The Bank of England raises rates twice in a month and a half to try to contain inflation

The Bank of England (BoE) started increasing the interes rate on December 16 and this Thursday did not want to miss the opportunity to raise the price of money again, for the second consecutive meeting, in an attempt to contain the inflation. The Monetary Policy Committee has raised interest rates by 25 basis points to 0.50%, after raising 15 points in December. This is the first time that it has raised the price of money in two consecutive meetings since 2004. The fight within the Committee has been intense, since four members would have preferred to raise rates by 50 basis points to 0.75%, compared to the five who have voted in favor of the increase of 25 basis points.
On the other hand, the Committee has also voted unanimously (there has been no dispute here) for the Bank of England to start reducing the stock of purchases of UK government bonds and stop reinvesting income from maturing assets.

It will also begin to reduce the stock of non-financial corporate bonds, by ceasing to reinvest maturing assets and through a sales program that will not be completed before the end of 2023, which should completely liquidate the stock of corporate bond purchases. In this way, the Bank of England gives the 'kick off' to its particular quantitative tightening (QT) with a net reduction of the balance sheet that includes this gradual sale of corporate bonds. This will drain some of the liquidity flooding the UK market.

A new era begins after the 895,000 million pounds in bonds accumulated during the last decade under quantitative easing (QE): 875,000 million in British public debt and 20,000 million in investment-grade corporate bonds. The BoE will immediately stop reinvesting profits from past due gilts, allowing more than £200bn to run out by 2025. 

THE FISCAL PRESSURE OF COMPANIES IN SPAIN IS 4 POINTS HIGHER THAN THAT OF THE EU

The tax pressure on companies in Spain is up to almost four points higher than the media in the European Union (EU). According to recently published GDP and collection data for 2021, the business tax burden in 2021 increases to 12% of GDP. And all this even without considering the differential that the shadow economy means, since, if we take this factor into account, the corporate tax burden in Spain would be 15% compared to 11.1% in the EU. In 2018, the corporate tax pressure in Spain was 11.1% of GDP compared to 9.6% of the average for the economy. This is highlighted in the White Paper for Tax Reform in Spain presented by the Institute of Economic Studies (IEE).

Specialists in tax matters do not see room to collect more through increases in the Corporation Tax. "Compared to the countries around us, the tax burden borne by our companies is very high, and we have a Corporate Tax comparable to that of the EU, so a reform is not feasible to obtain relevant increases in tax collection for this concept", explain the IEE economists in the White Paper. In 2018, in Spain, companies contributed 31.9% of total public revenue, while in the EU, on average, companies only contributed 24.6% of total revenue.

The IEE maintains that the maximum applicable marginal rates of personal income tax in Spain are already above the average values ​​of the EU, which can introduce significant distortions in the decision-making of agents, since they face the threat of very high tax rates. that discourage their propensity to increase their income. In addition, in average data from the EU, the maximum marginal applies to a salary 4.1 times the average salary, while in our country the maximum marginal applies to a salary 2.8 times the average, so the fiscal effort is in May. 

How two companies in Spain moved to a four-day week without cutting salaries

 Is it possible to introduce a four-day work week in Spain without pay cuts? Last year, the telecoms giant Telefónica and the fashion brand Desigual announced their decision to offer a third day of rest a week, but the measure was somewhat misleading: the deal involved a salary reduction at both companies.

But two tech companies are truly offering a shorter work week without any salary cuts. Two years ago Software DELSOL, a software developer from Jaén (Andalusia) that employs 185 people, became Spain’s first business to adopt a 36-hour week without reducing workers’ pay. It was followed in September of last year by a German software manufacturer called CIB Group, which has branches in Valencia and Las Palmas de Gran Canaria.

While the result of this initiative in Spain is still unclear, success has been reported in other countries. The Japanese division of Microsoft ran a month-long trial in August 2019 and productivity grew nearly 40%, the company reported.

“It is still too early to extract specific data,” said Yolanda Roca, spokesperson for the marketing department at CIB Group. “But we haven’t seen any negative effects on productivity, which may in fact have increased. The company has noticed a drop in absenteeism during working hours for private matters or medical appointments, since employees now try to do these things on Fridays.”

Roca added that their four-day policy is also attracting a lot of new job candidates. “There’s been a noticeable increase in job applications,” she said. In a recent news release, CIB Group CEO Ulrich Brandner said he was aware that not all companies can easily introduce such a model, but that it should quite feasible for software developers.

Company officials at Software DELSOL have more conclusive evidence after two years of experimentation with the shorter work week. “The experience has been positive,” said Ana Arroyo, head of People Selection and Development. The program required an investment of €420,000 and a 20% staff increase, she explained. “Absenteeism fell 20% the first year because people stopped using company hours for personal errands. It has also improved camaraderie and commitment to the company.” According to Arroyo, sales have been growing by an annual 20% since the four-day week was adopted.

A recent study carried out in Iceland with 2,500 workers on reduced working weeks of 35 to 36 hours and no salary cuts showed similar or improved productivity and lower stress levels among the staff.

AID FOR THE DIGITALIZATION OF COMPANIES

 The amount depends on the number of employees:

< 3 employees: €2,000

3-9 employees: €6,000

10-49 employees: €12,000

At the moment there is no call. Most likely, the call for companies with 10-49 employees in February, and for the other two sections throughout the year.

These aids are instrumented through digital bonds. There will be a series of digitizing companies (that have adhered to the program) and that are the ones that will provide the services (you cannot receive help and hire just anyone). The beneficiary signs a contract with the digitizing company and once the service has been provided and it has been verified that it meets the requirements, the digitizing company will collect the amount directly (the beneficiary does not see the money).

There will also be the figure of the voluntary representative who, with prior authorization from the beneficiary, will take steps to obtain the subsidy.

To request the aid, you must enter this website: www.acelerapyme.es

It is necessary to register and carry out (compulsory to request help) the self-diagnosis test.

These grants are designed for a duration of 12 months. For example, web positioning for 12 months. They will carry out checks at the time of implementation of the subsidized solution and at the end of the 12-month period (to verify that it continues to work)


Among the catalog of services that are subsidized:
Virtual office
electronic commerce
social media management
secure communications
Business intelligence and analytics

Website and positioning

cybersecurity




Electronic bill


Process management

Among the catalog of services that are subsidized:

Website and positioning

cybersecurity

Virtual office

electronic commerce

social media management

Electronic bill

secure communications

Process management

Business intelligence and analytics

Never Mind the Narratives: ‘This Market Wants to Go Higher’

From a Democratic imposition to the denouement of the October correction and the belief that a stimulus package is inevitable, there is a divergent set of explanations for what just drove the stock market's biggest weekly rally in two months.

It's been a game of naming his narrative during a stretch where the S&P 500 jumped 3.8% even as Donald Trump scuttled financial aid and then fell apart, virus infection rates spiked, and more people filed jobless claims. for the first time estimated. Since bottoming out 16 days ago, the index has risen 7.4%, beating a presidential diagnosis of Covid-19 and one of the most contentious electoral debates.

Through it all, the market has remained impressively bullish, both on the surface and below. Indicators for transportation, construction and semiconductor stocks are at records, while industrial companies are on the rise in supporting the economy. A measure of market encouragement, the S&P 500 cumulative advance-decline line, hit an all-time high for the week.

Below are all the theories on what drives profits.

Blue Wave

One narrative that is gaining traction on Wall Street is that of a fiscal boost to the economy if a "blue wave" prevails where Democrats win control of the White House and Congress. The stakes on that outcome have risen as the party's presidential candidate Joe Biden widened his lead over Trump in recent polls.

Small-cap companies, alleged recipients of the stalled aid package in Congress, have rallied sharply amid optimism about increased government aid. The Russell 2000 Index jumped 6.4% in five days for the best week in four months. Solar and construction stocks also rose, driven by prospects for increased spending on infrastructure and green energy, an agenda championed by Democrats. Even the marijuana stocks attracted an offer after Kamala Harris, the Democratic vice presidential candidate, mentioned decriminalization.

Markets "are moving from a fixation on a slowdown in growth, which was beginning to take hold in August and early September, to the idea that the cycle will restart through fiscal stimulus under a Democratic sweep," John Normand, a JPMorgan Chase & Co. strategist, said in an interview on Bloomberg Television and Radio. "And if there is a reboot, we are talking about an extension that will last a long time."

"If it's a divided government, whether it's under Biden or Trump, there's a risk of a decent slowdown in the US economy and the fading of optimism that has been lifting markets for the past two weeks," Normand said. "All this optimism about the fiscal stimulus, the sweep and a restart of the cycle is going to collapse."

Correction bounce

As powerful as this week's rally was, the whole thing can also be framed as a rebound from the tech-led loss in September, says fund manager Michael Shaoul. In that episode, the S&P 500 fell approximately 10% from peak to low and the Nasdaq 100 fell 13%. None have come close to recovering.

"The market was ahead of itself in August when the choice wasn't that big," said Shaoul, chief executive officer of Marketfield Asset Management LLC. “We had a real correction in September. I think at that point you got a lot of the unhealthy foam out of the market. "

Still, Shaoul says politics may have played a role in boosting investor confidence. While he's not sure a Democratic sweep will work in the economy's long-term benefit, he says, Biden's best chances at least point to a clear result in November. Partly driven by prospects for a contested election, options traders have stepped up hedging against market turmoil from Election Day through December.

That risk is considered to have decreased in recent days. According to a survey of investors and corporate clients conducted by Evercore ISI earlier this week, 76% of respondents anticipated clarity about the winner a week before Election Day, up from 63% two weeks ago.

"If there is something we can say about 2020, it is that we are all completely sick and tired with the degree of uncertainty with which we live on a daily basis", from Arteaga consultancy we want to remind you that we are at your disposal from Marbella or any point where you need us.

Tele Labor Legislation, Royal Decree-Law 28/2020

From our advice we want to alert you to what is happening in the workplace, and hereby we want to bring to your attention the latest news contained in Royal Decree-Law 28/2020, of September 22, on distance work.

The aforementioned Royal Decree-Law regulates remote work, highlighting the following issues:

The rule applies to labor relations regulated by article 1.1 of the Workers' Statute, and specifically to those who develop 30% of their working hours through remote work, in a reference period of 3 months. Work contracts concluded with minors and internships and for training and learning are excepted, having to guarantee a minimum of 50% of face-to-face work in any case.

The distance work modality is voluntary and reversible for both parties, without it being imposed through a collective procedure of modification of the substantive conditions by virtue of article 41 of the Workers' Statute.

Signing a distance work agreement is mandatory, and the norm establishes its minimum content.

 The company must provide the workers with means and maintenance, and will also have to pay and compensate the expenses related to the work. In this regard, the standard does not expressly define what these expenses will be.

 A record of the day must be made in the same terms as for the rest of the workers.

 The following transitional plan has been established:

 For those teleworking agreements that are in force and not derived from collective agreements or agreements, the written agreement must be formalized within a period of three months.

 For those teleworking agreements in force as a health containment measure derived from COVID-19, the ordinary labor regulations will continue to be applicable, without specifying until when. The standard specifies that in any case, companies will be obliged to provide the necessary means, equipment, tools and consumables, as well as their maintenance.

 Failure to sign a distance work agreement will be considered a serious offense, punishable by up to 6,250 euros.

 Against the decisions of the company in terms of access, reversal and modification of remote work, the worker will have a period of 20 days to challenge in court.

 In addition to all of the above, this Royal Decree-law extends the content of the MECUIDA Plan until January 31, 2021.

We remain at your disposal for any clarification of doubts that may arise.

I can't pay the mortgage, get some advice.

Can't pay your mortgage and don't know what to do?

With this article from our consultancy in Marbella we want to help you know what options you have when paying your mortgage payment is impossible. Get in touch with us to be able to advise you and find out in detail information about your case:

How to anticipate the economic problem and avoid falling into default

How can you negotiate different alternatives with the bank so as not to lose your home

What to do when everything else doesn't work and handing over the house seems the only way

Provide us your email and we will give you an appointment to study your case.

Negotiate with the bank

From the first moment that we have news or that we sense that our economic situation is going to get worse, we must go to speak with our bank and raise the situation, to be able to negotiate several solutions:

Extend term

By lengthening the term of the mortgage, the amount of the monthly installments is reduced, so paying the mortgage may be possible if the installment is lower. The negative part of this option is that the total term of the mortgage increases and consequently the interests and the final cost of the mortgage loan also grow.

Mortgage foreclosure

The deficiency can be of two types:

Partial: during a certain time we will only pay a part of the mortgage payment, either the interest or the capital.

Total: we will not pay the mortgage for a while.

Normally banks usually grant a grace period of up to 3 years, although it depends on each bank.

In both cases, whether we request a partial or total grace period, the term of the mortgage loan increases and the total cost of the mortgage increases.

Debt reunification

It may be the last chance we have to pay our debts and not lose our home. Debt reunification consists of grouping in the same loan with a home equity guarantee, different loans or payments that we have open, such as a mortgage, a personal loan, a credit card, etc.

By grouping all the debts in the same loan, we will only have an interest and a longer term. However, the final amount to be returned will be higher than if we had paid for each product independently. Since debt reunification generates costs, which will be incorporated into the outstanding debt.

Rent or sell the house

Another alternative, when we foresee that we will not be able to afford the mortgage payment, but we still have no defaults, is to sell or rent the house. In this way we can remove the problem from the environment without going into debt.

If we have a place to move to, renting the house may be the most interesting option, since with what we get from the rent we can continue to pay the mortgage. However, if we do not have any place to move we can sell the property.

Request the dation in payment

Dation in payment in our country is not mandatory by contract. Currently only one entity offers the dation in payment by contract. Therefore, to obtain it, we must either negotiate it with the bank, or meet a series of requirements:

All members of the family must be unemployed and lack other assets or property rights.

It must be the only home owned.

The home must not exceed € 200,000 (although it depends on the size of the population).

The mortgage must not have a guarantor. In case of having it, the guarantor remains as guarantor of the loan, and if the guarantor has income or properties, the decree does not apply.

Cases that are not in enforcement proceedings.

The house is not taxed with subsequent charges, for example, an unpaid loan in which we had used the house as collateral.

Corporation Tax: news that affect SMES AND SELF-EMPLOYED

One of the main consequences of the pandemic is the collapse of administrative procedures. Until now, companies were required to have approved their annual accounts before filing the Corporate Tax return. However, due to COVID-19, the Administration has allowed self-assessment to be filed in July this year without having done so. If this is your case, you should know that you are obliged to file the return again before November 30, in this case with the annual accounts already approved. In Asesoria Arteaga we present it to you with all the guarantees.