Published: 12 May 2021
Location: London, UK
The UK economy shrank by 1.5% in the first quarter of 2021 the Office for National Statistics said this morning. The economy is now 8.7% smaller than where it was before lengthy lockdowns began last Spring. "The strong recovery seen in March, led by retail and the return of schools, was not enough to prevent the UK economy contracting over the first quarter as a whole, with the lockdown affecting much of the services sector," said Darren Morgan, ONS director of economic statistics.
Yesterday’s Queen’s Speech “braced the better-off in Britain for tax hikes” to get the nation’s crippled public finances under control, the London Evening Standard reports, suggesting people and companies would have to “contribute a little more” to rebalance the books. The warning crystalised the huge challenge facing the Government to tackle the highest public borrowing since the end of the Second World War, while also delivering on its ambitious “levelling-up” agenda; channelling billions more to Scotland to prop up the union; and cutting NHS waiting lists which have soared during the pandemic. In his introduction to the Queen’s Speech, which includes 29 bills setting out the Government’s legislative programme for the next parliamentary session, PM Boris Johnson did not mention restoring the public finances but unveiled a long list of ambitious policies to reshape Britain including: -
- A promise to “turbo-charge” the economic recovery in every part of the country, “increasing and spreading opportunity”
- A new Lifetime Skills Guarantee for “flexible access” to high quality education and training throughout people’s lives
- Turning Britain into a “science superpower” with “record sums” being invested in research and development
- A Planning Bill to spark a house-building surge in specified area
- A Union Connectivity Review, to counter calls for Scottish independence, as part of a transformation of rail and bus services
- The creation of thousands of skilled green jobs
- Giving more people a chance to own their own home, and making renting “fairer” including by effectively abolishing ground rent on new long residential leases
- A pledge that “no child should be left behind” after the devastation caused to education by the pandemic.
Employers' groups and trade unions have expressed concern at the lack of an Employment Bill in the Queen's Speech. In 2019, Boris Johnson promised he would bring forward a new bill to improve people's rights at work in response to fears workers' rights could be watered down after the UK left the EU,. The omission prompted the TUC to say the government had "rowed back" on its pledge and the Recruitment & Employment Confederation to say such a bill was "long overdue." The government blamed covid for the delay in bringing forward the legislation.
The government went ahead with plans to reduce its stake in NatWest yesterday,
offloading 5% of the stock at 197p per share to raise just £1.1bn (the stock was bought at 500p per share) and leaving it with ownership of just below 55% of the bank. A Treasury statement said: "This sale represents further progress in the government's plan to return institutions brought into public ownership as a result of the 2007-2008 financial crisis to private ownership."
Fears about runaway inflation sparked a global sell-off in stock markets worldwide yesterday: it was announced that US inflation hit 2.6% in the year to March, breaching the Federal Reserve's target and raising fears interest rates may need to be raised. The FTSE 100 ended the day 2.47% down, although still 7.6% up on the beginning of the year. Travel stocks across the FTSE were especially hard hit as industry disappointment with the government's traffic light system for international travel continued: British Airways’ parent IAG ended the day 7.4% down; EasyJet slumped 3.5%; Wizz Air fell 3.62%; and jet maker Rolls Royce and InterContinental Hotels Group were also among the top fallers, down 4.87% and 3.03% respectively.
Heathrow lost almost 6.3 million passengers in April compared with the same month in 2019 figures released yesterday by the airport reveal. Only 536,000 people travelled through the airport last month, a 92% slump on the same period two years ago.
Heathrow Airport’s CEO says the government should significantly expand the list of countries on the ‘green list’ to include other low risk markets such as the United States and remove the need for fully vaccinated passengers to take two expensive PCR tests. John Holland-Kaye also said fully vaccinated people should be allowed to travel without any restrictions. So far there are only 12 countries marked ‘green’, including Portugal, Iceland and Australia. From 17 May, Britons traveling to green list nations don’t need to quarantine at home when they return to the UK unless the COVID-19 test they take on or before day two after their return is positive. In contrast, those who return from red list countries must pay £1,075 to quarantine in a hotel. It will remain illegal to travel to red or amber destinations for holidays.
Airbus has told its key suppliers to get ready for an 18% increase in output of A320-family jets by the end of 2022, Reuters reports. The tentative new planning goal would lift output of the model to 53 a month. The company presented its first quarter results on 29 April, when it revealed that operating profit rose 147% to €694m, led by commercial jets and helicopters. Revenues however slipped 2% to €10.46bn. Free cashflow for the quarter came in at €1.2bn, compared to the €8bn outflow that it suffered in the same period of 2020 after paying a record fine to Britain, France, and the US to settle a corruption scandal.
Amigo Holdings said yesterday that 95% of its 74,866 creditors who cast votes through an online portal voted in favour of a rescue scheme that will see them get less compensation for mis-selling than they are owed. The scheme will need to be sanctioned at a Court hearing scheduled for 19 May, however the Financial Conduct Authority looks set to oppose it on the basis that it's not fair, Sharecast News reports. The FCA is concerned that while creditors' claims are being significantly reduced, other stakeholders are not being asked to contribute.
Brexit has forced Britain to relinquish £2.3 trillion in monthly derivatives trading, according to consultants Deloitte and data company IHS Markit. Market share for euro swaps alone in London fell from just under 40% in July 2020 to about 10% in March, while on EU platforms it rose from 10% to 26%, and in the United States from less than 10% to 19%. "Overall, more trading went to US venues than EU venues," the report said.
AstraZeneca has suffered a substantial shareholder rebellion over proposals to hand its chief executive, Pascal Soriot, bigger bonus awards for the second consecutive year. Nearly 40% voted against the policy, which could hand him pay and perks of nearly £18m for 2021, at the company’s annual meeting in Cambridge. However, the proposal was approved as it received over 50% of the vote.
Reuters reports that the EU has launched a second lawsuit against AstraZeneca over delayed vaccine supplies. The Anglo-Swedish drugmaker had originally committed to deliver 300 million vaccine doses from December to the end of June, but has delayed shipments, having delivered only 50 million, which under the contract were due in January. Officials familiar with the case said the second lawsuit is mostly procedural, pertaining to the merits of the issue, but would also allow financial penalties to be imposed on the company.
Nearly 300 branches of bank TSB will offer domestic abuse victims a "safe space" following trials in Worcestershire, Herefordshire and Shropshire. The initiative, run by domestic abuse charity Hestia, is already in place in more than 5,300 pharmacies across the country. Victims will be able to phone a helpline, contact a support service, talk to a friend or family member, speak to a trained staff member or contact the local police from the bank.
Average monthly rents in London are at the same level as they were in December 2013, new data has revealed. Zoopla said rents are down -9.4% in the year to March, reflecting a slight increase from being down -10% in the year to February. Average rents now account for 42% of an average single-earner income in London, down from 49% in March 2020, and a peak of 53% in Q4 2016. The average monthly rent in Westminster is now £2,259 per month, down from a high of £2,617 in February last year.
High-end paint and wallpaper specialist Farrow & Ball is being sold to Danish coatings manufacturer Hempel Group it was confirmed yesterday. The British brand, founded in 1946, is being sold by its US private equity owner, Ares Management, for an undisclosed sum. However, according to the Financial Times, the deal is thought to value Farrow & Ball at £500m. Ares acquired Farrow & Ball in 2014 for £275m.
Soho House Group, the global network of private members’ clubs, is to be renamed the Membership Collective Group and, having confidentially filed for a New York listing last month, will enable members to subscribe for stock up to a specific threshold, likely to be several thousand pounds.
Pret a Manger is to trial opening stores in Tesco supermarkets, opening the first of four such ‘shop-in-shops’ at Tesco's superstore in Kensington, London.
The Financial Conduct Authority has confirmed it is formally investigating matters relating to the Greensill Capital collapse. Greensill was a finance company once worth around $30bn (£26bn) that went bust in March. Its demise has “caused much embarrassment for the investors who backed it and the banks that worked with it,” says Yahoo Finance UK. Britain's former prime minister David Cameron and current chancellor Rishi Sunak have both been dragged into probes over ethics and possible impropriety. MPs on the treasury select committee will get the opportunity to question Lex Greensill and David Cameron this week.
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