FIGURES OUT next month are expected to show more British businesses than ever before are cutting dividends because they need cash to cover black holes in their pension funds, according to the Times .
The CBI warning comes after it was revealed last week new rules of the Pensions Regulator may lift companies’ annual contributions to tackle pension fund deficits from £26bn to £37bn, says the Times.
If the extra £11bn were covered solely by shareholders’ payouts, the FTSE all-share dividend would be cut by 20%, according to Donald Duval, chief actuary of Aon Consulting and former government actuary of Australia.
The Pensions Regulator is currently consulting on proposals which suggest companies must clear their final salary deficits within ten years. The regulator has admitted as many as a one in five companies would need more money than their entire free cashflow over the next ten years to do so.
British companies have made £1,000bn of pensions promises, but have a shortfall in their funds of £134bn.
THE TREASURY could lose billions of pounds in corporate tax revenue if the European Court of Justice rules against it tomorrow in a landmark case which is expected to pave the way for dozens of future claims, says the Daily Telegraph.
Marks & Spencer argued earlier this year companies should be allowed to offset losses from European subsidiaries against profits from businesses in Britain, thereby reducing its tax bill.
Companies can currently offset losses from UK subsidiaries but not from those operating abroad, which M&S says is contrary to the principle of a single European market.
In April, the European advocate-general Miguel Poiares Maduro agreed, despite opposition from several EU members including Germany, whose finance minister Hans Eichel warned the case could cost the country up to Eu50bn (£34bn).
The advocate general's advice is usually followed by the court, leading experts to expect a similar judgement tomorrow.
STANDARD Life is worth more than £1.2bn a year to the Scottish economy, says the Scotsman.
A new study unveiled by the insurer yesterday reveals Standard Life accounts for almost 9% of Edinburgh and the Lothians' gross domestic product (GDP), and 1.5% of Scotland's national GDP.
The report, researched and written by Roger Tym & Partners and Tenon techlocate, was commissioned by Standard Life to assess the insurer's impact on Scotland and the UK economy. It shows the Standard Life Group generates £158.6m for the wider Scottish economy on top of an Edinburgh and Lothians figure of £1bn.
LAXEY PARTNERS, the activist investment manager, is floating an investment fund on Aim. The Value Catalyst Fund started five years ago with $100m (£57m) and was valued in June this year at $179m, reports the Guardian.
Through the listing on London's junior stock market Laxey, which has a record of publicly confronting underperforming company boards, hopes to attract more interest in its highly interventionist style of asset management.
As financial adviser, Laxey will take an annual management fee of 0.5% from VCF, together with a 15% performance fee on returns above 10%.
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