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UK economy shrank by 2.9% in January as the third lockdown came into force. Business, Media and Marketing…

   NEWS / 12 Mar 2021

Published: 12 March 2021

By Suzanne Evans, Director, Political Insight


Breaking news: the UK economy shrank by 2.9% in January as the third lockdown came into force and is now 9% smaller than it was before the start of the coronavirus pandemic.
 
Border checks and additional post-Brexit paperwork on imports from the EU have been postponed by six months, until early next year. The coronavirus pandemic has been cited as the reason by the PM’s Europe advisor - David Frost - rather than Brexit, for giving businesses more time to adapt to new rules and minimise disruption. The move follows news that UK exports to the EU fell 40.7% in January, according to the Office for National Statistics, and a survey of 900 company directors by the Institute of Directors showing some 20% of companies have halted their trade with the EU. The government said overall freight volumes between the UK and the EU have been back to their normal levels since the start of February.
 
UK chancellor Rishi Sunak has signalled he will not roll out another Eat Out to Help Out scheme, telling the Treasury Select Committee yesterday that he was not considering any new subsidies to get consumers spending again, as he was confident “there will be consumption-led recovery even without intervention.”
 
In the latest setback for Oxford/AstraZeneca vaccine’s European rollout, Norway, Iceland, Italy and Denmark are suspending use of the jab, either in whole or part, after reports of blood clotting following vaccinations. The European Medicines Agency is investigating the matter but stating there is currently no indication that the vaccine caused these conditions, which aren’t listed as side effects.
 
Ofgem has cut returns for shareholders of UK local electricity networks by a third to keep prices low, while requiring higher investment in greener energy. The UK energy regulator said shareholders' return on equity from local networks will be a maximum of 4.4% - a third lower than the previous price control. Ofgem said it had set the rates of return consistent with the average for EU regulators to keep the UK as an attractive investment.
 
Royal Mail is to introduce a Sunday parcel delivery service for major retailers following a surge in demand “for more frequent and more convenient deliveries.” In the last year, Royal Mail said it has processed “unprecedented parcel volumes,” delivering 496 million parcels in the third quarter ending 27 December 2020.
 
Foxtons is under pressure to pay back the £4.4m it claimed under the furlough scheme, following the announcement of its financial results on Wednesday showing its best bottom-line performance since 2017. The company also bought rival estate agency Douglas & Gordon for £14.25m earlier this week; announced a £3m share buyback in December; and has so far handed £1.8m to investors.  Foxtons pointed out it had been forced to make £9m in cost savings; was still loss-making; and did not plan to pay a dividend.
 
Balfour Beatty said on Wednesday it would hand back furlough repayments worth £19m. Yahoo Finance UK reported last week that 125,000 employers have now returned £700m in furlough grants.
 
John Lewis said yesterday it is likely to close more stores as it reported a record loss of £517m. The company said forced high street store closures, along with restructuring and redundancy costs, meant it could not expect to reopen all John Lewis shops at the end of lockdown, and that that would also have implications for the supply chain. The company, which runs as a partnership, giving each employee part-ownership of the firm, recorded a loss before tax of £517m in 2020, down from a profit before tax of £146m in 2019.
 
Supermarket Morrisons has revealed in its preliminary results that annual profit halved as, despite a jump in revenue, that was offset by £290m of COVID-19 related costs. Britain's fourth biggest grocer by sales revealed that hiring extra staff, employee recognition bonuses and pay, as well as food bank donations contributed to the largest slice of COVID-19 related costs — more so than staff and customer protection measures.
 
FTSE 250 company Playtech said yesterday that it had been "severely impacted" by the Covid-19 pandemic, with group-wide revenues dropping by over a quarter. The company produces sports betting software, and was hit as sports events worldwide were cancelled and betting shops closed.  Adjusted underlying earnings slumped 32% to €253.6m.
 
Global entertainment giant AEG is putting London's river-bus taxi service up for sale following a year in which its services have been heavily disrupted by the pandemic. Sky News has learnt that AEG is working with advisers on the sale of Thames Clippers, 15 years after it bought a controlling stake in the business.
 
Advertising group WPP says it will buy back up to £300m of shares as it reported an annual £2.8bn pre-tax loss caused by the Covid-19 crisis. The FTSE 100 company posted a £1.2bn profit a year earlier.
 
Heathrow Airport Holdings said its monthly passenger numbers for February fell below 500,000, the lowest since 1966, as a result of the ban on all but essential travel, blanket quarantine, pre-departure and post-arrival testing. Limits on passenger flights, which normally carry freight, also meant cargo volumes remained nearly 30% down on an annual basis. The company pointed out that its EU rivals including FrankfurtParis Charles de Gaulle and Schiphol airports returned to pre-pandemic cargo tonnage levels.
 
Reuters reports that Ryanair, Easyjet and other low-cost airlines have written to the European Union asking that its plan to force carriers to use a certain share of sustainable fuels apply to all flights, not just short-haul ones. The European Commission is drawing up targets for airlines to use a minimum share of sustainable aviation fuels, to curb the sector's  CO2 emissions. In December Brussels shelved a draft 5% target for 2030 for being too low.
 
Cunard is to offer a series of ‘UK-based voyages from its home port of Southampton this year, as a number of international sailings stay cancelled. Billed as ‘a unique and luxurious staycation opportunity’ the company plans to unveil more details will be revealed later this month.
 
Despite winning its High Court fight with businesswoman Amanda Staveley, the judge who heard the case has ruled that Barclays must pay its own legal fees, amounting to some £30 million.
Staveley sued the bank after making complaints about the behaviour of bosses when negotiating investment deals during the 2008 financial crisis. Mr Justice Waksman ruled against her, deciding she could not establish loss, but concluded Barclays had engaged in “serious deceit” and that one boss, Roger Jenkins, had knowingly made false representations.
 
HSBC has announced plans to give shareholders a vote on its climate plans, following concerted efforts by climate change activists to set clear targets for reducing financing for fossil fuel companies and projects, starting with coal. HSBC will now propose a special resolution to "set out the next phase" of HSBC's net zero plans, which include a pledge to become net carbon neutral by 2030 and make financing activity net zero by 2050.
 
British American Tobacco says it will acquire a 20% stake in Canadian cannabis business Organigram for £126m. Organigram is focused on research and product development activities of adult cannabis products, with an initial focus on cannabidiol (CBD).
 
Babcock has clinched a deal to hive off its sale of its oil and gas aviation unit to CHC Group. The unit, which provides transportation services for crews in the offshore oil and gas sector, employs more than 500 people and operates approximately 30 aircraft.
 
3.2 million British households have acquired a pet in the last year, according to the Pet Food Manufacturers' Association (PFMA), meaning the country now has 17 million pet-owning homes.  Half of new owners are aged 16 to 34 and have been bought “in response to social isolation,” thereby sparking animal welfare concerns.
 
Ralph Findlay has said he will step down as the boss of Marston’s after 20 years leading the pub chain. The Wolverhampton-based company, which runs around 1,500 pubs, has said he will leave his position as chief executive in September.
 
Royal Dutch Shell cut its chief executive’s pay by more than 40% in 2020 after the oil company plunged to a $20bn (£14.3bn) loss triggered by the steepest ever drop in oil demand during the Covid-19 pandemic. Ben van Beurden’s total remuneration fell to €5.8m (£5m) last year, compared with about €10m the year before. It is the second consecutive pay cut for the chief executive after his pay packet halved in 2019. Shell also announced on Thursday that its chairman, Chad Holliday, would step down after six years in the role, to be succeeded by the former BHP chief executive Andrew Mackenzie from May.


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