11th October 2021
Good morning To boost its economy, Spain is considering offering under-35s €250 a month to move out of their parents’ houses. Spaniards leave their family home at the age of 30, nearly four years later than the EU average.
- Global tax floor set
- Jobs market fiercest in 24 years
Global tax floor set
What’s going on?
On Friday, after years of negotiations, countries around the world finally agreed a global minimum tax level of 15% among other landmark tax reforms.
Why is this important?
In June the G7 – group of seven largest economies including the UK and US – agreed to a historic deal that would see a global minimum corporate tax rate of at least 15%.
Creating a tax floor stops countries from trying to outdo one another by constantly lowering their tax rates to attract multinational companies, in a so-called “race to the bottom.”
Now 136 countries – representing 90% of the world economy - have also signed up to the agreement.
The deal has been in the works for years and when implemented could net an additional $150bn in tax revenue annually - much needed by governments to finance the expensive pandemic related support schemes.
In the early stages of negotiations, countries like Ireland had been unwilling to sign up. In 2003 it lowered its corporate tax rate to 12.5%, thereafter it attracted a host of multinationals looking to lower their tax bills. Big American tech firms, including Facebook, Google, and Apple, have all set up their European headquarters in Dublin.
But not wanting to be left out, Ireland has finally joined the agreement.
Tech giants are likely to be most impacted as they’ll have to pay tax where they operate and earn profits so won’t be able to hide earnings in tax havens or low tax countries.
The new rules are expected to become effective in 2023. The next step will be for countries to agree the deal in their own legislatures. That could be tough, especially in the US, a country that is crucial to any global tax agreement but also home to fierce disagreements between its two major political parties.
Jobs market fiercest in 24 years
A new report by accounting giant KPMG has found that in September wages rose at the highest rate in 24 years.
The IT and computing sector had the most in-demand permanent staff, just ahead of the hotel and catering industry.
An imbalance of supply and demand for staff has led to upward pressure on pay.
On the supply side high employment, fewer EU workers because of Brexit and people being nervous to switch roles because of the pandemic has created a labour shortage.
On the demand side the end of lockdown restrictions has boosted economic activity and improved business confidence leading many firms to go on a hiring spree.
The shortage of skilled workers has left companies competing for staff.
Recruiter Robert Walters said it has even seen some salaries double. There have been reports of some newly qualified lawyers being offered £150,000 a year.
Rising wages may be good for workers but could potentially damage economic recovery if firms can’t find the staff needed to grow their businesses.
There have been calls for the government to step in to help by introducing policies that encourage business investment and skills development.
Stat of the day
Newcastle United now have the richest owners in world football after the Saudi Arabian sovereign wealth fund bought the club for £305m. The fund has assets worth around £320bn.
Other stories to keep you in the loop
- Energy price hikes: Treasury rules out support for firms
- Tesco and Royal Mail take Christmas hiring spree to 100,000
- Burger King UK prepares for whopper £600m London listing
- Budgeting app Yolt is closing down from December
- US adds 194,000 September jobs in another month of disappointing growth
- Tesla moving headquarters to Texas from California
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