi, HSBC UK’s head of network, emphasising that the shift was already underway before the pandemic accelerated it.
“It hasn’t pushed us in a different direction but reinforces the things that we were focusing on before and has crystallised our thinking. This is a strategic direction that we need to take to have a branch network fit for the future."
The number of customers using branch banks had fallen by a third in the past five years, HSBC said, with over 90% of customer contact being conducted over the telephone or internet.
As part of a new strategy, the bank will be altering some branches to focus on cash access and establishing “pop-up” branches in some areas. These changes will come into effect by the end of the year and will mean a reduction in services offered by some remaining branches.
HSBC will have 511 physical branches in the UK following the planned closures. The bank’s shares rose 2.1% following its announcement on Tuesday.
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Other banks have also made plans to reassess their working spaces amid the COVID-19 pandemic. The Financial Times reported that Virgin Money and Metro Bank intend to convert parts of branches into flexible working space, and that Lloyds Banking Group would start to test similar measures from October.
These plans have caused concern among some campaigners, who say that local bank branches provide a lifeline for those requiring access to cash and face-to-face services, as well as enabling small businesses to bank without greatly disrupting their own trade.
Stock trading is not an easy task. That is why it offers the potential for great rewards. Many people get the impression from social media that it is easy to make a huge amount of money from stock trading. However, the reality is that stock trading can be quite difficult at times, and even the best traders can suffer substantial losses.
The stock market is always in a volatile state, and it can get affected by minor or major events. The COVID-19 pandemic collapsed in the stock market, and it is still recovering from the effects. But intelligent traders can make substantial profits from the recovering market using some key ideas. We will discuss six of those ideas that can be a part of your stock trading strategy.
Use Stock Trading Software
When it comes to stock trading, you shouldn't rely on predictions and forecasts. Wall Street professionals love to tell their customers that they can predict the future of stocks better. But the market situation of 2020 is one of the best examples of the futility of stock predictions.
Stock forecasts can be useful in preparing you for market volatility as long as you react on time. Whenever you see a downtrend emerging, it is best to move to the sidelines. But it is best if you rely on technical analysis software rather than a person trying to make a profit from it.
Stock trading software provides the necessary research and analysis of the stock market. That allows you to investigate the stocks that interest you. You can get information on the past performance of the company with accurate predictions of the future. The stock software also provides real-time updates on stocks and recommends the ones that are best for investment.
You will have access to indicators that study past patterns and provide accurate predictions and forecasts. Some of the best software offers advanced tools like charts and customised tax reports. They allow you to develop your stock trading strategy with risk management steps to avoid market crashes like the one in 2020.
When it comes to stock trading, you shouldn't rely on predictions and forecasts.
Keep Your Accounts Close to the Highs
You will have to double your efforts to make up for the losses incurred in 2020. Most people believe that long-term investments are the best way to compound your money. However, you can also compound your profits by keeping your accounts high and gaining continuous results.
Instead of holding onto a single stock and hoping to get rich from it, engage in aggressive trading. It will allow you to consider the best stock options and benefit from compounding your profits by keeping your accounts closer to the highs.
Compounding profits in stocks can fail if you suffer huge losses, which applies to long-term and short-term trading. That is why you must protect your gains in 2021.
Profits Are Sporadic
The stock market always goes through ups and downs of various patterns. Therefore your style of trading should always be varied and focused on the bigger picture. In the post-COVID-19 market, you still have to follow the 80/20 rule. That means you will make substantial profits 20% of the time you spend on stock trading.
If you had an immediate success, you have to keep in mind that you might make little progress 80% of the time due to the shifts in the market. Bear in mind that you might not be able to predict the period of peak profit. So you have to be always ready to spring into action whenever the conditions are favourable and make maximum profit from it.
Use Charts
Some people think that they can rely on their ability to predict macroeconomic events. Such people have suffered huge losses during the COVID-19 market crash. Charts can provide you a framework for your stock trading in a million different ways.
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They are not a way to predict the future performance of the stock market. But charts are extremely helpful to manage and monitor your existing trades. They can also help you anticipate when to buy or to sell your stocks.
Develop Your Own Approach
The best approach for stock trading is subjective to every person. Some people are efficient at following trends and developing momentum, while others work best with the fundamentals.
Therefore, you should formulate your own approach in 2021, depending on your methodology to view the market and buy new stocks. The stock market is always evolving, which means you have to keep modifying your methods to protect your capital and future investments.
Consider Incremental Trading
Most people feel that stock trading is a process of buying a good stock and then hoping to make a profit from it. The style of trading without a strategy resulted in huge losses in the 2020 market crash. In the new year, you should consider trading incrementally by taking an initial position and watching the action.
If you were wrong about the stock or market shifts, you would be able to sell the stock with the least amount of losses. On the other hand, if the stock is doing well, you can become aggressive and build your trade.
Stock trading is difficult, and that is why it has the potential for huge profits. Therefore you must have the right strategies to maximize your earnings from your investments. We believe that the methods we discussed above will prove helpful for your stock trading strategy in 2021.
Europe’s car industry has suffered its largest drop in sales since records began, stemming from the impact of the COVID-19 pandemic.
New data published on Tuesday by the European Automobile Manufacturers Association (ACAE) showed that new car registrations in the European Union fell by 23.7% in 2020, the sharpest annual decline ever seen by the industry body. 3 million fewer cars were produced than in 2019, and only 9.9 million new car registrations were recorded in the bloc.
According to the ACAE, the decline is owed to the COVID-19 pandemic and its disruption of car assembly lines and consumer demand.
“Containment measures – including full-scale lockdowns and other restrictions throughout the year – had an unprecedented impact on car sales across the European Union,” the organisation said.
Every one of the EU’s 27 member states saw double-digit sales falls during 2020, according to the ACEA’s figures. The greatest fall was in Spain, with a decline of 32.3%, followed by Italy at 27.9%. Sales in France and Germany also dropped by 25% and 19% respectively.
The worst Europe-wide slump was felt in March and April, when COVID-19 made its initial impact on Europe and the first lockdown restrictions were put in place. However, sales have remained weak since then.
New car registrations dropped by 76.3% across the EU in April as these first lockdowns were established.
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New registrations also fell by 3.3% in December, marking the third monthly decline in a row, as new lockdowns have been imposed in European nations.
The car industry represents 7% of the EU’s GDP and employs almost 15 million people directly and indirectly, the ACEA said.
London-based online food delivery company Deliveroo has been valued at over $7 billion (£5.1 billion) after its most recent fundraising round.
Deliveroo announced on Sunday that it had secured another $180 million from its existing investors, including minority shareholder Amazon, as it gears up for a blockbuster initial public offering in the coming months. The IPO will be London’s biggest new share issue in three years.
The company, which had already raised $1.5 billion from its investors, plans to use the newly raised funds to innovate, expand its online grocery business and establish delivery-only kitchen sites.
"This investment will help us to continue to innovate, developing new tech tools to support restaurants, to provide riders with more work and to extend choice for customers," said Deliveroo founder and CEO Will Shu in a statement.
Deliveroo is among a range of eCommerce companies to benefit from the shift in consumer spending caused by the onset of the COVID-19 pandemic in 2020. Last April, the Competition and Markets Authority approved Amazon’s purchase of a 16% stake in Deliveroo after the firm warned that restaurant closures in the first UK-wide lockdown could cause its collapse.
With the ensuing country-wide rise in demand for online food delivery, Deliveroo managed to double its revenues in the UK and Ireland, achieving profitability in the second and third quarters of 2020. It is now planning to add a further 100 cities and towns in the UK to its coverage, having already built up a base of 140,000 restaurants on its platform.
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A successful IPO would complete the company’s recovery from the initial shock caused by the pandemic. JPMorgan and Goldman Sachs have been hired to advise on its stock market flotation.
John Ellmore, Director of NerdWallet, discusses the significance of negative interest rates and how savers can adapt to them.
Many Britons will have hoped that 2021 would provide some respite from the intense financial pressures of 2020. Unfortunately, this is unlikely to be the case – in fact, new and potentially unique challenges lie ahead.
COVID-19 has had a hugely significant impact on the UK economy: 314,000 redundancies were reported between July and September 2020 alone, Government spending rose by £280 billion last year, and public borrowing in the past 12 months is estimated to be the highest in peacetime history at 19% of GDP.
The Government and Bank of England (BoE) have had to act in order to stimulate the economy and limit the damage. For one, in March 2020 interest rates were cut to a historic low of 0.1%. However, the cut might not have gone far enough and, over recent months, the BoE has been debating lowering rates below zero; going as far as to issue a letter to all UK banks, urging preparedness for base rates to drop to negative figures.
This policy is not without its merits. After all, it will encourage commercial banks to lend more, and consumers to spend more, therefore fuelling economic growth. However, negative rates are unlikely to be viewed as optimistically by savers.
The impact of negative interest rates
While negative interest rates make borrowing cheaper, they have the opposite effect on savings.
When rates fall below zero, it becomes more expensive for commercial banks to keep customers’ money in savings accounts. Theoretically, this could force commercial banks to charge savers for holding their money. However, this scenario is not likely, as doing so would inevitably drive the majority of clients to rapidly withdraw their savings from banks. This would, in turn, cause a massive economic aftershock.
While negative interest rates make borrowing cheaper, they have the opposite effect on savings.
That said, even if commercial banks do not impose such fees, the value of many people’s savings could decrease over time; it certainly will in real terms, given the UK’s inflation rate currently sits above 0.5%.
The question, therefore, is what can savers do to protect their money?
Keep calm and research different options
Crucially, Britons must not panic. Doing so may result in rash or ill-informed decisions, which could damage their long-term financial prospects. Instead, it is important to dedicate time researching the various savings options available.
For more risk-averse savers, there are savings accounts available which still offer relatively generous interest rates. For example, there are fixed-rate savings accounts offering up to 1.25% in interest, while some instant access accounts can offer savers as much as 0.6%.
People most thoroughly research their various saving options. Comparison websites are a good starting point, as they search the market for different financial options and present their findings in a clear, jargon-free table. So, users can simply select the savings account that best suits their needs.
Consider investments
However, some savers may want their money to work a bit harder. In which case, they might want to look into other options, such as stocks and shares ISAs.
These are tax-efficient investment accounts, which enable savers to put their money into a range of different investments – these can either be chosen by the saver themselves, or by the ISA provider.
Stocks and shares ISAs present an opportunity for generous returns on savings, should the investments be successful. However, this also means that the value of savings could decrease, if the value of investments falls. So, those contemplating starting a stocks and shares ISA should carefully consider their risk appetite before committing to this savings strategy.
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Premium bonds accounts
Another alternative savings strategy comes in the form of a premium bonds account. This entails adults purchasing bonds for £1 each; £25 worth of bonds being the minimum amount one can purchase. Instead of gaining interest on their purchase, customers are entered into a monthly cash prize draw in which they could win a tax-free sum of between £25 and £1 million.
What’s more, 100% of an individual’s investment is protected, so investors will always break even, even if they never win a prize draw.
That said, the odds of savers winning money are not particularly encouraging; it is estimated that 1 in 54,656,068 people win £1,000 each month. So, while perhaps a more fun alternative to a traditional savings account, this strategy might not be suited to those looking to make more significant or predictable gains on the value of their savings.
The prospect of negative interest rates will be unnerving to many savers. However, it is important to remember that there are alternative savings routes available. Finding the right one will involve dedicating time to researching different options; but if Britons do their research and make informed decisions, they should be able to save for the future with confidence.
Most major stock markets were lifted on Thursday amid reports that President-elect Joe Biden will announce a $2 trillion COVID-19 stimulus programme later in the day.
European markets saw modest gains, with the FTSE 100 opening 0.1% higher in London and the DAX gaining 0.2% in Frankfurt. Paris’s CAC 40 remained flat. The effect on Asian markets was more pronounced as Japan’s Nikkei hit a three-decade peak and Hong Kong’s Hang Seng rose 0.95%.
The bond markets also saw movement. The yield on US Treasuries, the benchmark for global borrowing costs, also rose two basis points to 1.11% on the expectation that a $2 trillion aid package will raise US debt levels to new heights. Meanwhile, European yields were held in place due to widespread COVID-19 lockdowns and heightened expectations of further bond buying by the European Central Bank.
US futures were largely subdued, with the S&P and Dow Jones respectively gaining 0.2% and 0.3% while the Nasdaq slid 0.1% down.
President-elect Biden is expected to lay out stimulus plans today in Wilmington, Delaware. According to CNN, Biden’s advisors have told allies that the total package could come to around $2 trillion.
"Essentially, the markets have been in a holding pattern for the past three days as dealers have been waiting to hear from Mr Biden,” CMC Markets’ David Madden told Business Insider. "To an extent, a large amount of positive news has been factored into stocks and commodities."
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A Deutsche Bank analysts’ note spoke optimistically on the possibility of fresh stimulus checks sent to US citizens, noting that Biden has been a vocal proponent of $2,000 checks in the past. The bank also noted the possibility of “additional immediate economic relief for families and small businesses”.
Investors have remained largely unshaken by Wednesday’s historic House vote to impeach Donald Trump, making him the only US president to be impeached twice.
Andrew Megson, executive chairman of My Pension Expert, offers his advice to savers aiming to get the most out of their finances for retirement.
The beginning of the new year has been just as turbulent as the one that came before it. Indeed, COVID-19 cases and hospital admissions are increasing once more, consequently driving the UK into its third lockdown since the beginning of the pandemic.
Yet despite this sombre start to 2021, the arrival of a new year presents marks a fresh start for individuals everywhere, with many taking the opportunity to better themselves – especially when it comes to the state of their retirement finances. After all, January remains a popular time for older members of the workforce to consider setting their retirement date.
Inevitably, many people are wondering what they can do to ensure that their pension pot remains in good health. So, here are some pension planning tips worth considering in the new year, to help savers secure a relaxed and financially secure retirement.
Devise a suitable retirement strategy
It might seem like a fairly elementary suggestion to make, but developing a sustainable retirement plan is a vital factor many adults dismiss. According to a recent My Pension Expert survey of over 900 UK adults aged 40 and over, a staggering 42% admitted that they had no clear retirement strategy in place.
In these circumstances, it is vital to seek some independent financial advice. An adviser will be able to offer a helping hand when it comes to devising a retirement plan that suits their client’s specific needs.
It might seem like a fairly elementary suggestion to make, but developing a sustainable retirement plan is a vital factor many adults dismiss.
Take the hassle out of savings
We are all inundated with a million and one things to do during the working week, so often the subject of pension contributions is left in the sidelines. As such, individuals should consider how they can make saving for retirement as hassle-free as possible.
If you have a workplace pension, this shouldn’t be too tricky. The way this usually works, employers simply deduct an agreed sum from an employee’s salary to count as their pension contribution. The result is that this is an easy process, unless individuals want to increase their contribution at any time.
Alternatively, those with a personal pension should consider setting up a direct debit to replicate this process. In this way, contributions can be made with minimal effort.
Tracking down old pension pots
In today’s increasingly fluid jobs market, it is common for individuals to have worked for up to 10 (or more) different companies throughout their career. So, by the time an individual has reached retirement age, they will have amassed a number of pension pots. As a result, it can be easy to lose track; indeed, nearly a third (31%) of UK adults aged 40 to 54 have lost track of their pension pots, according to recent research from My Pension Expert.
To make things simpler, the government offers a helpful tracking tool, which should go some way to help pension planners locate their missing pots. Although at the moment the service cannot tell individuals the total value of the pension pots that they have accumulated, it does provide users with the contact details of their provider.
Shopping around for the right option
The world of pensions can seem like difficult terrain to navigate. Consequently, many savers fail to shop around for a pension provider, instead settling for one that does not suit their needs. However, there are plenty of different options available; consumers just need to make a habit of conducting their own research. After all, pension planners are able to transfer their pension pot at any age, so there’s no need to put off conducting research until a later date.
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However, some pension providers will impose fees on clients who transfer their funds, so this is something to keep in mind if you’re thinking of changing providers. Savers should always ensure that you read the small print to see if this is the case or seek independent financial advice if they are unsure.
Keep an ear to the ground
Ultimately, planning for retirement can be complex - particularly in the current climate, where economic turmoil and changing markets are complicating matters even further. With further changes expected to pension policies, tax relief, the triple lock system, and even the potential for negative interest rates, it might seem more difficult than ever to get a handle on retirement finances.
So, it will be beneficial for savers to make a conscious effort to keep up with the latest pension news, and potential changes to pension policies in the new year. In this way, savers are less likely to be in for a shock if any changes are made, and will be able to adjust their retirement strategy accordingly, which should make for a more financially secure retirement. As policies can often be quite complex, savers shouldn’t be afraid to ask for a helping hand if they need some assistance cutting through the jargon.
While 2021 hasn’t been smooth sailing thus far, this doesn’t have to be the case for people’s pensions. After all, there is no time like the present for savers to strengthen their pension pots, and achieve some peace of mind amidst all the chaos.
Karoline Gore looks at HMRC's tax submission policies and what they mean for January 2021 self assessment filings.
With the self-assessment deadline looming, around 5.4 million self-assessment customers will be finalising their tax submissions by the end of this month. With the deadline less than a month away, professional bodies and customers have been calling on HMRC to delay the 31 January tax filing deadline. With multiple lockdowns and drastically changing finances for self-employed customers in 2020, many people are struggling to complete their self-assessment on time - or to afford the payments on account. However, HMRC has recently issued a response refuting requests to extend the deadline, but promising to keep the matter under consideration. With the pressure on to get those self-assessments in by midnight on 31 January, many are now beginning to wonder about their options if they cannot meet the deadline, and the consequences should they miss it.
Penalties For Late Filing Of Self Assessment
If you miss the deadline for filing or paying your tax bill, you are liable to receive a penalty of £100 if your self-assessment is less than three months late. Consumers will also have 30 days from filing to pay their tax due, or risk being fined 5% of their tax bill. If you do miss the 90-day late filing window, each additional day your return is late will cost you £10.
It is also important to note that HMRC charges interest on any tax owing. The current late payment interest charge is 2.6% as of April 2020. Penalties for late filing and late payment of your self-assessment tax are also independent, which means failure to submit your self-assessment on time can result in consumers paying both fines at the same time. This presents two important issues that the self-employed must overcome during this tax season: timely filing of their tax return and the payment on accounts.
Options For Late Filing
If you do miss the self-assessment deadline, your options weigh heavily on contacting HMRC as soon as possible. According to the ICAEW, an acceptable practice when the filing deadline cannot be met is to file your self-assessment using provisional figures or estimates of any missing information. However, acceptance of this method depends on the extent of the effort put forth by the client on obtaining the missing information. HMRC has said that it will not accept this if there is proof of little effort being made, or your accountant did not request the details on time.
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If your self-assessment filing has been affected by COVID-19, there may also be grounds for appeal against any penalties. To do this, clients must submit their tax returns and await the penalty notice before appealing. The appeal process is done online for taxpayers and by using an SA370 for agents. Additionally, HMRC has confirmed that circumstances relating to COVID-19 would be considered reasonable grounds for appeal consideration, with fines waived for those who file late due to the pandemic.
Options For Non-Payment Of Balances On 31 January
If taxpayers find themselves unable to pay their balances on 31 January 2021, one of the first options they have is to contact HMRC’s payment hotline to work out a payment plan. According to ICAEW and guidance published by HMRC, the deadline for negotiating extended payment deadlines is 2 March, 2021. Insights from the Tax Faculty recommends taxpayers take proactive steps to increase their chances of getting HMRC to agree to payment schedules, including keeping your paperwork for tariff payments updated and having reliable financial forecasts to aid in their payment plan suggestions.
Alternatively, those with a tax bill of £30,000 or less can apply for time to pay their taxes over 12 months. In October 2020, the UK government raised the tax liability threshold to £30,000 as part of their pandemic response and in a bid to give self-assessment customers access to enhanced payment plans. According to the Financial Secretary to the Treasury, Jesse Norman, “We are supporting jobs by giving more breathing space to up to 11 million Self Assessment taxpayers when managing their tax affairs. Enhancing Time to Pay should ease the financial burdens and protect the livelihoods of these taxpayers as they navigate the months ahead.”
With the clock ticking on the self-assessment deadline, it is now down to taxpayers to become familiar with the options available if they cannot meet the 31 January cut-off. Regardless of their choice, immediate action is recommended.
Dare Okoudjou, Founder and CEO of MFS Africa, looks at the fallout of the COVID-19 pandemic and how the world economy can become more adaptable in its wake.
The relentless spread of COVID-19 throughout 2020 has underlined the importance of financial resilience in disasters and unforeseen events. The United Nations Sustainable Development Goals Report 2020 estimated that some 71 million people would be pushed back into extreme poverty in 2020 due to the pandemic, while some 1.6 billion precarious workers in the informal economy – half the global workforce – may be significantly affected.
But while the aggregate reporting may be global, the rapid advance of COVID-19 across the world has also highlighted how economic interconnectedness means that the worst would hit everyone at the same time. Often where one region or country was subject to severe restrictions on movement or activity, another was more open. People have therefore felt the effects of the pandemic at different paces and to different degrees according to where they are in the world. This dynamic provided a path to greater resilience – we can offset economic damage to a badly affected area by funnelling support from one that is doing better. But it depended on the availability of convenient and low-cost solutions that could reach the poorest where they were.
With incomes squeezed and jobs lost due to COVID-19, it has become increasingly important for this group to be able to easily access support from family back home, and likewise to be able to provide this support to family where needed. Remittances can be a lifeline for people in precarious situations and provide flexibility in the face of disaster by enabling money to easily move to where it’s most needed.
Remittances are more than a lifeline
The virus halted all movement of people and cash. As regions put in place different states of lockdown and movement restrictions to curb the spread of COVID-19 – this prevented customers from accessing cash. The virus also rendered cash a less hygienic option, thus states also restricted the opportunities to make in-person transactions. All of this made mobile money infrastructure more important.
The relentless spread of COVID-19 throughout 2020 has underlined the importance of financial resilience in disasters and unforeseen events.
Since remittance payments account for a significant portion of sub-Saharan Africa’s GDP (2.8% in 2019), it was vital to ensure they could be made easily to send money. The pandemic led many African countries to strengthen their mobile money ecosystems and address specific constraints. For example, Ethiopia relaxed its rules for mobile banking and money transfers – opening the market to all local businesses to encourage people to go cashless and control the spread of coronavirus. The Central Bank of Kenya raised its transition limits and Safaricom has lowered their fees, all in an effort to encourage people to ditch cash during the COVID-19 pandemic. These are only a few examples of how the financial services regulators in Africa adapted their thinking to put the safety of citizens at the heart of its operations, whilst also ensuring they have access to the wider global economy. In a few short weeks, a pandemic helped shift perspectives on the role of appropriate regulation in building financial solutions that strengthen consumer resilience.
Digital payments and financial resilience
The pandemic has emphasised the urgency and importance of these digital ecosystems to governments and decision-makers. With restrictions on physical contact and movement during an economic crisis, it has underlined the importance of being able to move money about seamlessly and highlighted the role that digital technology can play when it comes to keeping consumers and businesses connected during a crisis. Just because we have (physically) come to a standstill, doesn’t mean that the economy has to as well.
Although we are continuing record-breaking new cases, there is a silver lining. Recent announcements on successful vaccination trials are signalling the beginning of the end for this pandemic. What is important now is that we don’t retract the positive steps made to support vulnerable senders and recipients of remittances. Unfortunately, we are starting to see some reversals. In my country, Benin, revisions in regulation of cross-border payments have stripped away proportionality in payments, meaning that very small payments are being treated on the same regulatory terms as larger payments.
Africa provides an intriguing vision for what digitally-enabled resilience looks like – and the barriers that stand in its way. The continent is a leader in mobile money, with over 400 million registered mobile money accounts; the technological tools to support its widespread adoption have been in place for over a decade.
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Mobile payments provide a fantastic example of how digital technologies can help us build a more resilient and adaptable world, one that can better see through crises and pandemics and mitigate the economic and social damage of these rare but impactful events. Policymakers, regulators, and businesspeople need to recognise the opportunity: to build a new normal, where digital infrastructure such as mobile payments future-proof our world.
Commerzbank announced on Friday that it plans to write off the €1.5 billion in goodwill that remain on its books due to “deteriorating market conditions,” including low interest rates in Poland and the euro area where the bank maintains a presence.
Further to the write-off, the bank increased its risk provisions, with at least €1.7 billion in bad loan provisions booked. This figure includes a €500 million top-level adjustment for the expected impact of the COVID-19 pandemic in 2021.
These changes, which will be taken for the 2020 financial year, suggest that Commerzbank will post a larger loss than analysts had predicted. Its shares fell as much as 4.1% following the announcement, trading at €5.53 as of 12:09 PM in Frankfurt. Overall, shares in the bank have fallen 4.9% over the past 11 months.
“After this balance sheet clean-up, we are well prepared for the road ahead of us,” Commerzbank CEO Manfred Knof said in the company’s statement. “Our goal is to make the bank more profitable in the long term.”
A former Deutsche Bank executive, Knof took over Commerzbank on 1 January after being tapped for the position last September. He is currently heading up a radical restructuring of the bank, warning that it “needs to undergo a fundamental transformation”.
Last month, Commerzbank said that it would set aside €610 million in the fourth quarter to cover these restructuring costs, and in November warned of the potential for its outlook to worsen depending on how the second wave of the pandemic developed.
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In the 2019 financial year, Commerzbank ranked as the second largest bank in Germany by the total value of its balance sheet.
The value of the combined cryptocurrency market has passed $1 trillion as Bitcoin and other virtual token prices have seen widespread surges.
Bitcoin hit a new record high of $37,732 at around 5.40 AM GMT, only days after passing the $34,000 mark. The total value of the Bitcoin currently in circulation is close to $700 billion, making up the bulk of the crypto market cap.
Bitcoin’s rise has also lifted smaller cryptocurrencies including Ethereum, cardano and Ripple’s XRP.
Given its status as an alternative asset, crypto’s rise has been attributed in part to investors fleeing traditional markets in the wake of major events. The outbreak of the COVID-19 pandemic and resulting lockdown measures caused a sharp rise in investor enthusiasm which has continued to last through to 2021.
Bitcoin in particular has been sensitive to the political climate. Its latest price rally, which saw the currency’s value rise by 7% over the last 24 hours, came after Democratic candidates won crucial runoff elections in Georgia, giving the party control of the US Senate in addition to the House and, come 20 January, the presidency.
Overall, Bitcoin’s value has risen by 200% since the start of October. The currency has begun to move shift towards the mainstream payments landscape as PayPal moved to let its customers trade using Bitcoin on its platform.
Naeem Aslam, chief market analyst at Avatrade, said the 6 January chaos on Capitol Hill helped to shore up the price of Bitcoin, and said that the currency was “surely and clearly heading towards the next important price level, which is $40,000.”
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“A real bull rally has only begun,” he predicted.
