Published: 01 June 2021
By Suzanne Evans, Director, Political Insight
The private sector is growing at the fastest rate in six years according to the Confederation of British Industry's (CBI) latest monthly Growth Indicator. Activity expanded at the fastest pace since August 2015 in the quarter to May, rising 30%, up from 1% last month. In the same period, business & professional services activity grew at a survey record pace (50% from 5%), while distribution sales (35% from -8%) and manufacturing output (18% from 3%) increased at the fastest rates since August 2018 and December 2018 respectively.
The Organisation for Economic Co-operation and Development (OECD) says the UK's growth will be the fastest among its member countries, predicting the UK is likely to grow 7.2% in 2021, up from its March projection of 5.1%. The OECD raised its forecast for global growth to 5.8%, compared with the 4.2% it predicted in December.
Data from the Office for National Statistics (ONS) shows the gap between Britain's wealthiest and poorest has widened in the last decade. In that time frame, the total income of the UK's richest rose 0.9% a year after inflation, while the income of the poorest dropped 0.3% a year on average. The richest fifth of households earned over 12 times more than the poorest (£107,800 compared with £8,500) in the period leading up to the crisis. However, taxes and benefits cut the difference in total disposable income to four times — £75,600 and £18,600, respectively. Universal Credit claimants are one of the few groups of people to be relatively shielded from widening income inequality. The ONS found the biggest contribution to inequality was indirect taxes, with the poorest spending 32.9% of their disposable income on this while the richest spent 11.4%.
The Night Time Industries Association (NTIA) says nine out of ten businesses say any delay to a full reopening of society on 21st June could threaten their survival. 85% of firms also said they need at least two weeks’ notice to prepare to reopen or restart their business activity, and that more than one third at least a month. 95% of nightlife companies have already made financial commitments and logistical preparations to reopen on 21 June, including ordering stock, calling in staff, selling tickets, booking entertainment and paying for marketing and promotional material. The NTIA has warned that any diversion from the planned roadmap will be “financially and emotionally catastrophic.” NTIA is the industry’s largest trade body, representing more than 1,400 businesses across the UK’s night-time economy.
Data released by the British Retail Consortium this morning shows that two-thirds of retailers will shortly be open to legal action on the rent payments they may have missed due to COVID-19 closures. The moratorium on aggressive debt collection ends o 30th June. Total rent debt is estimated to be £2.9bn. The BRC said that already, one in seven shops lie empty, with this number expected to rise.
Chicken restaurant Nando's has been given a stay of execution by its lenders and avoided defaulting on a £300m debt pile. The Telegraph reported last night that banks including NatWest, Barclays and Santander have agreed to waive the testing of loan covenants in May. The chain had denied in December that it was in debt crisis talks after a hefty £20m bill for COVID-proofing its UK restaurants.
Domino's Pizza is hiring 5,000 cooks and delivery drivers, as staff who joined during the pandemic head back to former roles. The fast-food chain said it had recruited thousands of workers in the last year to keep up with demand, including event managers, taxi drivers and hairdressers, unable to carry out their work due to lockdowns. The chain is also taking part in the government's Kickstart scheme, offering around 1,400 work placements for young people in stores in England, Scotland and Wales.
JD Sports denies it is searching for a successor to CEO and chairman Peter Cowgill. On Saturday the Times reported that JD’s annual report contained the line: “Additional succession planning has occurred throughout the financial year following concerns relating to the single appointment of the executive chairman.” Cowgill has been executive chairman of the sportswear group since 2004 and assumed chief executive responsibilities in 2014.
Morrison Supermarkets is the latest company to find itself in the firing line over bosses' pandemic pay, after removing the £290m cost of dealing with COVID-19 before calculating executive bonuses. Sky News has learnt the UK's third-biggest grocer is facing a protest vote at its AGM next month over a multimillion-pound award to David Potts, the company's chief executive. Potts received a cash bonus of £850,000 alongside a deferred award of the same size. He was also handed restricted stock worth almost £1.4m, 20% of which was calculated using an earnings-per-share metric that would not have otherwise paid out.
Love Hemp has raised £2.35m to support growth plans for health and nutritional products based on marijuana by selling more than 67 million shares to investors at 3.5p a share. Love Hemp will use the money for general purposes and to support marketing after revamping its marketing team and re-signing Kamaru Usman, a martial arts champion, as brand ambassador. The company also raised £7m in April for marketing its products in the UK and the US.
Kraft Heinz says it will invest $199m (£140m) in a UK food manufacturing facility in north-west England over the next four years, meaning ketchup, mayonnaise and salad cream - made in the country once again. Kraft Heinz said It would be the firm's biggest expansion of a manufacturing site outside the US in more than 20 years, and one of the largest investments in UK manufacturing since Brexit.
UK house prices soared 10.9% in the year to May, the highest level in seven years, according to the Nationwide. The average house price has risen to £242,832, up £23,930 over the past twelve months. Buyers are in a "race for space" as they seek larger homes and properties with gardens, Nationwide said. "There's a market has seen a complete turnaround over the past twelve months," said Robert Gardner, Nationwide's chief economist. A year ago, activity collapsed in the wake of the first lockdown with housing transactions falling to a record low of 42,000 in April 2020, he said. "But activity surged towards the end of last year and into 2021, reaching a record high of 183,000 in March," he said.
Nationwide is to cut 150 mortgage adviser jobs according to the Mail on Sunday, because of a move to online consultations which has increased during the coronavirus pandemic. Nationwide said it carries out more than half of mortgage consultations through video conferencing and now plans to speak to most mortgage customers online in the future. One in four mortgage consultants employed by the lender face losing their job.
Travis Perkins told customers this week to brace for a 15% rise in the price of bagged cement, a 5% bump in the price of paint and a 10% increase in the price of chipboard. A report in the Sunday Times quoted the builders’ merchant as saying that “the market is facing considerable cost and availability challenges on a number of key commodity items at the moment." Britain’s construction sector has had its sharpest pick-up in activity since 2014. Construction accounts for around 6% of total UK output, Yahoo Finance says.
Oxford University is aiming to raise £500m from philanthropists, governments and corporate partners as it plans to launch a new Pandemic Sciences Centre for global research collaboration. The centre will unite a range of academic disciplines and sectors, including infectious diseases, vaccinology, immunology, structural biology, diagnostics, drug discovery, clinical trials, data science, public health, and social and political sciences.
The Financial Conduct Authority (FCA) has introduced a new rule to ensure people renewing their home or motor insurance will pay no more than they would as a new customer from January. The move is expected to save loyal customers an estimated £4.2bn over 10 years but will spell the end of the cheapest deals for new customers. A FCA study in 2018 found customers who stuck to their policies were paying £1.2bn a year too much.
Park Holidays, one of the country's biggest holiday park operators, has appointed HSBC and the Bank of Canada to oversee a strategic review which could trigger an auction of the company later this year. Park Holidays is owned by investment firm Intermediate Capital Group (ICG). Insiders told Sky News that if it does get sold, Park Holidays would command a price "well in excess" of the £362m that ICG paid to buy the company from Caledonia Investments in 2017. The company is the biggest operator of its type in the south of England, with 33 sites under its ownership, including at Dawlish in Devon, Felixstowe in Suffolk and Birchington in Kent.
A dedicated terminal for passengers arriving in the UK from countries with a high risk of Covid has opened at Heathrow Airport. Travellers arriving on direct flights from the 43 nations on the government’s ‘red list’ will now transit through Terminal Three.
Tui has agreed to sell its 49% stake in Spain's Riu hotels to its joint venture partner Riu-Group for an initial payment of €540m (£464m) in cash to reduce debt and exposure to real estate. Tui will receive up to €130m more depending on the business's performance over two years.
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