PRUDENTIAL IS UNDERSTOOD to have ruled out any move on Standard Life as the Edinburgh mutual prepares for its £5bn stock-market flotation, believing that the UK market would not generate the returns to justify a big-money outlay, reports The Scotsman .
According to the paper, Prudential unveiled a forecast-beating 27% jump in first-quarter sales yesterday to £637m, boosted by its Asia division, and insisted it could thrive on its own despite cut-throat UK competition.
Standard Life admitted on Tuesday it had received a string of proposals to buy "significant stakes" in the company, but the Pru is not believed to have been one of them. "The returns are not as good in the UK as in some other parts of the world," the paper qoutes a source familiar with the situation as saying..
Prudential, the UK's second-biggest insurer, is under pressure to show evidence of growth after it rejected a £17bn takeover bid from rival Aviva last month. The new business sales figures were well above a consensus range of £508m-£614m. In the UK, sales jumped 17% to £244m, but this was inflated by a £66m deal with mutual Royal London to buy its book of pension annuities.
Mark Tucker, chief executive of Prudential, said he was chasing margin as opposed to volumes, adding rivals were gaining market share by offering unit-linked bonds at discount prices.
THE GROWING COMPLEXITY of the UK tax system is jeopardising its international competitiveness, according to company directors, reports The Financial Times.
Two out of three companies believe the tax system has become more complicated over the last five years, according to a survey of members of the Institute of Directors (IoD).
Almost 60% of the respondents thought the tax system was having a negative impact on the UK’s international competitiveness, while half of all respondents said they were spending increasing amounts of money on tax planning and compliance, and nearly 20% of them said they would consider transferring their operations outside the UK, solely because of the tax system’s complexity.
The IoD said although the mere complexity of the tax system was unlikely to drive many UK businesses abroad, it would deter foreign companies from locating a new operation in the UK.
The reason tax has become increasingly complex lies with the underlying complexities of business, the government’s desire to use tax as a policy instrument and the involvement of large numbers of people in creating tax legislation, it said.
But the IoD acknowledged that solving the problem of tax complexity was not easy and would involve difficult trade-offs. It said the government should not be afraid of tackling existing special charges and reliefs, although it was important that tax simplification did not turn into a programme to increase taxes.
INFLATION FELL below target in March to its weakest rate for more than a year, despite rising utility bills, according to figures published yesterday, reigniting hopes for a cut in interest rates, reports The Times.
City analysts were surprised by the weak figures, which saw the consumer price index (CPI) fall to 1.8% last month, down from the Bank of England’s target of 2% in February.
Most had expected inflation to be unchanged or even to rise slightly. The data was also softer than had been forecast in the Bank’s most recent Inflation Report, revitalising the case for the Bank to cut rates. Interest rate futures jumped on the news, having previously started to price in the expectation that the next move in rates would be up.
However, analysts said that the data would not make much difference at the next meeting of the Bank’s Monetary Policy Committee (MPC), in May, as much of the fall in inflation came from items such as food, which behave erratically from month to month.
Most MPC members would want to wait for more data to come out before voting for any change, particularly as petrol pump prices were steady in March but have since risen by about 5% on the back of new record oil prices.
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