Published: 03 July 2021
Location: London, UK
Revised figures from the Office for National Statistics (ONS) show the UK economy suffered a slightly worse start to the year than first thought. GDP shrank by 1.6% - compared to an initial estimate of 1.5% - as business activity and spending was held back. Household spending in the January-March period fell by more than first feared, dropping by £9.9bn because much of the economy was closed. Meanwhile, the household savings ratio was 19.9%, its second highest level on record, the ONS said. Britain's economy shrank by 9.8% last year as a result of the pandemic - the biggest decline in three centuries.
The Government yesterday revealed details of a new Green Savings Bond which it hopes will appeal to those who have built up savings by staying at home during the pandemic. The Treasury aims to raise at least £15 billion through the bonds, using the money to invest in zero-emissions buses, offshore wind and efforts to decarbonise homes and buildings. The bonds will also be used to pay for climate change adaptation programmes such as flood defences or tree planting. Anyone aged 16 or over will be able to put between £100 and £100,000 into the bonds from National Savings and Investments, locking their money in for three years. However, the interest rate has yet to be announced.
In a speech at the Mansion House later today, Chancellor Rishi Sunak will announce new plans forcing companies to report their environmental and climate impact. The so-called Integrated Sustainability Disclosures Requirements will apply to firms “across the economy”, the Treasury said. Companies will also be required to say what risks and opportunities they face from climate change. Sunak will also promise to make the UK the most “advanced and exciting” financial services hub in the world and explain how he will “sharpen our competitive advantage in financial services” with reforms in the industry, PA Media reports. “As the baton passes to a new generation of leaders in finance, I feel optimistic about the future. Ambitious at home. Confident internationally,” he will say.
Business Secretary Kwasi Kwarteng has announced forthcoming legislation allowing the government and councils greater freedom to support businesses. The Subsidy Control Bill will replace EU-wide state aid rules, which require member states to seek approval for government assistance to firm. Kwarteng said the government was using its "newfound freedoms" following Brexit to "empower public authorities across the UK to deliver financial support - without facing burdensome red tape". However, the EU Commission, which has expressed concerns the UK may distort competition by failing to ensure UK and EU firms operate on a so-called "level playing field" will be scrutinising the bill carefully, and the UK will still be subject to World Trade Organisation rules and any decisions made can be contested in law courts, the BBC reports.
The ‘sausage war’ is on hold: the EU has agreed to a three-month delay to a ban on some meat products from Great Britain being sold in Northern Ireland. The proposed ban on items like fresh sausages was a consequence of the Northern Ireland Protocol in the Brexit deal between the UK and EU agreed in 2019. The new arrangement means the meat ban will be postponed until 30 September.
The furlough scheme starts to wind down today. The 1,500 staff still taking government cash to stay at home will continue to receive 80% of their wages, but employers will now pay 10% of that for the first time. From 1 August, the employers' contribution will rise to 20%.
HMRC is reminding those who have been working from home that they can claim tax relief on household-related costs of up to £500. “It’s not too late to apply for tax relief on household expenses if they’ve been working from home during the pandemic," said Myrtle Lloyd, HMRC’s director general for customer services.
The government’s new ‘right to repair’ rules come into force today, meaning manufacturers must make spare parts for consumer goods such as washing machines, TVs and fridges available by law.
Bank of England chief economist Andy Haldane has warned of the need to act quickly to “nip inflation in the bud” and that he can see upsides to the supply side of the UK economy because of Covid. Speaking at the Institute for Government yesterday, Haldane said the damaging effects of the pandemic to the economy “have been mitigated very materially.” “As of now you could easily tell a much more positive story about the supply side of the economy,” he said, partly because employees are more productive without having to commute – which he said was one of the “least productive forms of human activity” – and partly because businesses have “tooled themselves up” in the digital era. On inflation he said he wouldn't be surprised if it went "well north" of the government's target of 2% by December, to around 4%, if left unchecked, so the UK needed to act to avoid having to raise interest rates which is “the last thing we need right now”. Haldane is set to leave the bank in September.
Investment bank JP Morgan has opened its European headquarters in Paris, moving 140 employees to the French capital as part of its European-wide Brexit strategy. The bank aims to have 800 staff in the office by the end of 2022. Those who have moved to the new premises come from 32 nationalities and work mainly in sales and trading roles. CEO Jamie Dimon said the new premises houses six trading floors and will see between $300bn and $400bn in trading volume every day. The building was inaugurated by France’s president Emmanuel Macron.
Serco says it predicts its profits will jump 50% to between £120m and £125m during the first half of the year because of its continued work on Covid-19 contracts for various governments, including the UK’s test-and-trace service. The outsourcer said it had won record levels of new orders during the period, worth almost £4bn, including large contracts with the Ministry of Defence and the Department for Work and Pensions in the UK, as well as with the Royal Canadian Air Force.
Dixons Carphone has swung back to profit on the back of a massive boost in online electrical goods sales during Covid lockdowns. The company reported pre-tax profits of £33m yesterday, compared to a £140m loss a year earlier. Online electrical sales more than doubled to £4.7bn. Dixons trades as Currys PC World and Carphone Warehouse and plans to change its name to Currys in September.
US fashion giant Gap has confirmed it plans to close all its 81 stores in the UK and Ireland and go online-only.
Checkatrade Chief executive Richard Harpin has told BBC Radio Four's Today programme he believes construction industry staff shortages were being caused by "mainly EU migrant workers going home". He said the shortages were "pretty bad" across the country, and that he wants the government to put more trades on its jobs shortage list. He said it was "really important that we find a way to get them back" to cope with the "massive demand" for work.
Real estate investment trust Civitas Social Housing has seen full-year profits slip despite recording a 6.2% increase in revenue and saying rent collection was unaffected by covid. Pre-tax profit fell to £37.1m in the twelve months ended 31 March, down from £37.7m a year earlier, as direct property expenses rose from £259,000 to £1.17m and because changes in the value of investment properties slipping from £9.38m to £5.51m.
Bitcoin exchange Binance has announced it will utilise a product called CipherTrace Traveler to improve its compliance strategy. The tool will enable Binance to comply with the global 'travel rule' implemented by the Financial Crimes Enforcement Network in the US, and the intergovernmental Financial Action Task Force, to ensure that certain customer data is disclosed and transferred between counterparties as a part of the cryptocurrency transaction. At the weekend, the Financial Conduct Authority ordered Binance Markets to remove all advertising and financial promotions by 30 June, and warned consumers that Binance is not permitted to undertake regulated activities in the UK.
Anglo-Dutch oil giant Royal Dutch Shell Plc plans to leave Aera, its California-based oil and gas-producing joint venture with Exxon Mobil Corp, four people familiar with the talks told Reuters. Shell has divested numerous carbon intensive assets this year, selling its refinery in Washington state to Holly Frontier Corp and its stake in a Houston-area refining joint venture to Petroleos Mexicanos as it shifts new investments to renewables and power. The company is also considering a sale of its assets in the Permian Basin of Texas. Earlier this year Shell said it aimed to cut the carbon intensity of its products by at least 45% by 2035, and by 100% by 2050 from 2016 levels, however a Dutch court last month ruled this is insufficient and ordered the company to lower emissions by 45% by 2030 from 2019 levels. A Shell spokesperson declined to comment on the Reuters’ report.
Mining company Rio Tinto yesterday declared force majeure on customer contracts at Richards Bay Minerals in KwaZulu-Natal, South Africa, halting operations a month because of escalating violence following the assassination of its general manager of operations, Nico Swart. Swart was killed in cold blood on his way to work a month ago after his vehicle came under intense gunfire. Equipment at the mine was then burned and destroyed by the killers and other local community members. Rio Tinto has long grappled with unrest at its South Africa operations, much of it linked to demands for more access to jobs and a greater sharing of resources’ wealth with the local community. The mineral sands the company mines there are used in everything from smart phones to sunscreen.
Chinese ride-hailing giant Didi Global has ended its first day of trading on the New York Stock Exchange with a valuation of $68.49bn (£49.6bn). It was the biggest listing in the US by a Chinese company since Alibaba's debut in 2014.
A six-year truce between Google and Microsoft has ended after both sides declined to renew their pact. In 2015 the two settled outstanding lawsuits and agreed not to litigate or complain about each other to regulators without first trying to resolve disagreements internally at the highest level. However, even before the deal lapsed, the companies had begun to feud publicly over a proposal to force Google to pay news publishers for content and they argued more quietly over technology for selling search ads. Sharecast News reports they two are now preparing for ‘open warfare,’ while the FT says the truce may have died a natural death as government regulators around the world seek to challenge practices that may have entrenched the leading tech companies' advantages but stifled competition.
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