Biz Briefing: Tax Change 'Will Cost Jobs'

(c) Sky News 2011

A report for the budget airline easyJet claims the Government's proposed changes to the Air Passenger Duty (APD) airport departure tax would be "destructive".

Ministers have announced a consultation on plans to increase APD from £12 to up to £16 per person for flights up to 2,000 miles and reduce the rates and number of tax bands on long-haul services.

Consultants Frontier Economics have calculated a £2.6bn cost to UK GDP annually and 77,000 job losses.

It believes the changes would reduce UK passenger numbers by three million a year, increase CO2 emissions by 360,000 tonnes and reduce tourist spending in the UK by £475 million annually.

EasyJet (Other OTC: EJETF.PK - news) favours a per-plane tax.

Chief executive Carolyn McCall said: "This report provides convincing evidence that the Government should not impose further increases in APD on short-haul flights.

"Four out of five British passengers would be better off under a per-plane tax and, more importantly, it would encourage the industry to fly more efficiently."

:: Sky News has learned that a report on the future of Northern Rock suggests the  government sells it - rather than turn it back into a mutual.

Our City editor Mark Kleinman says Deutsche Bank (Xetra: 514000 - news) , which is weighing up options for the nationalised lender, believes a straight sale would rasie more money for the taxpayer.

:: Mothercare has announced a 73% fall in pre-tax profits to £8.8m for its last financial year and a massive shake-up of its UK business.

Total UK sales fell 0.5% to £587m over the year to March 26 though international sales grew by 17%.

The retailer is to close a further 110 stores but is expecting to benefit from 40 rent reductions over the next two years.

It says its UK property strategy will also benefit from having over 40% of its high street leases expire by March 2013 as it seeks to reduce its exposure to the UK high street.

The new focus will be on out-of-town Parenting Centres, which contain its Early Learning Centre brand.

The company says it wants to concentrate on its wholesale and online businesses both in the UK and overseas, where it is planning 150 new stores as international sales offset weaker performances at home.

:: Another retailer experiencing soft UK sales is French Connection (Berlin: FDE.BE - news) .

In its latest trading update, the company says revenue in the UK/Europe (Chicago Options: ^REURTRUSD - news) division was 1.8% below the same three month period last year.

Total (Euronext: FP.NX - news) group revenue is up 3.6%, largely thanks to strong business in North America,  and it says there was strong growth over the past few weeks during the Bank Holiday/Easter season though it remains cautious about the UK retail market.

:: Cineworld says its trading for the year to date has been damaged by a film schedule which had no major 3D releases.

Revenues for the 19 weeks to May 12 were down 8.9% while box office sales fell 7.8% compared with last year.

Cineworld expects a stronger line up of films in the remainder of the first half, including 'Pirates of the Caribbean: On Stranger Tides (3D) and the finale of the Harry Potter series.

:: The Bank of England's latest decision to keep the base rate of interest on hold was again a 2-way split.

Minutes of this month's meeting of the Monetary Policy Committee show that once again Andrew Sentance, Martin Weale, and the bank's Chief Economist Spencer Dale wanted a rise - to combat inflation.

Six (SNP: ^SIXY - news) members, including the Governor Mervyn King, voted for no change.

Andrew Sentance has now left the MPC (KOSDAQ: 050540.KQ - news) and his replacement Ben Broadbent supports the majority view that inflation will come back to target next year.