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UK Retail Sale Figures For October: E-commerce Surges
As regular readers of this blog will know, the pandemic has boosted e-commerce all over the world and in almost every sector. The UK’s retail sector is no exception. Many had predicted that the growth of retail sales would stall in October, but this did not turn out to be true. In fact, UK retail sale figures For October rose 1.2% from September and were up almost 8% from the same month last year. But how is this industry still growing despite the pandemic and severe financial worries gripping the nation? This article will outline the figures on the ONS report on retail, before going on to explain just how these figures keep rising.
What Do The Figures Say?
Staggeringly, all measures in the total retail sales industry saw an increase in October 2020. The monthly growth rate for value sales was 1.4% and for volume sales 1.2%. This was the sixth consecutive month of growth. This meteoric rise has resulted in value and volume sales 5.2% and 6.7% higher respectively than in February 2020, before coronavirus (COVID-19) lockdown restrictions were applied in the UK.
In the three months leading to October, value sales increased by 9.2% and volume sales by 8.9% when compared with the previous three months.
Unfortunately, two of the main industries that have not been able to show the same amount of growth are clothing and fuel. Clothing had been steadily recovering, but October saw that progress stall, whilst fuel has been struggling since the pandemic started. In the case of clothes, it is probably because people are going out less and working less, and thus they are not needing work clothes or special attire, whereas in the case of fuel, people are simply not commuting as much.
Where Does E-commerce Fit In To The UK Retail Sale Figures For October?
Quite simply, e-commerce is propelling the growth for the UK retail sale figures in October. Shoppers have spent 60.1% more online than they did last October – and 5.7% more than last month. More than a quarter (28.5%) of all UK retail sales were made online in October. That’s more than the 27.5% of sales made online in September and well ahead of the 20.1% of sales made online in February 2020. Whilst these are impressive increases, it is worth bearing in mind that these figures are lower than peaks of 33.3% in May and 31.8% in June.
Some were predicting that the growth of e-commerce might have been about to settle down, but Novembers lockdown suggests that e-commerce might grow even more. The growth of the industry is most keenly felt in groceries, as grocery sales almost doubled (an increase of 99%) from October 2019. Such is the significance of this increase, it is likely that these figures represent a permanent shift for at least a considerable portion of consumers.
How Should You React?
If you are a business owner, the message is clear: e-commerce is the way forward. Bearing this in mind, it is obviously worth making sure that all you digital platforms are up to date and user-friendly. However, a big problem that will be facing suppliers will be deliveries. Capacity in the delivery network will be close to full proximity until the new year. In order to compensate for this, it is perhaps wise to limit the use of next day delivery as much as possible. Further, some experts are suggesting the use of out-of-store click-and-collect locations. This means you can take a lot of your orders at once to one location, saving time and money. Since we are still in the midst of the pandemic, no-contact delivery options like these are made even more viable.
As for consumers, the best option is to order your goods as soon as possible in order to ensure that goods reach you before Christmas. It is likely that this is already being done, since people doing their Christmas shopping earlier this year would account for some of the increase we have seen in sales in October.
Conclusion – The UK Retail Sale Figures For October Show E-commerce Is Here To Stay
Clearly, the UK retail sale figures for October have show October to have been a strong month for the retail and e-commerce sector. Whilst many are predicting that this trend will begin to stagger in November, the significance of the current lockdown and Christmas shopping cannot be overlooked – don’t be surprised to see the growth continue. Click here to see the figures from October in full.
Here at J & P Accountants, we understand that the prospect of trying to comply with all those tax regulations and logistic calculations can be daunting in the festive period. But that’s where we come in.
If you are a business who participates in cross border e-commerce, we would be more than happy to help you register for VAT, file your VAT returns, and help you comply with VAT in case your account faces any issues. At J&P, helping your business is our passion, and we understand that companies across the UK are at risk now more than ever. We are here to support you through the Coronavirus crisis and the busy festive period, so please do not hesitate to give us a call on 0161 637 1080 or send an e-mail to enquiries@jpaccountant.com
Daily News Round Up 16th-20th November
Daily News 16th November 2020
E-commerce News: Troy UK Launches New E-commerce Platform
The new platform launched by Troy, called Troy Commerce, allows members to purchase goods from the Order Hub, but perhaps its most useful feature is that that is also allows members to design their own e-commerce stores. The design feature has a lot of customization available, and allows users to pull products directly from the Order hub into their stores.
J&P Comments
This platform could be a very useful tool for UK vendors. Troy Commerce records every transaction that takes place on the platform. This allows user to predict buying trends, thus enabling them to deliver an optimized, data-driven experience to their consumers.
Business News: Brexit Talks Stall With Deadline Looming
Ireland believes Britain and the EU have 10 days to find a Brexit breakthrough, before both sides will have to start preparing for a No-Deal Brexit. The point of contention seems to be fishing borders and the level playing field – specifically, to what extent Britain will be allowed to subsidize their companies. These revelations come out on the day that PM Boris Johnson claims he believes that the UK can ‘prosper’ without a trade deal.
J&P Comments
The British government seems to believe that they need loose level playing field regulations in order to achieve the status of a completely sovereign nation. They are hoping to achieve similar rules to the likes of Australia and Canada. However, the EU is arguing that the close proximity of Britain, along with the size of the British economy, means that Britain must accept tighter restrictions. With only a matter of time left until the deadline, it does seem that one of the sides will have to back down in the coming days if a trade deal is to be agreed.
E-Commerce News: Pinduoduo Looking Towards Rural Consumers
Pinduoduo has pledged to increase investment in digitalizing the rural supply chain in China in the wake of increased demand for online grocery shopping. The company believes itself to be China’s largest online platform for agricultural products, which it has achieved by enabling direct selling from farms to consumers. This investment in rural supply chain is an attempt by the company to cement this position.
J&P comments
Pinduoduo will face tough competition for these consumers from the likes of Alibaba and JD.com as more rural consumers look towards online shopping due to the effects of the pandemic – a trend we’ve seen all over the world. Digitizing and modernizing the current rural supply chain will be extremely expensive. However, if it allows for the guarantee of fast and stable deliveries of delicate produce, it is likely that this investment will be heavily rewarded.
Daily News 17th November 2020
E-commerce News: German Startup Raises $25 Million To Acquire And Scale Amazon Brands
Razor Group has raised $25 million in a new round in order to acquire and scale Amazon brands. The company currently has two Amazon stores, but they hope that this fresh injection of investment will allow them to increase their portfolio to 8 stores. They hope to have 30 stores by the end of next year.
J&P Comments
This news comes as last week a company with a similar business model called ‘Heroes’ raised $55 million for the same purpose. This is a relatively new business idea, with the motive being for these companies to consolidate a portion of the Amazon marketplace. Whilst this idea will certainly be replicated over and over again, Amazon has over 5 millions sellers, and thus it will be a long time before the Amazon market is completely consolidated.
Business News: Biden Vows More World Trade
Biden has declared that the US must reverse the position that they held under Trump with regards to International trade in order to be involved in decision making surrounding trade. “We make up 25% of the world’s trading capacity, of the economy of the world. We need to be aligned with the other democracies – another 25% or more – so that we can set the rules of the road,” Mr Biden said.
J&P Comments
Biden’s comments come just days after the signing of the Regional Comprehensive Economic Partnership, the biggest trade deal in the world which covers nearly a third of the world’s economy and population. Clearly, he is worried about the US losing its stake in the global economy. Thus, it will be interesting to see whether he attempts to join the RCEP, or the rival Trans Pacific Partnership that the Obama administration backed.
E-Commerce News: Amazon Launches Online Pharmacy
Today marks the launch of Amazon’s online pharmacy. Named ‘Amazon Pharmacy’, the store will allow customers to price compare drugs and will also allow for customers to pay with insurance or by themselves. There will also be a discount for their Prime members.
J&P comments
Amazon has been working for year to acquire state licenses for shipping prescriptions across the country. That being done, Amazon can now build on their 2018 acquisition of PillPack, which Amazon has said will remain separate from their pharmacy. Due to their logistic power, it will now be interesting to see if the retail giant will play any part in distributing the reported Covid vaccines.
Daily News 18th November 2020
Logistics News: Singapore’s GIC Set To Acquire Logistic Properties In Europe
Singapore’s sovereign wealth fund, GIC, have partnered with urban logistics manager Melcombe Partners to obtain urban logistics properties in Europe. The aim of the new venture is to develop distribution centers and logistics assets in Europe’s major countries, including the UK, France and Germany. Melcombe will be operating and maintaining the assets.
J&P Comments
This investment in Europe comes after GIC have been investing heavily in China over the past couple of months. Last month GIC increased its stake in Chinese online car marketplace Uxin by 6.3%, as well as recently leading a nearly $200 million series D2 injection into Chinese edtech company Aixuexi Education Group.
VAT News: 2021 VAT Changes For Northern Ireland
Northern Ireland will face similar changes to the rest of the UK, however the key difference is NI goods held by overseas sellers and sold on ‘facilitating’ Online Marketplace (OMP) to NI consumers will remain the VAT responsibility of the overseas seller. VAT obligations reporting obligations will not move to the OMP. However, the OMP will share joint liability.
J&P Comments
Northern Ireland is interesting since it will fall under both the UK and EU VAT regimes. Movements between NI and EU are not affected by the UK ecommerce changes. These fall within the EU rules. The EU ecommerce VAT package, with similar changes, comes into force on 1 July 2021.
E-Commerce News: Apple Halving Commission Fees On Its App Store
From January 2021, any existing app maker who made less than £830,000 ($1m) in 2020 will only have to pay a commission of 15% in 2021. Previously, they would have to give up 30%. In the future, any sales above $1m will also have a commission of 30%.
J&P comments
This new rate is more in line with Amazon, who only charge 15% for in-app purchases within its Amazon Prime Video app. Apple have said that of the 28 million developers who use the Apple store, the vast majority will benefit. This move also shows that Apple are finally responding to concerns about its dominance in iOS app market place.
Daily News 19th November 2020
Business News: China To Open Up Its ‘Super-Sized’ Economy
Speaking at the Apec forum, president XI Jinping has said China will be importing more high-quality goods and services. He also claimed that China will be signing more free trade deals with more countries, and denied claims that China would be decoupling from other economies.
J&P Comments
This news comes just days after the historic signing of the RCEP, the biggest trade deal in the world which has China at its centre. China is clearly favoring an economic policy that favors cooperation and globalization which will help their economy continue its staggering rate of growth. Mr Xi also claimed at the forum that he was aiming to turn China into a ‘high income’ nation by 2025.
E-commerce News: Russian E-commerce Stimulated By Pandemic
The coronavirus has been the catalyst for a surge in e-commerce growth in Russia. Even in the country’s Far East, where temperatures can fall as low as minus 50 degrees Celsius, there has been rises in e-commerce as there has been a lot of investment in delivery routes and services.
J&P Comments
E-commerce accounted for just 1.4% of Russia’s economy in 2019, according to research firm Data Insight, compared with 2.6% in the United States and 5.1% in China. Analysts from market research firm Euromonitor expect annual online sales in Russia to grow by more than 40% this year to around 2.5 trillion roubles and by 10-15% a year over the next five years.
Business News: Britain Wants Trade Deal With Canada
Trade minister Liz Truss has said that Britain is determined to agree to a trade deal with Canada before the end of the year. At the moment it is just a continuity agreement, but the minister indicated that Britain is likely to develop much closer ties with Canada over the coming months.
J&P comments
In those same comments, the minister also pointed out that Canada are in the Trans-Pacific Partnership. Undoubtedly this is a partnership that we will see Britain attempt to strike a deal with in the coming months. With the Brexit deadline looming, it is imperative to get the Canada trade deal over the line as soon as possible.
Daily News 20th November 2020
Business News: October Sees Retail Sales Grow For Sixth Month In A Row
UK retail sales have risen by 1.2% in October, despite reduced footfall on the high street. However, the slow recovery in clothing sales has stalled, and fuel sales are also still below pre-March lockdown level, due to reduced traffic on the roads.
J&P Comments
According to the stats from the ONS a lot of the growth is due to online sales, a sector that they say has “remained at high levels over the course of the pandemic.” This seems a reasonable conclusion, since there has been growth in retail sales despite a number of local lockdown restrictions across the UK. Sales are likely to take a hit during November, however, due to the national lockdown.
Logistic News: Congestion At UK Ports Causing Disruption
Heavy congestion at UK ports has led to shipping firm quadrupling their freight costs. The congestion is thought to be caused by companies stockpiling goods before the end of the Brexit transition period and some companies increasing their orders due to the national lockdowns. There have also been a large number of PPE orders.
J&P Comments
The yard and port congestion is mainly in Felixstone and London Gateway. This congestion is particularly worrying as Christmas orders are obviously adding to the imports, meaning there is a risk of late deliveries. The sharp increase of freight rates, up to 300%, is in an effort to dissuade people importing to the UK for the time being.
Business News: Japan Looking To Expand Trade Pact
Japan aims to expand a major regional free trade pact called the CPTPP, Prime Minister Yoshihide Suga said on Friday at the Apec meeting, potentially catering for China’s and Britain’s interest in joining the deal. China had hinted that they would be interested in joining the pact earlier this year and Britain have made it very clear that they hope to join in the wake of Brexit.
J&P comments
This news comes just days after Japan signed the RCEP, now the world’s biggest trade deal. The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) links 11 countries including Canada, Australia and Japan. Upon reaching a continuity agreement of trade with Canada, it seems clear that Britain will then attempt to negotiate a way into the CPTPP.
The RCEP: How Will It Affect E-commerce
This week marks the historic signing of the Regional Comprehensive Economic Partnership (the RCEP). This trade agreement is now the biggest of its kind in the world, as it encompasses roughly 30% of the world’s population and GDP. This includes the 10 nations of the ASEAN, as well as China, Japan, South Korea, Australia and New Zealand. These nations have not always seen eye to eye, and this agreement signals the dawn of a new era of improved relations and trade in the region. But what implications will this agreement have on trade in the region and, indeed, the world? This article will outline the ways in which this trade deal will be beneficial to any cross-border ecommerce traders in these countries, and to operators in other parts of the world who wish to enter the Asia-Pacific market.
What Is Covered In The RCEP Agreement?
The RCEP is concerned with reducing tariffs on trade in goods, as well as creating higher-quality rules for trade in services, including market access provisions for service sector suppliers from other RCEP countries. The RCEP agreement will also reduce non-tariff barriers to trade among member nations, such as customs and quarantine procedures as well as technical standards. This will obviously greatly improve trade and investment in the region.
The biggest companies stand to benefit the most, since the agreement should allow them to build supply chains right the way through the countries in the RCEP. Undoubtedly, the improvement in logistical properties and supply chains will be one of the advantages for the countries involved in the trade deal.
Further, the standardisation of the rules throughout the region will mean intellectual property transactions will be streamlined and the cost of doing business will be greatly reduced.
However, it is worth bearing in mind that the RCEP is not a completely free trade agreement. There are still a few loopholes where countries can maintain tariff’s in specific sectors, and reports are estimating that it will take around 2 years for the countries to implement the terms of the agreement internally.
What About Ecommerce?
Unfortunately, as it stands, Ecommerce is one of the sections that is underdeveloped in the agreement. Some members of the RCEP were hesitant about agreeing to any rules regarding cross-border data flows or a customs moratorium on data transmission.
However, it is very likely that there will be future negotiations surrounding this topic. Moreover, as it stands there have been some rules put in place to improve ecommerce.
The agreement states in Chapter 12:
“No Party shall require a covered person to use or locate computing facilities in that Party’s territory as a condition for conducting business in that Party’s territory.”
There’s also the following provision: “A Party shall not prevent cross-border transfer of information by electronic means where such activity is for the conduct of the business of a covered person.”
This will obviously mean that the cost and complexity of doing e-commerce business within the countries will be lessened. For any vendors within the RCEP countries this will obviously facilitate more cross-border trade.
RCEP will cut tariffs and establish rules including cross-border digital data flows. It will remove duties on 61% of imports from Association of Southeast Asian Nations members, Australia and New Zealand, along with 56% from China and 49% from South Korea.
However, please bear in mind that this excludes financial services, as the deal states that member nations are able to write their own exemptions for to implement measure for security and public policy reasons.
As for vendors outside the member nations, it is likely that they will benefit eventually from the lesser developed countries in the deal having improved economies and logistic facilities, and thus becoming more promising markets. Further, it is likely that the EU, the UK and the US will attempt to negotiate some form of increased trade in the region, so keep an eye on our social media in order to follow how your country will react to the RCEP.
Conclusion – Is The RCEP A Good Deal For The World?
It has been estimated that this trade deal could mean a boost of $500 million for global trade and ecommerce in the next 10 years. Of course, companies situated in the RCEP nations will benefit greatly from the increase of cross-border trade, but it is likely companies from all over the world will benefit from the investment in infrastructure and the influx of money in the region.
Here at J & P Accountants, we understand that the prospect of trying to comply with all the new RCEP regulations could be daunting. But that’s where we come in.
If you are a business who participates in cross border e-commerce, we would be more than happy to help you register for VAT, file your VAT returns, and help you comply with VAT in case your account faces any issues; especially in China, where we have several offices and warehouses.
At J&P, helping your business is our passion, and we understand that you may need help altering your business to capitalise on the new RCEP agreement, such as registering for trademarks or the transfer of intellectual property. We are here to support you through this transition, and the Coronavirus crisis, so please do not hesitate to give us a call on 0161 637 1080 or send an e-mail to enquiries@jpaccountant.com.
Prepare For Black Friday & Cyber Monday
It’s the most wonderful time of year; the beginning of the festive period means the weather is getting colder and we’re finally about to put 2020 behind us. But there is still time for you to make the most of this year from a business point of view. The final quarter of the year can be more lucrative than the proceeding three combined as consumers spend lavishly on gifts. Despite everything that has happened, this year will be no different. As we approach Black Friday and Cyber Monday, this article will give you the best advice to make sure you are ready to capitalise on the biggest sales weekend of the year.
How This Black Friday & Cyber Monday Will Be Different
This year will certainly not see the scenes of previous years of packed shops and high streets. Instead, 2020’s trend of people looking towards ecommerce looks likely to continue. The annual study from Deloitte Insights predicts that online sales are likely to grow 14-18%, with nearly two-thirds of customers planning to shop at online retailers. But with the UK currently in lockdown, and other countries still enforcing restrictions, you can expect these projections to be exceeded comfortably.
It is expected that Brits will spend £6 billion over the sales period this year, an increase on last years’ £5.6 billion. Similar growth is expected all over the world, as this year has seen more and more consumers partake in online shopping. We have already seen this in action on Alibaba’s Singles’ Day, as it has been reported that over $75 billion worth of sales took place this week – an increase of 26% from last year. similar levels of spending will likely be seen on Black Friday and Cyber Monday.
How You Can Prepare
Due to the exceptional demand that is to be expected, all vendors should ensure that their websites are capable of handling the increased amount of traffic. This means checking your servers are capable, but also making sure that your software is able to present any deals or bundles you may be offering.
It is also important that you do the same for the mobile versions of your sites. Mobile phones have established themselves as the primary device for consumers to access the products on offer over the Black Friday and Cyber Monday weekend. In 2019 over two-thirds of consumers made their purchases using their mobiles.
On top of this, it would obviously be wise to ensure that your inventory is prepared for the increase of demand. You should ensure that all your most popular products are well stocked and that your delivery methods are established well in advance.
This approach has already been taken by industry leaders as 93% of retailers have already taken steps to improve their digital shopping capacity, and 50% have enhanced their website or e-commerce proposition.
Don’t Forget Tax On Black Friday & Cyber Monday
Bearing in mind that Black Friday and Cyber Monday are global events, you may receive orders from a variety of destinations. For example, in the US nearly all states can now tax foreign sellers. A lot of these states operate on a tax threshold of $100,000 or 200 products, whichever comes first. Thus, keeping a record of how much your selling and where is paramount in this period.
If you are a UK-based business and you are going to be exporting goods into the EU, HMRC says that UK VAT should be charged up until the value of your sales exceed the distant selling threshold in that particular country for this calendar year.
Furthermore, the guidance from HMRC states that all distance sales that were made to a non-taxable person should be reported on an Intrastat Supplementary Declaration form if your company trades above the UK Intrastat threshold.
Cross-border sellers should make sure to bear this information in mind, as sales are expected to rise exponentially over the coming weeks.
Conclusion – Check Your Software And Your Sales Thresholds Before Black Friday & Cyber Monday
This sales weekend is likely to be the biggest ever, especially with companies starting their sales earlier this year, so don’t be surprised if the sales exceed the current projections. Business owners would do well to ensure that all versions of their sites are at full capacity, and that all information on any third-party selling platforms is up to date.
Here at J & P Accountants, we understand that the prospect of trying to comply with all those tax regulations can be daunting. But that’s where we come in.
If you are a business who participates in cross border ecommerce, we would be more than happy to help you register for VAT, file your VAT returns, and help you comply with VAT in case your account faces any issues. At J&P, helping your business is our passion, and we understand that companies across the UK are at risk now more than ever. We are here to support you through the Coronavirus crisis and the busy festive period, so please do not hesitate to give us a call on 0161 637 1080 or send an e-mail to enquiries@jpaccountant.com
Daily News Round Up 9th-13th November
Daily News 9th November 2020
VAT News: Netflix Clashes With Bangladesh Over VAT Regime
In a letter to the national board of revenue, Netflix has requested a simplification of the country’s VAT registration, returns filling and VAT payment process in order to better comply with the country’s VAT Law. The main problem seems to be that the regime lacks a simple mechanism for foreign tax payers to register, submit returns and pay VAT without a local presence to register.
J&P Comments
Estimates in 2019 suggested that Netflix are earning $21 million annually from Bangladesh, thus it is obviously that the company and the country need to find a way for Netflix to fulfill their VAT obligations. Under the current law, VAT will be collected twice on cross-border supplies of electronic services as local banks are also required to withhold VAT on remittances to non-resident service providers. It would be a lot easier for foreign electronic investors if these rules were amended.
Business: Global Markets See Upturn As Biden Set To Take Office
Shares around the world have seen healthy gains as Joe Biden is about to become the 46th president of the US. The announcement of Biden’s success saw London’s FTSE 100 rise 1.5% in early trade, with similar results seen across Europe, as well as in Australia, China and Hong Kong.
J&P Comments
The news of Biden’s success has been particularly well received in China. Trump took a very confrontational approach to China, which sparked the tariff war in 2018 which saw higher taxes imposed on imported goods from each country. Biden is expected to take a much more co-operative approach, and as a result the Shanghai Composite, China’s main share benchmark, rose by almost 2% today.
Logistics News: Amazon Air Opens In Saxony
Amazon Air has begin operations at its new regional air freight centre at Leipzig-Halle Airport, the first of its kind in Europe. Two flights a day will be handled at the centre. Furthermore, the site is set to create a further 200 jobs in the region, where there is already said be 1,500 Amazon jobs. Amazon has had roots in Leipzig since 2006.
J&P comments
This new venture once again reiterates Amazon’s position as a world leader of e-commerce. The centre will create a new connection within Amazon Air’s network, and will surely offer Amazon customers a wider choice of products and better delivery options.
Daily News 10th November 2020
E-commerce News: New Swedish Product To Improve B2B E-commerce
A Swedish fintech company called Payer has released a new product that should make B2B e-commerce much smoother. The new product (which is currently unnamed) lets merchants verify new customers, so new customers can be trusted and thus make purchases more easily. This innovation reiterates Sweden’s position as one of the most progressive e-commerce and fintech markets in the world.
J&P Comments
This innovation should be really exciting for e-commerce traders. It is estimated that 90% of B2B purchases worldwide are made using invoice payments, as it stands. Whilst this fulfils its purpose, as accounting and tax-related information follows each invoice, it is not digital and user-friendly. This product will make a lot of the manual processes that are currently involved in B2B purchases automatic.
E-commerce News: Black Friday To See Online Sales Surge By 35-45%
UK online sales are expected to grow by 35-45% during the Black Friday trading period. This projection takes into account Covid-19’s effect on consumers shopping habits (namely, buying more online) as well as the fact that the UK is in a four-week national lockdown. The Black Friday peak shopping period will run from 23rd-30th November.
J&P Comments
IMRG have claimed that e-commerce sales are already up by 34.9% this year, which is a significant increase of last year’s rate of growth, which was 6.7%. Bearing this in mind, along with retailers beginning their Black Friday campaigns earlier this year and consumers expected to start their Christmas shopping earlier, e-commerce retailers should make sure they are prepared for increased demand.
Business News: Asian Markets Surge As Hopes For Vaccine Increase
As reports yesterday suggested that the vaccine for Covid-19 seems closer than ever, Asian stock markets saw a significant rise. In Japan, shares in car manufacturers and retailer Uniqlo have both risen by more than 2%. Further, Hong Kong’s Hang Seng opened 1.8% higher, and China’s Shanghai Composite also saw gains.
J&P comments
Obviously, the news of a vaccine is fantastic news for everyone. It is interesting though that the increase in the market was not felt by every industry. For example, the gaming industry saw a drop as the vaccine will see an end to lockdowns. Nintendo shares fell by 5%, while Sony fell by 2%.
Daily News 11th November 2020
E-commerce News: Alibaba Singles’ Day Sales Exceed $56 bn.
China’s Alibaba recorded sales of $56 bn on over 16 million discounted products in this years Singles’ Day sales event. The sales event, which spans four days, is the biggest of its kind of the world, and eclipses Black Friday and Cyber Monday in the US. It is thought that Covid’s restrictions on overseas travel and commerce has had a positive effect on the event.
J&P Comments
This news is indicative of China’s economic recovery post-Covid, as well as the global shift towards e-commerce. As of today, the event has recorded sales at 372.3 billion yuan ($56.3 bn) and saw orders peak at a record 583,000 per second, according to Alibaba.
Business News: UK Publish Latest Plans For Cross Border Trade
The UK government has announced a new web service which will make the importation of goods to UK ports smoother. The ‘Check an HGV is ready to cross the border’ service will be used in tandem with the Smart Freight System and the Goods Vehicle Movement System to check that operators have all the correct documentation ahead of goods reaching the UK.
J&P Comments
Nearly two-thirds (63%) of firms say uncertainty around documentation is one of their key challenges. Undoubtedly, a significant element of this will be concerns around both operators and their clients being prepared for the UK’s departure from the European Union. Hopefully this service will be a solution to these challenges.
Business News: WhatsApp Launches Shopping Button For Business Accounts
The new button, which will allow users to browse through a business’ catalog with a click, is aiming to increase the probability of business’ product being discovered. The new shopping icon, which replaces the voice call button, has been launched worldwide.
J&P comments
Not many people are aware of WhatsApp Business. It is a completely separate app to the standard version of Whatsapp, but works much in the same way, only it is designed to connect businesses to customers rather than people to their family and friends. This edition of the catalogue button will greatly improve the usefulness of the app, and thus we may see a surge in users over the coming months.
Daily News 12th November 2020
Business News: Gove Says Britain Determined To Secure EU Trade Deal
Michael Gove, the minister in charge of implementing the divorce deal, has been quoted claiming Britain are ‘determined’ to reach a trade deal with the EU. This could be an indication of Britain softening their stance against the EU, after yesterday reports surfaced claiming the mid-November deadlines for these talks has been extended.
J&P Comments
It is possible that the US presidential election has affected Britain’s negotiating strategy. Biden has been on record claiming he does not agree with Brexit, and has also claimed that he would be extremely unlikely to strike a trade deal with the UK if no EU deal is reached. This is, of course, a very different approach to Trump’s, who would likely have struck a strong trade deal with the UK had they agreed on a No-Deal Brexit.
Tax News: UK Extends Tax Break For Manufacturers
Britain’s finance ministry has said it will extend a tax break by a year in an attempt to stimulate investment in manufacturing. The £1 million will be extended until January 1st 2021. This relief is being offered in an attempt to help manufacturer businesses, especially those who make investments in plant and machinery assets, weather the effects of the pandemic.
J&P Comments
This will be welcomed news for the manufacturer industry. Figures today have shown that the output in manufacturing is 8.1% below where it was last year. This tax relief will certainly help lighten the burden on the manufacturing industry, and tax breaks for other industries can be expected.
E-Commerce News: NBCUniversal Increases Shoppable Content With New PayPal Deal.
NBCUniversal has launched a new platform called One Platform Commerce to unite all of its e-commerce initiatives. They have now partnered with PayPal in an attempt to streamline payments. The production company NBCU currently has over 60 retail partners.
J&P comments
One Platform is an industry leading application, which allows advertisers to easily plan and measure their campaigns across all of NBC’s networks, as well as allowing consumers to buy advertised products directly from the platform. PayPal’s inclusion will surely give consumers more trust with the platform. Like many other industries, this is an example of how the entertainment industry is adapting to consumers increasing use of online shopping.
Daily News 13th November 2020
Business News: Government Report Recommends Doubling Capital Gains Tax
The report, commissioned by Chancellor Rishi Sunak, suggested that roughly £14 bn could be raised by doubling rates and cutting exemptions. This is being considered as a possible way to help cover the cost of the Covid pandemic. Whilst Mr Sunak commissioned the report, he does not necessarily have to accept its findings.
J&P Comments
Whilst it is unlikely that all of the recommendations of this report will be carried out, it does suggest that we can expect some changes to the current rules surrounding capital gains tax. Most likely will be a change to rule that the first £12,300 of gain is exempt from taxation and perhaps a small increase in order to bring the tax more in line with income tax.
Logistics News: Tesco Reveals Plans To Go Fully Electric By 2028
Tesco’s first electric delivery vans will begin deliveries to customers in London this month as the supermarket announces plans to have a fully electric delivery fleet by 2028. The coronavirus has meant that Tesco have had to double their amount of delivery slots to 1.5 million a week in order to keep up with increased demand. This has put quite a strain on their green credentials, as petrol-powered vehicles fulfill the orders.
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This news comes in a week when the government has faced a lot of pressure from small businesses to help them to go carbon neutral. The CBI, BCC, Federation of Small Businesses, Make UK and the Institute of Directors announced on Friday that they had joined forces to demand a “just transition” – a fair framework to help meet climate goals. There is likely to be fresh motivation for this aim, as Joe Biden looks set to take the US back into the Paris accord.
E-Commerce News: Asia-Pacific Set To Complete World’s Largest Trade Deal
The Regional Comprehensive Economic Partnership (RCEP) will lower tariffs, boost investment and allow for freer movement of good within the region. The partnership includes China, Japan, South Korea, Australia, New Zealand and the 10 members of the Association of South East Asian Nations (ASEAN) – Brunei, Vietnam, Laos, Cambodia, Thailand, Myanmar, Malaysia, Singapore, Indonesia and the Philippines.
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This deal will cover nearly a third of the world’s entire population and about 30% of global gross domestic product. The deal will certainly stimulate investment in the region in the form of supply chains and distribution hubs. It is thought that this deal has been put in place as a reaction to America’s retreat from the region under Trump, and thus it will be interesting to see how Biden reacts.
What Biden’s Victory Means For The World’s Economy
The 2020 US elections saw the biggest turn out for a presidential election in 100 years. The polarised nature of the American political landscape was made evident by the narrow victories that Biden made in the swing states. It is now his job to unite America and, also, the rest of the world. Trump’s presidency saw the US grow further apart from China and Europe than they have been in a generation. It is widely assumed that Biden will attempt to mend relations between America and Europe and China. This was shown by the surge in world markets as soon as it became apparent that Biden was going to become the 46th president of the US. But what are the implications for the economy now Biden looks set to take office? This article will outline what we can expect from Biden’s America, and how this is going to affect the rest of the world.
What Biden’s Victory Means For The USA
Whilst the Democrats have taken the White House, the senate is still controlled by the Republicans. This is going to have major implications on policy and spending, since a divided senate greatly reduces the chances of major policy changes.
Most notably there is unlikely to be any significant changes to taxes, or movements to place harsher regulations on the major tech firms. This means there is more certainty in the market, at least for the time being.
This being said, there is still likely to be a significant form of stimulus in one form or another, and the markets have already reacted accordingly with the S&P 500 SPX, 0.63% gaining more than 2% each day last week.
One thing that the market will have to watch out for is an increase to corporate tax. Biden has promised such a raise; but, since the senate is still held by the Republicans, this is very unlikely to happen in the near future, and thus stocks have been given another boost.
However, it is not all good news for Americans. The lack of an imminent stimulus package means that Federal banks will have to inject further liquidity. This has meant that the dollar index has dropped to as low as 93.07 over the last week.
What Biden’s Victory Means For China
The trump regime saw tensions escalate between the US and China. Trump took an extremely adversarial approach to China, which led to both countries placing high tariffs on each other’s imports. Whilst it is probable that the US and China will continue to compete economically in sectors such as technology and security, it is expected that Biden will take a much softer and cooperative approach with China.
Bearing this in mind, it now seems likely that China and the US will resume cooperation on major issues such as Covid vaccines and climate change. This will hopefully strengthen relations between the two countries.
Biden’s approach will also probably see the US’s crackdown on China’s core technology relax. This is good news for Chinese companies such as WeChat and TikTok, however Huawei may still face a struggle.
The less confrontational approach that is expected from Biden is also good news for the yuan, which has already gained 6% against the dollar, mostly due to China’s quick recovery from the pandemic.
What Biden’s Victory Means For The UK
The biggest implications for the UK will surely be felt in the Brexit negotiations. The UK’s negotiating stance thus far seem predicated on the idea of a strong trade deal with the US making up for a lack of EU trading, which Trump backed.
This is no longer the case. Biden has been on record saying that there will be no trade deal with the UK if they do anything to unravel the Good Friday Agreement that bought peace to Northern Ireland. A No-Deal Brexit would override certain parts of the Good Friday Agreement.
In addition, Biden and his team have made it very clear that they think Brexit is a bad decision for Britain. This may mean that Britain will concede more ground in the Brexit negotiations, and this may mean the deal is more aligned with EU regulations. This is surely good news for e-commerce vendors in the UK and EU.
It’ll be interesting to see how the negotiations proceed, since it is likely that whatever terms are agreed on for Brexit could be used as a framework for a new trade deal between the US and the EU, a deal that it is clear Biden is keen on striking, especially to his commitment to fight climate change.
Conclusion – A United World?
Whilst the above information does imply that the US will be much less adversarial than it was under Trump, there is still a long way to go until relations between America and other nations are back to their previous states. Indeed, Biden will likely not scrap all of Trump’s policies immediately, since they give him a strong negotiating position. Still, the markets are clearly anticipating that Biden’s victory is good news for cross-border businesses and international trade – and we are too.
Do you predict that Biden will have a positive effect on the world’s economy? Let us know in the comments below!
If you are a business who participates in cross border e-commerce, we would be more than happy to help you register for VAT, file your VAT returns, and help you comply with VAT in case your account faces any issues. At J&P, helping small businesses is our passion, and we understand that companies across the UK are at risk now more than ever. We are here to support you through the Coronavirus crisis, so please do not hesitate to give us a call on 0161 637 1080 or send an e-mail to enquiries@jpaccountant.com
