The British Government has privately admitted that the United Kingdom faces an “economic crisis” as it completes its exit from the European Union, amid the second wave of the pandemic. The confidential report of the Prime Minister’s Cabinet Office Boris Johnson, to which has had access to the newspaper The Guardian, warns of the economic chaos that Brexit and Covid-19 can generate.
The report, marked “confidential” and dated September, lays out the potential impacts of the latest stage of Brexit, detailing “reasonable worst-case scenarios” in 20 different areas, from oil and healthcare to travel and surveillance. A no-deal Brexit will cost more than the coronavirussays Governor of the Bank of England.
UK and global food supply chains will be disrupted by “concurrent circumstances at the end of the year,” the newspaper warns. The Accumulated reserves at the end of 2019 decreased during the pandemic and they cannot be easily replaced.
There will be general food shortages, but problems could reduce the availability of some fresh supplies and drive up prices. The low-income groups will be at higher risk of food insecurity if there is a no-deal Brexit.
The public administration admits that it is “very aware” of the risk posed by the potential labor shortage in healthcare due to Brexit, due to dependence on EU citizens and a workforce already overwhelmed by pandemic controls.
The Cabinet Office said did not comment on the content of the leaked documents, but he said it was part of “intensive planning” to support individuals and citizens at the end of the transition period.
The second wave of the coronavirus pandemic it may ruin the incipient economic recovery that has been observed in Europe since the summer. The drastic increase in infections by Covid-19 has caused new confinements and partial closures in the main economies of the region, which has led to Goldman Sachs to slash growth forecasts for the fourth quarter, while German economic institutes cast worse forecasts for the Eurozone locomotive.
Europe is the main source of the spread of the coronavirus, which has led several of its countries, such as the United Kingdom and France to adopt extreme measures in the form of confinements, while the numbers of infections and deaths do not stop. British Prime Minister Boris Johnson ordered a month-long national confinement for England, starting next Thursday, due to the alarming data of the pandemic. The confinement will continue until December 2, although the authorities do not rule out extending that measure. It will mean the forced closure of non-essential shops and businesses, as well as all hospitality, although schools and universities will remain open.
Similarly, France and Germany imposed national restrictions early last week. Also late on Saturday, the Portuguese government announced that, starting Tuesday and for two weeks, it will confine 70% of its population, but will not close schools, commercial establishments or restaurants.
Faced with the new and increasingly tough restrictions, the US investment bank now hopes that the PIB (PIB) real de la zona euro shrink 2.3% in the fourth quarter, a sharp change from its previous projection of 2.2% growth.
For Germany, the forecast worsens to a drop of 1.5% compared to the previously forecast expansion of 2.7%. In the case of France, expects a 3.8% decline in GDP when previously it was estimating an advance of 2%. For Italy Y Spain expects the economy to fall 2.3% and 3.3% after projected growth of 2.4% and 1.7%, respectively.
Likewise, it reduced the GDP growth forecasts for the United Kingdom down to a 2.4% drop versus the 3.6% expansion previously expected.
“Looking ahead, we assume that the new restrictions will last for three months before they are phased out starting in February,” Goldman Sachs economists say.
For their part, Citi economists expect the UK GDP to shrink by more than 4% between October and December. “Longer national shutdowns cannot be ruled out,” Citi said in a note. And he adds that “with the probability that virus risks persist until the second quarter of 2021, we expect production to remain more than 11-13% below the levels of the fourth quarter of 2019 until then, with local restrictions and an acute behavioral response that weighs heavily (along with Brexit). It is also increasing the risk of more permanent effects. “
For its part, in Germany, the restrictions to face the coronavirus pandemic will cost the economy about 19,000 million euros and approximately 600,000 jobs, according to calculations by the German economic institute DIW, which estimates a 1% reduction in German GDP in the fourth quarter and an increase of 50,000 unemployed compared to the spring.
A red carpet awaits multinationals when it comes to setting up their company in the Netherlands, with a extra in tax benefits. But leaving is not going to be so easy. A bill from the green left GroenLinks, which has the support of three of the four government parties, is committed to fine the companies who decide to move to another country that does not tax dividends. The companies would have to compensate the Dutch Treasury for the tax revenue they would lose by leaving these Netherlands. Tax evasion must be at least a little more difficult in one of the countries that has earned the worldwide reputation of a tax haven.
This standard has been baptized as the “Unilever Law”, a company that exemplifies how these plans would affect whoever decides to leave. The multinational hygiene and food products company, the Omo detergent and Magnum ice cream company, is being a headache for the Liberal government Mark Rutte. Since its founding in 1930, the Anglo-Dutch giant has maintained two independent headquarters, one in London and one in Rotterdam, as well as two separate tax entities, although it has always operated as a single company, with a single board of directors. But Brexit has made him rethink this structure, opting to unify into one of his tax entities, but in which country?
How Holland leaves half Europe tax-free thanks to a ‘sandwich’
Imane Rachidi. Hague
The Dutch system is estimated to cost the rest of the world a minimum of € 22 billion annually in evaded tax revenue
The Netherlands and the United Kingdom have spent two years pressuring the company and trying to persuade it to choose their country as the headquarters for its sole corporate headquarters. And there can be only one winner: London – which has no tax on dividends – has been chosen, but The Hague is not ready to give up and lose with this operation a millionaire amount in tax revenue.
With the support of all partners, it now remains to formally announce a relocation plan that will allow it to continue legally as a British-only company. This is expected to occur in late November, as long as the “Unilever Law” doesn’t go through. If GroenLinks manages to get your project approved on the express track, it could force the company into two scenarios: backtracking, or a move with a hefty bill under your arm.
Unilever has recognized that, if the law is passed, your move to London will no longer make sense, it would not be profitable. The United Kingdom does not have a tax on dividends, and its decision is clearly motivated by the saving of that tax, for which it would be fined by the Netherlands. “That is exactly the goal of the legislation. If the law passes, Unilever will stay and this news will help secure the support of the majority of parliament “to prevent other companies from leaving, applauded Bart Snels, the deputy responsible for the bill.
Contrary to European legislation
If he left anyway, Unilever would have to pay 11,000 million euros before leaving Rotterdam. So, moving to the UK “would no longer be in Unilever’s interest, nor its shareholders and other interested parties, “the company acknowledged in a letter to the partners. It assures that, in any case, it will not paralyze the preparations for its departure because it believes that the legality of this legislation conflicts with international treaties and the tax arrangements between the UK and the Netherlands. The Council of State, an advisory body to the Dutch Government, has an opinion close to that of Unilever and considers that “I would not be responsible“pass this law by” coming into conflict “with higher laws.
The dividend tax had been under debate for the past several years, in part because of Unilever’s defensive attitude. When several British investors began to pressure the company to abandon its plans to consolidate its core operations in Rotterdam, Rutte tried to persuade them as a liberal would: proposed to eliminate the tax on dividends in the Netherlands, just to tempt the company into staying in the Netherlands.
Why is the Dutch Government so hard on Spain? Because he wins votes at home
Imane Rachidi. Hague
His management of the coronavirus crisis has made the Dutch see him as the best post-war prime minister, even though he is increasingly censored in the European Union.
This decision was a political scandal in The Hague, which even led to an SMS exchange between the Prime Minister and the director of the company at the time, Paul Polman, who has always referred to the head of the Dutch Government as “Mark”, a good friend”. The press came to qualify the prime minister as Unilever’s “errand boy” and the public pressure was such that, in the end, the plan failed and Rutte pushed the idea away. The multinational decided that, without tax incentives, it was better to go to London. And that’s when GroenLinks got their red card – it shouldn’t be that easy to leave.
It is estimated that the Dutch state would lose several million euros due to the decision of the group of the detergents to unite in one its corporate structure, since this would turn the multinational, on paper, into a purely British company. For now, this will only affect the millionaire that the State coffers enter in tax on dividends. Unilever does not plan to close its Food and Refreshment branch in Rotterdam, and will also keep its research and development center in Wageningen, which saves the 2,500 jobs it has on Dutch territory.
200 million a year
The Minister of Economic Affairs, Eric Wiebes, said he was “disappointed” with Unilever’s decision to save the Netherlands tax by going to London, although it refused to assess the blow this will do to the Dutch treasury. “The fact that, in a formal sense, the central office is no longer located here, means that no tax on dividends will end here“, he acknowledged.
According to Unilever estimates, the Dutch state receives around € 200 million per year, a calculation made on the basis of the average paid in the last three years in dividend tax on Dutch shares. “I would have preferred that the company simplify its structure to a single Dutch woman at the helm,” said Hans de Boer, from the employers’ union VNO-NCW. But London came out winning. And for that, the greens insist, This law must come into force as soon as possible, even if it is through an emergency process.
“It is not right for companies to make such important decisions simply to avoid tax. When a company moves abroad for this reason, it is a way of tax avoidance “Snels noted. For this deputy, companies “have been able to obtain benefits thanks to the good facilities, infrastructure, education and other issues that have been found in the Netherlands. Therefore, a compensation is justified”.
The international business community in the Netherlands is also not satisfied with the relocation fine proposed by GroenLinks, a measure that will be preventive facing Brexit. This obstacle could also affect the Anglo-Dutch oil company Shell, which also has one of its offices in The Hague and another in London. “GroenLinks wants to keep companies in Holland and we want that too. But with this proposal you put a fence around the country that says: you can’t go out, you can’t come in. Young companies, in particular, they will think twice before settling here, “warned the VNO-NCW union.
No control of corruption
In the midst of this debate, Transparency International (TI) has denounced the neglect of the Dutch Executive when it comes to punishing Dutch companies involved in illegalities in their activities abroad. Despite the increase in Dutch investment outside the Netherlands, the Government ignores the accusations of corruption leveled at Dutch multinationals abroad, so they end up getting away with business that is not entirely ethical in other countries. This is “clearly a breach” of international agreements against corruption and bribery, TI says.
“And corruption is allowed, the rule of law is undermined and poverty and injustice perpetuated, “says Lousewies van der Laan, Dutch director of TI. Defendants do not sit in court, nor do whistleblowers get enough protection to fight for justice. The Netherlands, along with Colombia, South Africa, Latvia, Costa Rica, Canada and Austria, have one of the worst scores in the category of “largest exporting countries with limited application of the treaty,” according to the report. Export of Corruption 2020: evaluation of compliance with the Anti-Bribery Convention of the OECD.
Companies rarely go to Dutch courts to report corruption cases abroad for lack of precedent
In conclusion, only four of the 47 signatory countries, which represent 16.5% of world exports, actively enforce anti-bribery agreements. For the NGO, the United States, United Kingdom and Switzerland are the best countries when it comes to combating corruption in their companies abroad. Although Germany, Spain, France, Portugal and Italy are not doing anything bad either. None is worse than Holland, where the active application of the treaty has plummeted since 2018.
The Netherlands accounts for 3.1% of world exports and, between 2016 and 2019, they started 16 investigations and two court cases were opened on suspicion of bribery abroad, but only three were closed with sanctions. The Netherlands has “a rather weak anti-corruption culture, in which suspicious situations abroad are often overlooked.” Furthermore, the lack of clarity in the law about the terms of the business agreements reached also does not contribute to a culture focused on integrity. “There are no clear rules to return to the country or to the victims the amounts confiscated from proceeds of corruption. “
The companies or the victims they rarely go to Dutch courts to report corruption cases abroad due to lack of precedents and because the Public Ministry does not have sufficient capacity to investigate either. One of the affected companies is Crown jewel, the oil company Shell, involved in a corruption scandal in Nigeria together with the Italian company Eni, a case that is now in the Italian courts. Rome accuses both of pay bribes to secure part of the Nigerian oil field in a deal valued at $ 1.3 billion. The Italian Prosecutor’s Office has requested prison sentences for those involved. The Netherlands is still thinking about it, as it tries to retain companies that want to flee because of Brexit.
But right after the announcement, the government was forced to remove an advertisement that seemed to suggest that ballet dancers should train for jobs in cybersecurity.
Recipients include large organizations such as the London Symphony Orchestra, which received £ 846,000, and small venues such as the 50-seat Finborough Theater in London, which received less than £ 60,000. The Cavern Club in Liverpool, where the Beatles first made their name, received £ 525,000.
Culture Secretary Oliver Dowden said in a statement that the money was “a vital boost to the theaters, concert halls, museums and cultural organizations that make up the soul of our nation.”
Julian Bird, CEO of the UK Theater crowd-sourcing group, said the news was “kindly received, and will help create jobs and keep jobs.”
All of Britain’s museums, galleries, theaters and music venues closed when the country went into lockdown in March. Some have managed to reopen, with reduced capacity and financial losses, but coronavirus restrictions have made most live performances impossible.
Thousands of arts employees have also not received support from government job retention programs because they are self-employed.
Many felt slighted when Treasury Chief Rishi Sunak said the government would protect “viable” jobs, though he denied hinting that jobs in the arts were not.
Some in the arts voiced further outrage Monday over a government-endorsed ad that showed a young ballerina tying her ballet slippers alongside the words “Fatima’s next job could be cybernetic. (She just doesn’t know yet) ”.
The government said the announcement was part of a long-running campaign to encourage people in a variety of trades to consider careers in cybersecurity. But Dowden acknowledged that he seemed “insensitive.”
He Barcelona Soccer Clubowes banks and clubs 820 million euros, of which it will only deduct 332 for pending collections, for which it presents a net debt in the 2019-20 season of 488 million. An alarming figure, since it came from 217 last season, which would place it first in the ranking of debtor clubs in Europe, according to the ‘Financial Year Report’ that the UEFA published annually and that this last year has not seen the light yet due to the appearance of covid-19. Until last year, the Manchester United it was the team with the most debt, with 459 million euros, followed by Inter (438), Atlético (391) and Juventus (291). He Real Madrid it did not appear in the ranking of defaulters.
Barcelona has entered 192 million euros less than what it had budgeted. Out of an expected income of 1,047 million it reached only 855, even if the club warns that, without the pandemic, the figure would rise to 1,059. Barça closes the 2019-2020 season with losses of 97 million euros and the red numbers will continue in 2020-2021, as expected in the accounts.
Problems with the wage bill
The revenue forecast for next season, which was initially $ 1.12 billion, has been drastically lowered to $ 791. The ravages of the pandemic, with the lack of public in the stands, will cause 330 million to stop entering. And that makes it a major issue for Bartomeu and its directive the subject of the wage bill. The League will not register clubs whose salary mass exceeds 70% of its budget. At the end of this year, the Barça wage bill reached 636 million, a reassuring 61%. But with revenue declining to $ 791 million, the wage bill soars around 80%. Barcelona has managed to reduce it this summer by 42 million with the departure of players such as Luis Suárez (23.4 million euros gross per year), Rakitic (13.3) or Vidal (9). But with the unexpected decrease in income you need to reduce the wage bill much more.
He has two alternatives: negotiate a salary reduction for the squad, as the club is proposing, or let out players with a high salary weight
Bartomeu’s alternatives are two: generate more revenue by selling players or getting rid of players with high contracts. If you bet on the former, you would have to sell the only footballer who would generate a real capital gain from his transfer, Ansu Fati, for which they estimate that they will get 150 million. The sale of Griezmann or Dembelé, for example, would not be profitable as it cost the club 120 and 140 million euros respectively, unrealistic figures for a market in crisis like the current one. Barça calculates that capital gains from transfers should reach 73 million this season. But Umtiti and Dembelé have not left and now we will have to work on the January market.
The other option is to lighten the salary mass, and in that aspect it also has two alternatives: negotiate a reduction in the staff’s salary, as the club is proposing, or let out players with a lot of salary weight. The first bet is dangerous because it could end with players denouncing their contracts or going free even in January. There is a real risk that footballers will claim their freedom letter, or at least challenge the measure proposed by the club, since they are protected by law with article 41 of the Workers’ Statute. And it would not be the first time that a professional athlete uses the Workers’ Statute to demand the termination of their contract. It remains to be seen how the club acts, which could negotiate the salary reduction with each player individually.
The second would go through letting Messi out, whose salary weight is around 70 million gross per year. A measure that has not been valued, as has been seen when the club refused to let the Argentine leave after announcing his frustrated departure. Messi stays and you have to bear his salary weight, so the solution is to lower the salary of his teammates.
The ballast of the Espai Barça
During Bartomeu’s tenure, Barcelona has bagged more than 500 million euros in sales (222 with the payment of the Neymar clause to PSG), but the problem is the very high cost of the operations faced with transfers such as Dembelé (140) or Coutinho (160). Spending on salaries and transfer repayments has triggered the debt, and to this has been added another unexpected burden: the Barça space. The financing of the technological project already reaches 815 million euros of expenditure. A problem that punishes even more the battered culé economy.
Barcelona is the tip of the iceberg, for being the club with the highest salary mass. But the rest of the top clubs in Europe are experiencing similar situations. Dortmund has closed this season with losses of 44 million and already announces 75 for next. Its president, Hans-Joachim Watzke, offered a diagnosis shared by all his colleagues: “We will only benefit again if there are no restrictions on attendance at stadiums. We must be patient. Football is extremely difficult to imagine without fans and it is time to endure “. Roma, who lost 204 million this past year, need to enter 140 million and announced a capital increase in June to try to save the club financially.
Real Madrid, however, saved the season because it had planned a profit of 40 million and that cushion saved it from the impact of the pandemic. The whites, who have turned all their expectations into the remodeling of a new Bernabéu that will boost the club’s ordinary income, are considering an austere budget for next season, which would be around 650 million. Something that would not cause a problem with the weight of your salary bill, since capital gains from transfers such as Achraf, Reguilón and Óscar Rodríguez give margin. And in addition, Florentino already closed a salary cut with the staff last year, given the imminent crisis of the pandemic, which allows him to be relieved.